retired workers, we heartily endorse the legislation as provided in H. R. 5180 which will provide an equitable floor of protection against income taxation of retirement income for all retired persons who now lack this floor of protection.

Thank you for the privilege of testifying on this bill.

The CHAIRMAN. We thank you, Miss Bennett, for your contribution to the committee. Are there any questions? The Chair hears none. We thank you.

The next witness is Mr. Royce L. Givens, secretary-treasurer of the National Conference of Police Associations. Mr. Givens, we are very glad to see you here. Just give your name and the capacity in which you appear, and we will be glad to hear you.

STATEMENT OF ROYCE L. GIVENS, SECRETARY-TREASURER, NATIONAL CONFERENCE OF POLICE ASSOCIATIONS

Mr. GIVENS. Mr. Chairman and members of the Ways and Means Committee, my name is Royce L. Givens, secretary-treasurer of the National Conference of Police Associations composed of the following: The Patrolmen's Benevolent Association, New York City. The Chicago Patrolmen's Association, Chicago, Ill.

The Police Conference, State of New York, with 150 units.

The New Jersey State Patrolmen's Benevolent Association, Inc., with 113 units.

The Detroit Police Officers Association, Michigan.

The Policemen's Protective Association, Milwaukee, Wis.

The Police Officers Federation of Minneapolis, Minn.

Houston Police Officers Association, Texas.

The San Francisco Police Officers Association, California.

The Lost Angeles Fire and Police Protective League, California. The Peace Officers Research Association of California.

San Diego Relief Association, California.

The Police Pension Fund, New Orleans, La.

The Policemen's Association of the District of Columbia, representing approximately 100,000 policemen.

I am a member of the Metropolitan Police Department of the District of Columbia, and past president of the Policemen's Association of the District of Columbia. I am here today to represent the National Conference of Police Associations on the subject of exclusion of pension and retirement income for specific types of employees. The National Conference of Police Associations wishes to be recorded as being in favor, with one exception, of the subject matter of H. R. 5180, introduced by the Honorable Mr. Mason of Illinois.

The broad general purpose of H. R. 5180 and other similar bills pending before this committee is to provide legislation which will treat all persons drawing pension or retirement benefits alike. At present this is not the case. Railroad retirement, veterans' and social-security payments are exempt from Federal income tax. Disability retirement payments are also exempt but this exemption is for the most part uniform and has been extended to workers of many trades by court decision. It is our opinion that in retirement for age and service no one group or class should receive benefits another does not. H. R. 5180 and other similar bills provide uniform treatment for retired employees of all trades and professions except that the work clause tends to dis

criminate against certain trades or professions in which it has been found necessary and expedient to provide a low or comparatively young retirement age.

It is generally recognized throughout the United States that policemen and firemen positions are a young man's job. For that reason the greater majority of the legislative bodies have enacted pension or retirement laws with lower retirement age than other public employees. The general age being 55 years and approximately 25 years service. Lower retirement age has been borne out by much experience in that after a man reaches the age of 55 years his efficiency as a police officer or fireman has passed its peak. Also due to the extremely hazardous elements of this type of employment it is a means of persuading or recruiting younger men for the police profession.

Advantageous retirement systems are an integral part of these jobs. Without such inducement it would not be possible to man the police and fire departments of our country. Indeed even with such inducements it is difficult in recent years to recruit the needed men. The average worker in the United States retires at about age 65. The average retirement age for policemen and firemen is around 55 years. This is an advantage of course but in some ways it is not. A man who retires at 55 years of age often has not fulfilled the necessary obligations to his family. He may have children still in school or a home not yet paid for. This man has to work after retirement to supplement his income. The worker who retires at 65 is not nearly so apt to need supplemental income.

Therefore we of the police and fire profession find H. R. 5180 and similar legislation, bills which are intended to provide fair and equitable treatment for all workers; however, we find that there is still some discrimination against us.

We ask that the work clause be given careful consideration. We believe that any legislation that tends to encourage idleness is not in the American spirit. We respectfully suggest that a formula be worked out which would allow a retired person to at least double his pension or retirement payments before he would be penalized by lowering his exemption.

In an article by Hon. Herbert Brownell, Jr., Attorney General of the United States, appearing in "Parade," a section of the Sunday Washington Post of August 9, 1953, Mr. Brownell says in part:

*** But a lot depends on you. As citizens and taxpayers, you must see that the efforts of your local law-enforcement officers don't go unrewarded. Justice Department messengers make more money than the average American policeman. Any man who is struggling for the bare necessities of life is a prey to temptation. Remember: The thin line of policemen facing the relentless army of criminals is only as strong as its weakest man.

We of the National Conference of Police Associations heartily endorse the statement by Hon. Herbert Brownell, Jr., and believe that you gentlemen of the United States Congress would be in effect helping carry out the request of the Attorney General by enacting legislation to exempt not only police and firemen but all public employees, but more especially policemen and firemen, who have protected your homes and loved ones by jeopardizing their own life, from the payment of income tax.

