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(A) by striking out "public-welfare services (hereinafter in this title referred to as 'child-welfare services') for the protection and care of homeless, dependent, and neglected children, and children in danger of becoming delinquent”, and inserting in lieu thereof the following: "child-welfare services"; and

(B) by inserting after the period the following new sentence: "For the purposes of this part 3, the term 'child-welfare services' means those social services that supplement or substitute for parental care and supervision for the purpose of (1) protecting and promoting the welfare of children and youth, (2) preventing neglect, abuse, or exploitation of children and youth, (3) helping overcome problems that result in dependency, neglect, or delinquency of children and youth and correcting these conditions when they occur, and (4) when needed, providing adequate care in foster homes, adoptive homes, child-care institutions, or other facilities for children and youth who are away from home."

16. AMENDMENT 6-28-60-C-INTRODUCED BY SENATOR HUMPHREY (IDENTICAL TO THE FOLLOWING AMENDMENTS: NO. 8, 6-27-60-A, INTRODUCED BY SENATOR KEATING; NO. 13, 6-27-60-I, INTRODUCED BY SENATOR SCHOEPPEL; AND NO. 24, 6-29-60-X, INTRODUCED BY SENATOR HARTKE)

basis.

STAFF ANALYSIS

Increases the social security earnings limitation from $1,200 to $1,800 per year. Cost.-$616 million per year, or 0.19 percent of payroll, on a level premium Financing.-No tax increase provided to cover added cost to program. VIEWS OF DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE ON AMENDMENT 6-28-60-C

See joint report on page 480.

TEXT OF AMENDMENT 6-28-60-C

Intended to be proposed by Mr. HUMPHREY to the bill (H.R. 12580), viz: On page 80, between lines 3 and 4, insert the following new section: SEC. 211. (a) (1) Paragraphs (1) and (2) of subsection (e) of section 203 of the Social Security Act are amended by striking out "$1,200" wherever it appears therein and inserting in lieu thereof "$1,800", and (2) such paragraphs and paragraph (1) of subsection (g) of such section are amended by striking out "$100 times" wherever it appears therein and inserting in lieu thereof "$150 times".

(b) The amendments made by subsection (a) shall be effective, in the case of any individual, with respect to taxable years of such individual ending after 1960.

17. AMENDMENT 6-28-60-D-INTRODUCED BY SENATOR HUMPHREY Allows an employer a credit against his income tax for the employment of older persons. The amount of the credit granted would be equal to the increase in the employer's cost of doing business resulting from the employment of persons who are above the age of the younger employee who could reasonably be hired to perform substantially the same duties if no factor other than age were taken into account. The amount of the credit would be limited by the amount of tax imposed reduced by other allowable credits.

Cost. See report of Treasury Department.

VIEWS OF DEPARTMENT OF TREASURY ON AMENDMENT 6-28-60-D

Hon. HARRY F. BYRD,

Chairman, Committee on Finance,
U.S. Senate, Washington, D.C.

JULY 12, 1960.

MY DEAR MR. CHAIRMAN: This is in response to your request for the views of this Department on an amendment (6-28-60-D) intended to be proposed by Mr. Humphrey to the bill H.R. 12580 to extend and improve coverage under the Federal old-age, survivors, and disability insurance system * * *

This amendment would allow to an employer as defined in section 3401 (d) (relating to collection of income tax at source on wages) a credit against his income tax for the employment of older persons.

The amount of credit granted would be equal to the increase in the employer's cost of doing business resulting from the employment of persons who are above the age of the youngest employee who could reasonably be hired to perform substantially the same duties if no factor other than age were taken into account. The bill defines an increase in cost to include "any expenditure made by an employer in the conduct of his trade or business (including insurance premiums, contributions to pension funds, contributions to medical costs, contributions to workmen's compensation funds, and any other trade or business expense, including the increased cost of training an older worker and increased cost of maintaining an increased medical and nursing staff where older persons are employed ***)." Increases in cost refer not only to those attributable to an individual employee but also to older employees generally.

The amount of the credit would be limited by the amount of tax imposed reduced by other allowable credits. The proposed credit would be in addition to existing allowable deductions.

The tax benefit granted by this proposed amendment is in the form of a tax credit. Consequently, the Government in effect would bear all of the additional costs resulting from hiring older workers, up to the point where the employer's tax liability for the taxable year is eliminated.

Since the definition of older worker includes any worker older than the youngest worker who could perform substantially the same duties, workers whose ages are 25, 35, 45, or almost any age could be classified as "older workers." The Government, thus, would bear for the employer the entire additional costs of these workers through a reduction of his tax by an amount equal to this excess cost of hiring these "older workers."

Section 162 of the code already allows employers a deduction for "all the ordinary and necessary expenses" of carrying on any trade or business. Therefore, such amounts paid to or on behalf of workers, whether younger or older, are deductible. Thus, under the amendment, an employer will always receive a larger tax reduction than the additional cost of the older worker (assuming that the older worker performs substantially the same duties as a younger worker) because he will get back the entire additional cost as a tax credit and in addition take a larger regular deduction.

