"(2) No disbursing officer shall, in the absence of gross negligence or intent to defraud the United States, be liable with respect to any payment by him under this section if it was based upon a voucher signed by a certifying officer designated as provided in paragraph (1).

"APPROPRIATION

"SEC. 1602. There are hereby authorized to be appropriated to the Federal Medical Insurance Trust Fund for each fiscal year, beginning with the fiscal year ending June 30, 1962, out of any moneys in the Treasury not otherwise appropriated, such sums as the Secretary determines to be necessary to meet the payments made from such Trust Fund pursuant to this title with respect to individuals who are eligible to receive medical benefits under this title, plus interest accruing on such sums at the rate for each such fiscal year equal to the average rate of interest (as determined by the managing trustee) earned on the invested assets of such Trust Fund during the preceding fiscal year.

"PAYMENTS

"SEC. 1603. Payments required to be made under this title, as provided in section 1601, shall be made from the Federal Medical Insurance Trust Fund.

"NONAPPLICABILITY OF THLS TITLE

"SEC. 1604. The provisions of this title shall not apply to any individual (i) who is, or upon filing application would be, entitled to an annuity or a pension undr the Railroad Retirement Act or (ii) who is receiving, or is eligible to receive, an annuity under the Civil Service Retirement Act, or (iii) who is the wife or dependent husband of an individual described in clauses (i) or (ii).”

EFFECTIVE DATE

(b) Payments pursuant to subsection (a) of this section shall be made only with respect to hospital services, nursing home services, home health services. diagnostic outpatient services furnished, or very expensive drugs purchased after dates to be fixed by the Secretary, but such dates shall be, in the case of (1) hospital services, not earlier than July 1, 1961, or later than January 1, 1962, (2) nursing home services, not earlier than January 1, 1963, or later than July 1, 1963, (3) home health services, not earlier than January 1, 1962, or later than July 1, 1962, (4) diagnostic outpatient services, not earlier than July 1, 1961, or later than January 1, 1962, and (5) the purchase of very expensive drugs, not earlier than July 1, 1962, or later than January 1, 1963. The terms used in this section shall have the meaning assigned to them in title II of the Social Security Act.

AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1954

CHANGES IN TAX SCHEDULES

SELF-EMPLOYMENT INCOME TAX

SEC. 603. (a) Section 1401 of the Internal Revenue Code of 1954 (relating to rate of tax on self-employment income) is amended to read as follows: "SEC. 1401. RATE OF TAX.

"In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax as follows:

"(1) in the case of any taxable year beginning after December 31, 1959, and before January 1, 1961, the tax shall be equal to 41 percent of the amount of the self-employment income for such taxable year:

“(2) in the case of any taxable year beginning after December 31, 1960, and before January 1, 1963. the tax shall be equal to 4's percent of the amount of the self-employment income for such taxable year;

*(3) in the case of any taxable year beginning after December 31, 1962, and before January 1, 1966, the tax shall be equal to 5% percent of the amount of the self-employment income for such taxable year;

"(4) in the case of any taxable year beginning after December 31, 1965, and before January 1, 1969, the tax shall be equal to 6% percent of the amount of the self-employment income for such taxable year;

"(5) in the case of any taxable year beginning after December 31, 1968, and before January 1, 1972, the tax shall be equal to 7% percent of the amount of the self-employment income for such taxable year; and

"(6) in the case of any taxable year beginning after December 31, 1971, the tax shall be equal to 7516 percent of the amount of the self-employment income for such taxable year."

TAX ON EMPLOYEES

(b) Section 3101 of such Code (relating to rate of tax on employees under the Federal Insurance Contributions Act) is amended to read as follows: "SEC. 3101. RATE OF TAX.

"In addition to other taxes, there is hereby imposed on the income of every indiivdual a tax equal to the following percentages of the wages (as defined in section 3121(a)) received by him with respect to employment (as defined in section 3121 (b)) —

"(1) with respect to wages received during the calendar year 1960, the rate shall be 3 percent;

"(2) with respect to wages received during the calendar years 1961 and 1962, the rate shall be 34 percent;

"(3) with respect to wages received during the calendar years 1963 to 1965, both inclusive, the rate shall be 334 percent;

"(4) with respect to wages received during the calendar years 1966 to 1968, both inclusive, the rate shall be 44 percent;

"(5) with respect to wages received during the calendar years 1969 to 1971, both inclusive, the rate shall be 44 percent; and

"(6) with respect to wages received after December 31, 1971, the rate shall be 4% percent."

TAX ON EMPLOYERS

(c) Section 3111 of such Code (relating to rate of tax on employers under the Federal Insurance Contributions Act) is amended to read as follows: "SEC. 3111. RATE OF TAX.

"In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the following percentages of the wages (as defined in section 3121(a)) paid by him with respect to employment (as defined in section 3121 (b)) —

"(1) with respect to wages paid during the calendar year 1960, the rate shall be 3 percent;

"(2) with respect to wages paid during the calendar years 1961 and 1962, the rate shall be 34 percent;

"(3) with respect to wages paid during the calendar years 1963 to 1965, both inclusive, the rate shall be 34 percent;

"(4) with respect to wages paid during the calendar years 1966 to 1968, both inclusive, the rate shall be 44 percent;

"(5) with respect to wages pad during the calendar years 1969 to 1971, both inclusive, the rate shall be 434 percent; and

"(6) with respect to wages paid after December 31, 1971, the rate shall be 4% percent."