There are a number of bills before your committee relating to this subject, some of which refer to a specific type of employee or em

ployment. It is the views and convictions of the National Conference of Police Associations that if you exempt 1 employee or 1 type of employment you should exempt all types of employees and all types of employment.

Mr. Chairman, I want to thank you very much, and the members of the committee, for permitting me to appear here to express our

views.

The CHAIRMAN. We certainly thank you very much for your appearance here and for the information you have given the committee. Without objection on the part of the committee I wish to insert a statement from Mr. Marcellus C. Sheild, chairman of the legislative committee of the National Association of Retired Civil Employees, at this point in the record.

(The matter referred to follows:)

NATIONAL ASSOCIATION OF RETIRED CIVIL EMPLOYEES,

Mr. RUSSELL E. TRAIN,

Washington 6, D. C., August 4, 1953.

Clerk, Committee on Ways and Means, House of Representatives. DEAR MR. TRAIN: Through the good offices of Mr. Colin Stam, you were kind enough to advise me on July 2 that hearings on topic 37 of the general revenue revision schedule would probably be held in a fall session and I would be given an opportunity to appear and would be notified of the date.

I have just ascertained that the time for this topic has been changed under a revised plan and that topic 37 will be heard on August 13. It will be impossible for me to appear personally on that date because of an important previous engagement.

Mr. Stam has contacted Miss Taylor today and advised me that if we submit a brief by September 1 or shortly thereafter it will be called to the committee's attention and appear in the printed testimony.

We are grateful for this consideration and will have the material prepared and in Miss Taylor's hands by the time indicated.

Please accept our thanks for your consideration of our request.

Sincerely yours,

M. C. SHEILD, Chairman, Legislative Committee.

STATEMENT OF MARCELLUS C. SHEILD, CHAIRMAN LEGISLATIVE COMMITTEE, NATIONAL ASSOCIATION OF RETIRED CIVIL EMPLOYEES OF THE UNITED STATES GOVERNMENT, IN SUPPORT OF EXEMPTION OF RETIREMENT ANNUITIES FROM INCOME TAX

Mr. Chairman and members of the committee, my name is Marcellus C. Sheild, and I am chairman of the legislative committee of the National Association of Retired Civil Employees, an organization composed of retired civil employees of the United States Government. Our group has a membership of 65,000 with 350 chapters scattered throughout the United States, the Philippine Islands. Hawaii, and the Panama Canal Zone. The membership constitutes one-third of the approximately 190,000 retired civil employees and a small proportion of the approximately 50,000 annuitant survivors of deceased employees on the annuity rolls on June 30 last.

Our members, along with annuitants and pensioners generally, are greatly interested in topic 37 of your schedule-exclusion of pension and retirement income for specific types of employees-and thoroughly appreciate the courtesy of the chairman and the committee members in giving us this opportunity to present our views.

We should like at the outset, Mr. Chairman, to call attention to the increase in the number of aged and aging in the country in relation to the whole population. The total number of persons in the United States has doubled since 1900, but during that period the number of persons 65 and over has quadrupled. The number in that age group exceeded 13 million last year and is currently increasing at the rate of 400,000 a year-1 in every 12 persons is now in this age group. This change in our life is primarily due to the decline in infant mortality, and an increase in the expectancy of adult life. The enlarging num

ber of aging persons is creating grave social and economic problems that call for the re-examination of this segment of our population, from the standpoint of their financial status and their welfare and happiness as an integral part of national life.

Pensions and annuities, public and private, have not been geared to the cost of living. It seems trite to call attention to the doubling of the cost of living in the past 14 or 15 years and the halving of the purchasing power of the dollar. Such adjustments as have been made, both public and private, have been entirely inadequate to compensate annuitants and pensioners for the shrinkage in the value of their dollar annuity when translated into food, medicine, clothes, and the other necessities of living.

One of the deepest concerns of the aged and aging is health. I would like on this phase of the matter to quote an excerpt from the recent report of the Joint Committee on Railroad Retirement of the United States Congress on health of the aged.

"*** Such persons are sick more often, spend almost twice as many days in the hospital in the course of a year than the average person, use private and visiting nurses more often, are required to receive more doctor's home and office calls, become hospital cases more often and account for more hospital days per case. Their number is found with disproportionate frequency among the chronically ill, the disabled, and those suffering from major impairments. A particularly acute problem is their inability to participate in group plans for hospitalization insurance, because of their retirement or exclusion from the labor force and their low income."

The average Government annuity, according to latest calculations, is approximately $1,400 for employee annuitants and $540 for survivor annuitants of deceased Government employees. The Congress has made only two adjustments in annuities of those in retirement during the period of inflation-one in 1948 and another in 1952. For those annuitants who participated in both of these increases the average addition to the annuity was something less than 50 percent-a totally inadequate repair to the serious damage inflicted upon their annuity dollars by the approximate doubling of the cost of living. Survivor annuitants, who benefited by only one augmentation of their annuities averaged an increase of a little more than 17 percent. These upward readjustments of nuities were on a sliding scale, and many annuitants received only one benefit, being barred from the second increase by a limitation of $2,160 on annuities eligible for participation.