For

The benefits realized by the employer will depend upon his tax rate. those proprietorships, partnerships and small business corporations (electing to be taxed under subchapter S) who are subject to marginal tax rates higher than the regular corporate rates the benefits will be greater than in the case of a corporation.

The amendment would be extremely difficult, if not impossible, to administer effectively. It involves concepts which are not easily measurable. There are no adequate guides or objective tests which would be readily available to the several million employers, or to the Internal Revenue Service, for use in making the required determinations of cost differentials in relation to employees' wages. These cost differentials vary widely among industries, among firms within the same industry, and even among positions within the same firm. For example, it would be necessary to determine exactly the lowest age at which an employee could be hired to perform satisfactorily each one of thousands of jobs. While certain of the increased costs, such as higher insurance premiums for older workers, could be determined, it would be almost impossible to lay down specific, or even general, rules for determining "any other trade or business expense, including the increased cost of training an older worker and increased cost of maintaining an increased medical and nursing staff necessary where older persons are employed, * * *” The language is vague and subject to various interpretations and whether regulations called for by this amendment were made specific or general, there would doubtless be a considerable volume of litigation over the definition of terms.

The revenue cost of this amendment could be substantial, on the order of billions of dollars. Because of the broad definition of "older workers" which can cover workers of almost any age, a part of labor costs of workers at present employed could qualify for the tax credit. This would account for the greater part of the revenue loss. To the extent that this amendment encouraged the additional employment of older workers, there would be additional revenue loss. Since factors other than the tax credit will affect the hiring of older workers,

it is difficult to estimate to what extent employers will take advantage of the credit.

Aside from the impact on revenue and the administrative difficulties, special tax incentive measures such as proposed in this amendment lead to resentment on the part of taxpayers who do not receive similar favored treatment. Accordingly, while the Treasury Department is in sympathy with the objective of encouraging employers to hire older workers, it does not favor the enactment of this amendment.

The Bureau of the Budget has advised the Treausry Department that there is no objection to the presentation of this report.

Sincerely yours,

JAY W. GLASMANN, Assistant to the Secretary.

VIEWS OF DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE ON

Hon. HARRY F. BYRD,

AMENDMENT 6-28-60-D

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE,
Washington, July 11, 1960.

Chairman, Committee on Finance, U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: This letter is in response to your request of June 29, 1960, for a report on amendment 6-28-60-D to H.R. 12580, "Social Security Amendments of 1960."

This amendment would provide preferential tax relief to employers who hire older workers.

The Department strongly favors the employment of older workers. We believe that many capable older people have a great contribution to make to the work force and economy of our country, no small part of which is being lost because of misconceptions which prevail regarding the older worker.

However, we do not favor amendment 6-28-60-D to H.R. 12580 because of two reasons:

(1) It assumes that a premium must be paid to induce the increased employment of older persons. There is increasing evidence that employer reluctance to hire the older worker vanishes when the true facts are known about benefits which may accrue to an employer who avails himself of the stability and additional experience of the mature worker.

(2) It infers that older people are a liability rather than an asset as employees, particularly, the reference on page 2, lines 19-22, "including the increased cost of training an older worker and increased cost of maintaining an increased medical and nursing staff necessary where older persons are employed." Psychologically, this presents a gloomy picture and statistically, we believe, an inaccurate one.

With respect to the relationship of this proposal to our national tax policy and to the administration of the internal revenue laws, we defer to the views of the Treasury Department; and with respect to the evaluation of the proposal from the point of view of labor-management relations and manpower requirements, we defer to the Labor Department.

The Bureau of the Budget advises that it perceives no objection to the submission of this report to your committee.

Sincerely yours,

ROBERT A. FORSYTHE,
Assistant Secretary.

TEXT OF AMENDMENT 6-28-60-D

Intended to be proposed by Mr. HUMPHREY to the bill (H.R. 12580), viz: On page 184, after line 14, insert the following new section:

AMENDMENTS TO INTERNAL REVENUE CODE RELATING TO TAX CREDIT FOR EMPLOYMENT OF OLDER PERSONS

SEC. 710. (a) (1) Part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1954 (relating to credits against tax) is amended by redesignating section 38 as section 39 and by adding after section 37 the following new section:

"SEC. 38. CREDIT FOR EMPLOYMENT OF OLDER PERSONS.

"(a) IN GENERAL.-In the case of an employer (as defined in section 3401 (d)), there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount determined under subsection (b).

"(b) AMOUNT OF CREDIT.-The credit allowed an employer by subsection (a) for any taxable year shall be an amount equal to the increase in his cost of doing business during such year which results from the employment of older persons, as determined under regulations prescribed by the Secretary or his delegate. For purposes of this subsection, any expenditure made by an employer in the conduct of his trade or business (including insurance premiums, contributions to pension funds, contributions to medical costs, contributions to workmen's compensation funds, and any other trade or business expense, including the increased cost of training an older worker and increased cost of maintaining an increased medical and nursing staff necessary where older persons are employed, within the meaning of section 162), whether attributable to an individual employee or to the employees of such employer generally, shall be considered an increase in the cost of doing business which results from the employment of older persons to the extent that it would not have been required or made if the age of each employee involved were the lowest age at which an employee could reasonably (and consistently with the sound operation of the trade or business) be hired to perform substantially the same duties (and no factors other than age were taken into account).

