the Government because the working and producing taxpayers in a pay-as-you-go system would always outnumber the voting recipients. It would not undermine incentive to work or to save but would return responsibility to the individual, where, in a free country, it belongs. In the long run, it would be cheaper, more efficient, more equitable, and more democratic.

I would just like to make one remark and that is that if this committee should report out H. R. 6000, doubling benefits, the possibility of a return to a sound system would be that much more difficult.

I want to thank you very much for the privilege of appearing. The CHAIRMAN. Thank you very much, Miss Hammond, for your appearance and your contribution.

Miss HAMMOND. Thank you.

The CHAIRMAN. Miss Wright? Will you have a seat, please? You happen to be the last witness.

STATEMENT OF MISS IMOGENE B. WRIGHT, WASHINGTON, D. C.

Miss WRIGHT. Yes. This will only take me 7 minutes.

The CHAIRMAN. You are from Washington?

Miss WRIGHT. Yes.

The CHAIRMAN. And you are Miss Imogene B. Wright; is that the name?

Miss WRIGHT. That is right.

The CHAIRMAN. You may proceed with your statement.

Miss WRIGHT. Mr. Chairman and Senators of the Finance Committee, I am Imogene Wright, a waitress in one of Washington's larger hotels. I have been asked to furnish your committee information as to how tips of waitresses may be taxed for social-security purposes, and how the girls of the waitressing profession in general feel about the subject of tips and taxes.

In procuring the data and information for the compilation and production of my book, I interviewed over 100 girls who work in shops in Washington, Boston, and New York. The word picture I have thus put together seems about as complete and all-inclusive as any that has ever been published.

I think I should start with the over-all picture of tipping in the United States insofar as public eating places are concerned. My estimate, which is based on the most authoritative research work I have been able to locate, is that there are approximately 3,000,000 working waiters and waitresses in this country, and that these 3,000,000-odd serves receive tips, or gratuities, aggregating about $7,250,000 a day, based on the average taken from the research of our union which puts the waiter's or waitress' tips at $2.75 a day.

The average restaurant worker puts in about 280 days a year. We arrive at this figure by allowing him 1 day a week off, 2 weeks for vacation and 20 days off without pay or tips for sickness or personal business.

Multiply this $7,250,000 by 280 days and we get a probable grand total of $2,030,000,000 a year in tips, which would be taxable for socialsecurity purposes if a way could be found to do it.

My estimate of the number of waiters and waitresses in the United States is based on a statement by the National Restaurant Association

in a recent bulletin, that there are about 525,000 public eating places in the United States and that 25 percent of America's meals are eaten outside the home.

The number of servers in these public eating places run all the way from one or two waitresses, in a small place, to over a hundred in some of the larger hotels and eating establishments. Restaurant association experts estimate that the average is between 8 and 10 servers for each restaurant.

I am sure that six would be a conserative figure-one which is not overstating the case. This would bring the total number of waiters and waitresses in these 525,000 establishments to 3,150,000—or $3,000,000 in round numbers.

From the best source of information available, I believe an estimate of $2.75 a day is a fair one for tips of the average waiter or waitress in the United States. I base this figure on the testimony of Mr. Charles E. Sands, the representative of the Hotel and Restaurant Employees International Union.

This union is a very efficient organization. It has the best of research workers and ideal facilities for this research. It has locals in 800 cities. I do not see how anyone can go behind Mr. Sands' figures.

These figures are that some workers in small restaurants may take in as low as 50 cents a day, while those in larger and better places will run all the way up to $4 or $5. By averaging these figures the best way you can, we get $2.75 a day. Multiply this by 3,000,000 workers and you get 714 million dollars a day in tips-$2,030,000,000 a year on the 280-day basis. In my opinion there are three ways in which this 2 billion can be taxed.

Way No. 1 would be to adopt the European system of having the establishment add 10 percent or 15 percent to the guest's check, to be paid the server as tips-just as restaurants in many places in the United States add 2 percent or 3 percent to the guest's check to be paid the State or city as a sales tax. I give these two different tip levels because tips will vary not only as between different communities and different sections of the country but as between different establishments in the same community.

Way No. 2 would be for Congress to pass minimum-wage laws for employees now depending on tips for the bulk of their take-home pay. I realize that, in order to do this, the prices on the menus would have to be raised accordingly. The establishment must make income meet outgo, but the consumer will pay in the end, just as the consumer always does.

Way No. 3 would be for Congress to enact a special social-security law for workers who must depend on tips for a living wage, patterned along the lines of the Civil Service Retirement Act. A standard level for tips would have to be set at, say, $2 a day. The employer would deduct 6 percent-or 12 cents per day-as the tax on tips from each weekly check paid the worker by the employer. This would be paid to the Government, along with 6 percent of the basic wage, for their social-security retirement fund. These tip workers would start drawing a retirement wage at 60 or 62, just as the Government worker does now, and based on the same method of computation.