Living costs are still increasing and reached an alltime peak of inflation in July last. The subjection of fixed income to high taxation at a time when its purchasing power is being depleted by inflation approaches a form of confiscation. We submit, Mr. Chairman, that there should be exemption of annuities and pensions from income tax for the following reasons:

1. A tax on annuities is contrary to the general principle on which income tax is based.

2. A Republican House in the 80th Congress passed a bill exempting from income tax the first $1,440 of annuity of retired civil employees of the United States.

3. The Congress has recognized the principle of exemption specifically in the Railroad Retirement Act by exempting annuities under such act from income tax. 4. The Congress has acquiesced in administrative rulings exempting certain retirement income from tax, notably in the case of payments under old-age and survivors insurance.

5. Other exemptions have been provided by law or administrative action notably the first $3,500 of retired pay of military and naval personnel retired for disability, certain veterans' benefits and pensions, and beneficiaries of some private organizations.

6. The large groups exempted from income tax on annuities as contrasted to those large groups not exempted from income tax on annuities form a gross example of discrimination in the application of the principle of income tax.

7. The loss of revenue by extending income-tax exemption to those groups of pensioners not now accorded such treatment under present law or administrative ruling is not a significant factor.

8. In the interest of equity and justice among like groups of citizens, the present extensive discrimination between groups of annuitants and pensioners should be rectified.

The sixteenth amendment to the Constitution gave the Congress the power to levy a tax on incomes from whatever source derived. The Congress under this authority has levied taxes on incomes both of individuals and corporate

bodies. Obviously the theory of the power to levy this type of tax was based upon the earning power of the individual or the corporation. It is patent that a very small proportion of individuals in the land are capable of living without exerting their earning power hence the income tax in effect is a tax according to the ability of the individual or the corporate body to earn. This being the case it is submitted that a tax upon annuities or retirement income of the aged or disabled is not a tax upon their current earning power but is in fact a tax upon their past earning power or on their savings for old-age security as reflected in their retirement income. In this respect the tax upon this type of income is not inherently in conformity with the basic principle of income tax and becomes a tax upon the past thrift of the individual and his faithfulness to his employment and also on his earning power during his active years in preparation for retirement.

A Republican House of Representatives, by a substantial majority in the 80th Congress, approved the principle of exemption of retirement income from tax to the extent of freeing the first $1,440 of the annuity of retired persons retired under the Civil Service Retirement Act from income tax. This was a direct issue in a bill devoted to this single purpose and uncomplicated by any other legislative provisions. The Senate did not act upon the bill but its passage by the House, and the debate in connection with it, indicated strong approval of the principle involved.

The Congress has given its approval to the principle of exemption of retirement income from tax by incorporation of such a provision in the Railroad Retirement Act. It has indicated a further approval by continuing to acquiesce in the administrative action by which income under OASI of the Social Security Act and some other pensions, are exempted from such taxation. In this connection, an anomalous situation exists with respect to active employees of the Government in that approximately 900,000 of them are now under social security and the remainder, some 1,500,000 are under the Civil Service Retirement Act. The former group, when retired, will have completely tax exempt annuities and the latter will fall under the laws of taxation. The same disparity exists among some groups of State, municipal, and other local government groups

These examples, and others cited, constitute a pattern of legislative and administrative action providing exemption which is thoroughly without coordination and which directly results in a grossly inequitable treatment for those groups of retirees who are so unfortunate as to be in the groups that are not favored. The groups enjoying exemption from income tax form a majority of the class in which they fall and the group not enjoying exemption are a minority of the class. Present law and administrative action penalize this minority.

The members of our association, constituted entirely of former Government employees and their beneficiaries, still have a deep interest in the welfare of the Government and a spirit of loyalty to its highest tradition. We are sympathetic to the purposes and policies aimed at achieving a balanced budget and preventing increases in the public debt and at the same time to maintain a high level of preparedness for the security of the Nation. We believe that a complete exemption of the full amount of retirement income from income tax is in accordance with the spirit and intent of the principle of the income tax and is a matter of justice to the aged citizens in retirement who have during their active lives supported their Government by substantial contributions in the form of taxes on their earnings. We realize, however, that to ask for such a complete exemption would be impractical at this time and result in too great a loss of revenue at a time when the Government is straining to achieve financial stability.

Our association, with this premise in mind, has endorsed the general principles embodied in H. R. 5180 of this Congress, introduced by Representative Mason on May 13 last. We are not unmindful in this connection of the many other bills introduced at this session looking toward the same or similar results for various classes of pensioners and annuitants, Federal, State, municipal, other governmental units, and retirees from private-business activities. We are grateful to Mr. Mason and Mr. Forand of this committee and to Representatives Burdick, Corbett, Davis of Georgia, Dollinger, Jonas, Keogh, Lesinski, Miller, Morrison, Multer, Rooney, Taylor, Withrow, and others who have sponsored bills on this subject.

Our executive committee, in endorsing H. R. 5180 has done so for a number of reasons:

1. We believe that its provisions will result in only a moderate loss of revenue to the Government. Some experts who have studied the bill believe that such loss would not be in excess of $50 million a year.