"(c) CREDIT NOT TO CAUSE REFUND OF TAX.--The credit allowed by subsection (a) shall not exceed the amount of the tax imposed by this chapter for the taxable year, reduced by the sum of the credits allowable under the provisions of this part other than this section and sections 31 and 32,

"(d) CREDIT IN ADDITION TO DEDUCTIONS.-The credit allowed by subsection (a) shall be in addition to, and shall not reduce or otherwise affect, any deduction which may be allowable under this chapter."

(2) The table of sections for such part IV is amended by striking out

"Sec. 38. Overpayments of tax."

and inserting in lieu thereof

"Sec. 38. Credit for employment of older persons.
"Sec. 39. Overpayments of tax."

(b) (1) Section 36 of the Internal Revenue Code of 1954 (relating to disallowance of credits to individuals paying optional tax or taking standard deduction) is amended by striking out "and 35" and inserting in lieu thereof “35, and 38".

(2) Section 37 (a) of such Code (relating to retirement income credit) is amended by striking out "and section 35 (relating to partially tax-exempt interest)" and inserting in lieu thereof "section 35 (relating to partially taxexempt interest), and section 38 (relating to credit for employment of older persons)".

(c) The amendments made by this Act shall apply only with respect to taxable years ending after the date of the enactment of this Act.

18. AMENDMENT 6-28-60-E-INTRODUCED BY SENATOR HUMPHREY STAFF ANALYSIS

Transfers domestic program of surplus food distribution from the Department of Agriculture to Department of Health, Education, and Welfare. Authorizes

Secretary of Health, Education, and Welfare to give assistance to State and local governments in distributing surplus foods, including storage, and report to Congress on a formula for division of the funds requested by local governments, based on per capita revenues and the relative numbers of needy persons. Directs the Secretary of Health, Education, and Welfare to institute a food stamp plan for needy individuals in areas with a specified amount of unemployment and rural areas of low net income and standard of living. (Public Law 86-341, enacted last September, authorized (but did not direct) the Secretary of Agriculture to establish a food stamp system for the distribution of surplus commodities to needy persons during the period February 1, 1960, and January 31, 1962. The Secretary has not yet exercised his authority under this enactment.) Cost. This amendment gives the Secretary of Health, Education, and Welfare broad regulatory authority to determine eligibility for and amount of assistance to be provided. The administrative costs for the direct distribution would also depend on a number of factors, such as State and local expansion of the present program. Because of these variable factors it is impossible for the staff to estimate the cost at this time.

Financing.—Additional cost would be paid out of general revenue.

VIEWS OF DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE ON AMENDMENT 6-28-60-E

The Department of Health, Education, and Welfare would recommend against adoption of amendment 6-28-60-E to H.R. 12580. The reasons for this recommendation are as follows: The proposed transfer of the direct commodity distribution program from the Department of Agriculture to the Department of Health, Education, and Welfare, with distribution of food to schools and needy persons overseas being left in the Department of Agriculture, would entail substantial duplication of effort and corresponding additional expenses in the two departments. Such a transfer would also mark an undesirable change in the emphasis of the commodity distribution program from an adjunct of agricultural support operations to a program predominantly welfare-focused. The stamp plan proposed in the amendment would further increase the Federal share of public assistance expenditures, which is already disproportionately high. Finally, such a stamp plan would at best be of only limited benefit to welfare recipients; it might actually be detrimental to them if, as is possible, it led to an appreciable reduction in the cash assistance they now receive from State agencies.

TEXT OF AMENDMENT 6-28-60-E

Intended to be proposed by Mr. HUMPHREY to the bill (H.R. 12580), viz: At the end of the bill add the following new title:

TITLE VIII-DISTRIBUTION OF SURPLUS FOOD

SHORT TITLE

SEC. 801. This title may be cited as the "Food Act of 1960”.

STATEMENT OF PURPOSES

SEC. 802. It is the purpose of this title to (1) transfer the domestic program of direct commodity distribution to the needy from the Department of Agriculture to the Department of Health, Education, and Welfare, (2) to provide for the extension and expansion of the direct commodity distribution program by authorizing assistance to State and local governments in administering and handling such programs, and (3) provide for a food stamp plan for the purpose of securing an adequate and proper diet of foods high in nutritional value which are ordinarily consumed in inadequate quantities by the unemployed, the needy, and persons with low income, and others in designated industrial areas of labor surplus and low-income rural areas.

SEC. 803. As used in this title

DEFINITION

(a) The term "food commodity" means any food product raised or produced in the United States on farms, including agricultural, horticultural, and dairy products, livestock, poultry, and honey.

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