For these reasons, I urge legislation which will exempt from income, and from wages defined under the Federal Insurance Contributions Act, lump-sum payments for traveling expenses, where it can be demonstrated to the satisfaction of the Commissioner that such payments in fact represent a reasonable maximum allowance for actual expense. I apologize for taking up so much of your time, but our committee feels that the tremendous costs incurred by employers and the Government in administer. ing the social-security and income-tax withholding plans warrant the time necessary to a full and complete statement about the mechanics of doing the job. I conclude with the hope that your committee will give serious consideration to the suggestions we have made to reduce these costs. TABLE I.—Example: $45.50 weekly, $2,366 annually, 3 exemptions—FICA tax at 11⁄2 percent Weekly Weekly X52 Total withholdings, determined separately: 1. Gross wage. 2. Exemptions at $13 each 1. 3. Net wage subject to income-tax withholding (1–2). 4. Amount of income-tax withholding (15 percent of 3) 2. ог 5. Income-tax withholding-Wage bracket table 3.. Social-security-tax withholding: 6. 11⁄2 percent of gross wage.. Combined withholdings, with annual allocation: 7. Combined withholding- Allocation: 8. FICA tax-1 percent of annual wage.. 9. Balance Income-tax withholding....... 1 The $13 weekly exemption allowance is a rounding of $12.8205 ($600÷.9X1/52). The 15-percent rate is a rounding of 14.94 percent (the result of deducting 17 percent from the sum of 3 percent normal tax and 17 percent surtax, and multiplying the balance by 0.9). The $1.10 weekly withholding is a rounding of $1.05155 (the result of deducting 3 exemptions at $12.8205from the gross wage (note 1) and multiplying the remainder by 14.94 percent tax rate (note 2). The $1.78 combined weekly withholding would come rom a new wage-bracket table. It is the result of adding the $1.10 in the present wage-bracket table for income-tax withholding to 11⁄2 percent of gross wage. TABLE II.—Illustration of automatic year-end transfer of theoretical overwithholding of FICA taxes to withholdings for income taxes TABLE III.-Illustrating the extent of possible overwithholding due to applying the 12 percent rate on wages in excess of $3,000 per year TABLE IV APPROXIMATE POSSIBLE OVERWITHHOLDING DUE TO PRO RATA LOSS OF EXEMPTIONS IN WEEKS NOT WORKED Number of Exemptions 10 300 200 100 STATEMENT FROM THE COUNCIL FOR SOCIAL ACTION, CONGREGATIONAL CHRISTIAN CHURCHES This statement is submitted in behalf of the Council for Social Action, an official agency of the Congregational Christian Churches. It represents only the Council for Social Action. In a democratic organization like the Congregational Christian Churches, no individual or group is empowered to speak for all members and churches. The Church is concerned with social security for two basic reasons. First, family security is the first principle of social welfare. Social security helps to produce those conditions of physical, mental, and spiritual confidence and wellbeing which are essential to the development of good family life. Secondly, social security is concerned with basic economic and social rights of people. The Church cannot be the Church and remain silent when people are involved. In May 1949 the Council for Social Action adopted the following policy state ment: "We recommend that it be established as a national policy that all citizens are entitled to adequate social-security benefits. Existing social-security provisions should be extended to include especially the self-employed, domestics, agricultural workers, lay employees of religious, charitable, or any other group of workers not already covered by social security or some other adequate pension plan. The comprehensive social-security program should include increased old-age and survivor's benefits, unemployment compensation, and an adequate program of public assistance and health protection. "The Council for Social Action believes that the churches should be unequivocal in giving guidance to the Nation in the program of broad social welfare which social security legislation represents. Especially do we regard it as imperative for the churches to be included in a Federal social security plan offering protection to their lay employees. We believe that such a program can be operated without impairing in any way the rights and freedoms of the churches.” In line with this policy, we are happy to commend the general purpose of H. R. 6000. However, we would like to address ourselves to three specific points which have a bearing on this legislation: 1. We are critical of the provision making_social-security insurance compulsory for employees and merely voluntary on the part of employers when they are religious or charitable organizations. We strongly urge extension of social security to employees of nonprofit organizations on the same basis as for employees in other areas. We believe that the special treatment afforded charitable, religious, and other nonprofit organizations is not in the best interest of either the organizations or their many employees. H. R. 6000 requires that the employee must make a "compulsory" contribution to the social-security fund, but the employer may or may not contribute an equivalent amount. Voluntary contributions for the employer is an unwholesome and discriminatory principle. It destroys the concept of mutuality which is central to the entire social-security program. If the employer does not avail itself of the opportunity to make a voluntary contribution, the employee will receive only one-half of the benefits given other participants in the program. He may be "in" one year and "out" the next. His social-security benefit will always be the most expendable item in the budget. As a result, his old-age security benefit will be insecure and less than the benefit of other employees. We do not agree with those who oppose compulsory contributions by the employer on the grounds that such compulsion would violate the principle of separation of church and state. We do not believe that any serious constitutional questions would be raised by including religious organizations on the same basis as other enterprises. 