It is my observation that a majority of waitresses would like to see tipping abolished and a minimum wage substituted. Most of us agree with our union representative, Mr. Sands, when he said:

We believe our employees, our members, should be paid an adequate wage or commission so they would not be forced to take tips.

And now, gentlemen, to be perfectly blunt, we feel that H. R. 6000 was sent down to Congress as a red herring. We do not believe that those who conceived the bill sincerely believe they can ever tax all the tips of tip workers under the present system, because that would involve making over 3,000,000 people tell the truth. Rather, we believe this proposal was inspired or written by the Internal Revenue people to make this class of workers declare all their tips so they can be checked on for income-tax purposes.

To sum it all up, we of the waitressing profession think the proposal to tax our tips for social-security purposes is a very good one. We hope the Congress can and will work out a plan-with the cooperation and help of the employers and the workers-that will be satisfactory all around.

We hope you can give the waitressing profession, and with it our allied workers, the waiters, the feeling that those of us who live to be 60 will be as well taken care of in our declining years as the workers in the more and better fixed salary brackets.

We thank you very, very much.

The CHAIRMAN. Your appearance here at this time reminds us that we have not had lunch.

Senator MILLIKIN. I would like to ask one question.
The CHAIRMAN. Yes, Senator Millikin?

Senator MILLIKIN. If this were done, would you be embarrassing the estimates that are made by the waiters and waitresses as to their incomes for purposes of the income tax? I mean, there the tips are usually played down. Here, you play them up. I mean, would you be double-crossing yourself somewhere along the line?

Miss WRIGHT. Well, I am only going by the figures that I took from someone else.

Senator MILLIKIN. I see.

Miss WRIGHT. I didn't say as to how much any girl would make. That I can't say. No one can say. I only know how much I make. Senator MILLIKIN. I think your answer was a very good one. The CHAIRMAN. Thank you very much.

(The following statements and letters were submitted for the record :)

STATEMENT OF SENATOR LISTER HILL OF ALABAMA

Mr. Chairman and gentlemen of the committee, H. R. 6000 proposes desirable and much needed revision of the Nation's social-security program to meet the growing, changing demands and needs of the American people. I strongly supported the original Social Security Act of 1935. I joined in sponsoring those liberalizing amendments to the Social Security Act that have been enacted. I am asking for the extension and expansion of social security.

And

I am addressing the committee at this time, however, with particular reference to the maternal and child health services and services for crippled children. H. R. 6000 as it was passed by the House of Representatives in the last session of Congress does not include authorization for increasing the funds for these programs but leaves them at their present levels. I urge the committee to amend H. R. 6000 and authorize adequate funds to meet the urgent and growing need for these services. I urge the committee to increase the authorization of

funds for the work of the Children's Bureau in child welfare and child parent relationships.

The United States has seen a phenomenal increase in its child population during the last 10 years. The number of children under 5 years of age has nearly doubled. The 46,000,000 children in the country now constitute almost a third of the Nation's population.

Along with the sharp rise in the number of births, the cost of medical and health services has increased. As a result, the whole structure of State services for maternal and child health and for crippled children is threatened.

At no time has any State been able to furnish complete and State-wide maternal and child health services. Now 22 States have had to curtail the services they do provide.

We know the value of the maternal and child health services and the progress made under these programs. Since 1935 when the Social Security Act was passed maternal mortality has dropped 77 percent and infant mortality has declined 32 percent.

Curtailment of these vital services at a time when births and child population is increasing so sharply is literally a matter of life and death to the mothers and infants of America.

When the services are curtailed, the rural and low-income areas are the first to be affected. Yet this is where the services are most needed.

Half of the children in the United States are borne into one-sixth of the families. Generally these are young families whose maximum earning capacity has not yet been reached.

The States that are rich in children are the low-income States without financial resources to support adequate services for mothers and children. Mississippi, for example, has 63 children for every 100 adults. Yet Mississippi has a per capita income of $758 a year. Mississippi's capacity to support services for her mothers and children is considerably less than that of New York, which has 32 children per 100 adults and a per capita income of $1,891.

Despite the steady progress in maternal and child care, the death rates for mothers and children still vary widely in relation to the financial resources of the States. In 1947 the maternal mortality rate in Mississippi-with the lowest per capita income in the country-was more than twice the mortality rate in Nevada, with the highest per capita income.