DECLARATION OF POLICY ON RAILROAD RETIREMENT AND CIVIL SERVICE ANNUITANTS

SEC. 604. It is hereby declared to be the policy of the Congress in enacting this Act to include as many retired people as possible under the type of program established by this Act and to provide that their benefits should, to the extent possible, be financed by contributions made by them (and their employers) during their working years. To further this policy, the Congress should take action as soon as possible to make available to persons receiving annuities under the Railroad Retirement Act and the Civil Service Retirement Act a program under which such individuals can obtain the same type of services made available by this Act to those who are receiving old-age and survivors insurance benefits.

STUDY OF HEALTH NEEDS OF INDIVIDUALS

SEC. 605. Section 702 of the Social Security Act is amended by inserting "(a)” after "702"; by adding at the end thereof the following new subsection:

"(b) The Secretary shall conduct a continuing study and investigation of the health needs of individuals who have reached retirement age, and the means by which such needs may most effectively and efficiently be met. In connection with such study and investigation, the Secretary shall institute and conduct appropriate demonstration programs relating to the health needs of such individuals and the manner and means by which such needs may be fulfilled. The Secretary is authorized to provide for the carrying on of such research studies pertaining to health care and the administration of such care as may be recommended by the advisory council designated pursuant to section 226(f). Such research studies may be carried on directly by the Department of Health, Education, and Welfare, by others under contracts negotiated for, or grants made by the Secretary for, such purpose."

SEC. 606. As used in the provisions of the Social Security Act, amended by this Act, the term "Secretary" means the Secretary of Health, Education, and Welfare.

SEC. 607. This title may be cited as the "Retired Persons Medical Insurance Act."

2. AMENDMENT 6-25-60-D-INTRODUCED BY SENATOR WILLIAMS OF NEW JERSEY

STAFF ANALYSIS

Makes liberalization of the insured status requirement (sec. 204 of Housepassed bill) inapplicable as to any individual who is or will become entitled to retirement benefits under the teachers pension and annuity fund of the State of New Jersey or to retirement benefits under the public employees retirement system of the State of New Jersey.

Cost.-Negligible savings.

VIEWS OF THE Department oF HEALTH, EDUCATION, AND WELFARE ON AMENDMENT

6-24-60-D

While the present law does contain modifications to the general provisions governing coverage under the old-age, survivors, and disability insurance program, the Department believes, in general, that special provisions are undesirable in that they tend to nullify the effect of the general provisions of the law, and may introduce inequities and anomalies into the program. The proposed special amendment, applying only to persons receiving retirement benefits under two named New Jersey retirement systems, is subsequent to the additional objection that it would be the first special amendment (i.e., an amendment applying to specifically named groups) to the basic provisions of the program for determining eligibility to benefits and benefit amounts.

The Department believes that it is of fundamental importance in a broad social insurance system such as old-age, survivors, and disability insurance that the benefit rights of all persons covered under the program be determined on the same basis. The proposed amendment would not provide favorable treatment under the program for the group affected; it would nevertheless be a departure from the principle that all covered persons should be subject to the same requirements as to insured status. If enacted, it would undoubtedly be considered as a precedent by persons or groups seeking advantages through additional special amendments to the insured status or benefit computation provisions of the act. The proposed amendment is designed to be of help to a relatively small number of persons entitled to benefits under the two New Jersey systems, and would no doubt be of overall assistance to them (subject, of course, to the interpretation of the amendment by the State of New Jersey). Nonetheless, it would make inapplicable to these persons an insured status provision of the Social Security Act and might inadvertently be of disadvantage to some members of the systems by reducing the amount of benefits they would obtain under the Federal program. Since the objective of the proposed amendment is to affect favorably the benefit rights of certain individuals under the two named New Jersey retirement systems, its achievement would seem to be a matter for State, rather than Fed

eral, legislation. An amendment to the Federal law which has as its objective modifying benefit rights under State law does not seem desirable.

For these reasons the Department recommends that the proposed amendment not be enacted.

TEXT OF AMENDMENT 6-24-60-D

Intended to be proposed by Mr. WILLIAMS of New Jersey to the bill (H.R. 12580), viz: On page 67, between lines 14 and 15, insert the following new subsection:

(e) The amendment made by subsection (a) shall not apply in the case of any individual who, on, before, or after the date of enactment of this Act, becomes entitled to retirement benefits under the Teachers Pension and Annuity Fund of the State of New Jersey or to retirement benefits under the Public Employees Retirement System of the State of New Jersey.