2. We regard the failure to provide coverage for agricultural labor as a most significant inadequacy of H. R. 6000. This means that 4,000,000 families who earn their living by producing raw materials to feed, clothe, and shelter city families will continue to receive few, if any, of the benefits of the social-security system. Yet these farm families are among the least able to lay aside for their old age, for support of their dependents in case of death or for sudden emergencies. About half of all the families in agriculture, including the farm operators, the tenants, the sharecroppers, the hired workers, and the migrant seasonal help, made less than $2,000 in 1949 from both farm and part-time nonfarm work. One-fourth of all the families in agriculture received less than $1,000 that year, a year of farm prosperity. Clearly these families cannot afford to save enough for retirement or to tide them over a bad emergency on this income. As a result, these people must rely on public assistance in their old age. Today, about 52 percent of the public old-age assistance load falls upon rural counties. In many agricultural States, twice as many people receive old-age assistance or charity as receive old-age insurance benefits. This necessity is inconsistent with the national policy of regarding a contributory insurance plan as far more desirable than a system of direct aid. The social-security tax would not place too heavy a drain on the farmers' budget, yet the benefits the tax helps pay for would help keep these hard workers from the charity rolls. Many of the farm families have helped pay for socialsecurity benefits through contributions made during periods when they were employed at nonfarm jobs. The cost in human terms of the exclusion of agricultural workers from socialsecurity insurance cannot be tabulated. This cost is not borne by the aged alone; the children of the many farm families whose main breadwinner has died without the protection of survivors insurance pay the price of exclusion also. The Council for Social Action urges that the Congress act to extend the protection of the social-security insurance system to agricultural workers on the same basis as other citizens. In connection wth our concern for the welfare of agricultural families, we believe that H. R. 6000 should provide for an increase in grants-in-aid to State assistance, health, and welfare programs. It is generally true that States and counties which lack funds or facilities cut services to farm families first. No State in the Union provides a well-rounded health and welfare program for all its rural families. Only substantial grants-in-aid will make possible adequate care for these Americans. 3. Congress needs to recognize the long-range and difficult problem of Puerto Rico. Welfare aids which can be extended through our social-security system will aid materially in the solution of one aspect of the problem of Puerto Rico. We strongly support the provisions of H. R. 6000 which would extend old-age and survivors insurance to Puerto Rico and the Virgin Islands. The desire on the part of the 2,000,000 Americans, whose home is Puerto Rico, to be included in the social security insurance system is a healthy one. It reflects an optimism about the success of a current effort to raise productivity and living standards through industrialization. At this point in the economic development of the island, very few workers reach retirement age; few Puerto Ricans have sufficient income or enough steady employment to qualify for the insurance benefits if they do reach retirement age. It is important, however, that workers who can contribute to an insurance system be permitted to share in the benefits on an equal basis with their fellow Americans on the mainland. ("Equal basis," as used above, means that Puerto Rican workers will receive benefits equal to those of U. S. workers of the same income.) This is consistent with the policy of placing a contributory insurance system above reliance on a system of direct assistance. If we do not include these workers in an insurance plan, they will be forced to rely on direct assistance. We are wholly in accord with present provisions extending grants-in-aid to the insular government for public assistance. The whole social security system is predicated on the philosophy that local resources cannot be expected to meet all of the welfare needs, and that Federal assistance should be extended on the basis of need for the well-being of the Nation as a whole. We support the proposals to include Puerto Rico in the public-assistance and child-welfare programs of social security. The average per capita income in Puerto Rico is less than half that of Mississippi, the lowest income State. The desperate need for welfare aids becomes increasingly apparent when one considers that these low incomes are not balanced off by lower cost of living. The cost of living in Puerto Rico at comparable standards to those in the United States is as high as that of the mainland. The Puerto Ricans have demonstrated initiative and imagination with a program to meet the problem of maintaining economic gains in the face of rapidly growing population where the population is already dense and natural resources sharply limited. An unenlightened trade policy toward Puerto Rico has retarded industrialization of the island in the past. Now that the process is taking place, the benefits of increased public assistance and extension of the social security insurance can go a long way toward improving the economic health of a depressed domestic area. A STATEMENT BY THE LUTHERAN CHURCH, MISSOURI SYNOD, To the United States Senate Finance Committee: SIRS: Your committee is presently considering H. R. 6000, popularly known as "The new Federal social security bill." In lieu of appearing before your committee at its hearings, for which no appointment could be secured, the undersigned, speaking for the Lutheran Church, Missouri Synod, wish, in this brief written statement, to draw your attention to an apparent need of amending or clarifying section 210, page 40, subparagraph (9), which excepts "Service performed by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry or by a member of a religious order in the exercise of duties required by such order." We submit that the Lutheran Church, Missouri Synod, has in addition to its pastors a class of ministers, 1,374 of them in 1948, who should classify under the term "duly ordained," but might be held to be outside of the scope of that term in the administration of the act, on the technicality that they are not formally ordained and are not pastors. 60805-50-pt. 3-78 |