Increased appropriations can help to correct these disparities because section 502 of the Social Security Act provides, in addition to a flat sum allotted to each State, that additional funds be granted on the basis of the number of live births and the financial need of the States. If the present authorization of $11,000,000 with State matching for the next fiscal year is increased to $22,000,000, the States with higher birth rates and lower per capita income can approach the level of the wealthier States in their maternal and child services.

The present authorization for crippled children's services carried on through the Children's Bureau is $7,500,000. I urge the committee to include in H. R. 6000 the authorization to increase to $22,500,000 the funds for crippled children's services. This is a threefold increase, but the need for preserving and expanding these services is imperative.

Thirty-seven States have reported that their crippled children's programs must be curtailed if additional funds are not available. More than 22,000 crippled children were on waiting lists for treatment in April 1948. By the end of 1948 the number had increased more than 50 percent and it has continued to rise during the past year. Children are being sent home from hospitals, clinics have been discontinued, and other methods of treatment have been abandoned due to inadequate funds.

A half million children are known to have defects requiring orthopedic or plastic treatment, including some 160,000 children with cerebral palsy. Another half million are victims of rheumatic fever. Two hundred thousand have epilepsy. The States have made great progress since the enactment of the Social Security Act in discovering and treating these children. But there are many more afflicted children than those on the records.

Some of the children can be cured. Many of them can be rehabilitated to lead normal, useful lives. Children with spastic type of cerebral palsy can be helped to the point where they can attend school, learn to hold responsible jobs, and take their rightful place in the community.

I am urging the committee to make increased provision for needy dependent children and needy mothers by taking them into consideration under the permanent and total disability provisions of H. R. 6000.

The presence of the mother in the home is essential for the proper care and guidance of young children. Yet disability insurance bears no relation to the number of dependents, and mothers in such families frequently must go to work. The bill provides for increasing the funds for grants to the States for child welfare from the present $3,500,000 to $7,000,000 a year, and increasing the present $20,000 allotment for each State to $40,000 a year.

With the increase in child population in the United States we can expect a proportionate increase in the problems of child welfare. I hope the committee will further increase to $12,000,000 the authorization for child-welfare grants, to permit the States to expand their programs and employ additional trained staff experts.

There is no duplication of services in the programs provided under the Social Security Act and the other health and medical legislation which I have joined in sponsoring. All of the programs are essential to the health and welfare of our people.

The local public health units bill passed by the Senate will help local and county health offices to strengthen and expand their health services and preventive medicine.

The school health services bill provides for research into child life and the child's social and emotional development.

S. 2591 provides for research into the causes of certain crippling diseases such as multiple sclerosis, cerebral palsy, epilepsy, eye diseases, and others.

Our amendments last year to the Hospital and Health Center Construction Act are enabling the States to build more hospitals and health centers and provide more adequate facilities for the care of mothers and children.

As coauthor of these measures I can say that none of them will fulfill the need for specialized services in the field of maternal and child health and the care of crippled children.

The growth of child population and the increase in births, and the progressive curtailment of the State programs makes it urgent that we fill the gaps in H. R. 6000, broaden and strengthen the services our social-security program provides, and meet the developing need for the care of America's mothers and children.

STATEMENT OF HON. ARTHUR V. WATKINS, UNITED STATES SENATOR FROM UTAH

I have received considerable correspondence from my constituents in Utah as well as from people in other sections of the country on various sections of H. R. 6000. Many of my Utah constituents have found it impracticable to appear before the committee to present their views on many provisions of the proposed law; and, therefore, I am taking this opportunity to present to the committee for their consideration some of the ideas which have been expressed in my correspondence as well as some of my own ideas relating to this proposal. Let me cite specifically some objections in connection with H. R. 6000:

MINING INDUSTRY

Section 210 (k) (3) (F) and 206 (d) (3) (F) and 210 (k) (4) and 206 (4) (2), if passed by the Congress, will result in the cessation of a large amount of mining in my State as well as in other States.

The changes in these sections would place mine lessors and mine lessees in an employer-employee classification which would be a direct reversal of present laws which recognize the independent status of the parties involved. Now why am I so sure that the adoption of this legislation will result in the cessation of a large segment of the western mining industry?

The mining industry in the State of Utah has gone through just such a period. From 1900 to 1940 mine leasing in the State of Utah flourished. Then the various social agencies in the State of Utah determined that the mine lessees would be better off as employees of the various mining companies rather than as independent businessmen; and, therefore, in 1940 by administrative action all mine lessees in the State of Utah were determined to be employees for the sake of various social-legislation purposes. The result is history. From 1940 until 1944 mine leasing in the State of Utah not only was terminated but almost the entire activity carried on formerly by these groups ceased. Some mining companies endeavored to continue their operation under the employer-employee relationship but found that it was totally uneconomical. Other witnesses before