3. AMENDMENT 6-24-60-E-INTRODUCED BY SENATOR JAVITS FOR HIMSELF AND SENATOR KEATING

STAFF ANALYSIS

Permits the States to extend their unemployment insurance laws to provide coverage with respect to those nonprofit organizations which are not subject to the Federal unemployment tax without regard to the conditions specified in section 3303 of the Internal Revenue Code of 1954 (the Federal Unemployment Tax Act). It would thus permit States to allow to these organizations reduced rates of contributions to pooled unemployment funds on a reimbursable or other basis having no relation to unemployment experience or other factors having a direct relation to unemployment risk.

VIEWS OF DEPARTMENT OF LABOR ON AMENDMENTS 6-24-60-E (IDENTICAL

WITH S. 3594)

It is our understanding that Amendment 6-24-60-E which is identical to S. 3594) is intended primarily to allow State coverage of nonprofit organizations on a reimbursable basis, according to which these organizations would be billed periodically for the benefit costs charged to them and required to pay only these amounts into the State fund. Under a number of State laws, State and local governments are presently permitted to effect coverage of their employees on such a basis.

While the Department of Labor believes that employees of nonprofit organizations are entitled to unemployment insurance protection, we question the desirability of permitting treatment of one class of private employers on a basis inconsistent with the insurance approach to unemployment compensation. Such treatment would also appear to involve practical problems which might minimize its effectiveness in expanding unemployment insurance protection, while possibly hindering future extension of Federal coverage to employees of nonprofit organizations in all States instead of merely those which could avail themselves of the proposed coverage.

State unemployment insurance laws, all of which now provide for pooled funds, represent an insurance approach to the financing of unemployment costs. Such an approach offers the advantages of a wide pooling of risks among industries and employers, while also insuring annual employer costs that are predictable and limited by minimum and maximum rates. Some employers might not otherwise be capable of absorbing the benefit costs chargeable to them. Individual employer or industry financing through payments reimbursing the State fund for benefit costs provides neither the advantages of pooling nor the predictability of an annual tax.

The nature of nonprofit organizations does not appear necessarily to justify such a departure from the established pattern of unemployment insurance financing. Many receive the bulk of their funds from sources other than voluntary contributions, engage in commercial operations, and sell goods and services in competition with profitmaking organizations that are presently subject to unemployment insurance laws on a regular basis. Amendment 6-24-60-E might be considered by other employers as unduly preferential and thus lead to efforts for further extension.

In practice, the costs of coverage on a reimbursable basis may, under certain circumstances, exceed those on a tax basis, thus presenting problems to the organizations themselves and imperiling the extension of unemployment insurance which this amendment is intended to foster. For example, should an organization be required to reduce operations for budgetary reasons, thus laying off employees, benefit costs would ordinarily rise at the very time that the organization would least be able to absorb these additional costs.

Nonprofit organizations should not necessarily be classed with States or municipal corporations which, as previously noted, are covered under some State laws on a reimbursable basis. These entities are not "persons" within the meaning of section 3303 of the Federal act, and unlike private employers they are necessarily exempt from the Federal tax for constitutional reasons. Their activities do not ordinarily present competitive problems in relation to other employers. Such governmental entities are permanent, or nearly so, and even when dissolution occurs it ordinarily takes the form of merger or consolidation insuring payment or assumption of prior debts. They have resources of taxation and credit which assure a high measure of continuity in operations and financial capacity. These considerations are not generally applicable to nonprofit organizations, which often do operate in competition with other employers subject to unemployment insurance laws, have no assured level of operations or financial capacity, and can and do go out of existence with consequent risk of default.

There is the possibility also that this amendment might hinder extension of the Federal act to nonprofit organizations since State coverage pursuant to amendment 6-24-60-E would be in conflict with the conditions of section 3303 which would become applicable upon Federal coverage.

TEXT OF AMENDMENT 6-24-60-E

Intended to be proposed by Mr. JAVITS (for himself and Mr. KEATING) to the bill (H.R. 12580), viz: On page 142, between lines 13 and 14, insert the following:

CONDITIONS FOR REDUCED RATE OF CONTRIBUTIONS

(d) Section 3303(c) of such Code (relating to conditions of additional credit allowance) is amended by adding at the end thereof the following new paragraph:

“(9) PERSON.—The term 'person' shall not include any organization, service for which is excepted from employment under paragraph (8) of section 3306(c)."

4. AMENDMENT 6-24-60-F-INTRODUCED BY SENATOR JAVITS FOR HIMSELF AND SENATOR KEATING

STAFF ANALYSIS

Permits child to receive survivor benefits on record of individual who stood in loco parentis (in the place of the parent) for not less than 5 years immediately preceding the day on which the individual died; also requires that child must have been living with the worker at time of death and have been receiving at least three-fourths of his support from such worker.

Cost.-Unknown. Cost of amendment if amended as suggested by Department of Health, Education, and Welfare in the following report is estimated as negligible.

VIEWS OF THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE ON PROPOSED AMENDMENT 6-24-60-F

The Department of Health, Education, and Welfare is in favor of this amendment in principle and recommends its enactment. The Department believes, however, that the amendment needs to be modified as described below.

The amendment provides for the payment of child's insurance benefits only if the insured worker has died. A child who is living with and being supported by a retired or disabled worker also needs the protection of the program. The Department recommends that the amendment be modified to provide for paying benefits also in cases where the worker is disabled or retired.