contributions were made to the Federal old-age fund on behalf of such individuals. No contributions were made because the Treasury Department held such individuals to be independent contractors. With the "combined effect" of seven factors to juggle and weigh, the two Federal bureaus will be establishing the status of individuals on a quicksand base, and the likelihood of disagreement between the bureaus is immeasurably increased. What weight is to be given each of the seven factors? Which of the factors is the determining factor? If a dairy company contracts with a hauler or cream buyer to do certain things, does said company have control over the individual? Many haulers and cream buyers have been operating under contracts with dairy firms for years, and the performance of service by the hauler or cream buyer or his employees is regular and daily. Do these facts change the status of the hauler or cream buyer who has always been considered an independent contractor, a self-employed individual who is brought into the old-age insurance field by H. R. 6000? The services rendered by the haulers and cream buyers certainly can be integrated in the business of the dairy processor. The latter could perform these services through his employees but prefers, in keeping with long practice in the dairy business, to contract out such services with self-employed, independent contractors who have skill in handling motor vehicles and collecting and caring for dairy products and who have skill in buying and testing and caring for cream. Is it necessary, under the sixth factor, known as (F), that the dairy company investigate the financial condition of each hauler and cream buyer to determine the "lack of investment” or extent of investment of the hauler or cream buyer "in facilities for work"? Finally, the seventh factor, (G), provides for "lack of opportunities of the individual for profit and loss." Whenever an individual is engaged in business it seems axiomatic there are the concomitant opportunites for profit and loss.

The dairy company does not control these haulers or cream buyers, who, if they find their contracts unprofitable, will cancel the same. As above pointed out, however, many haulers develop dairy routes throughout the country and sell the same, just as cream buyers may develop a large business or neglect his cream buying, and profit or lose according to the skill and business acumen demonstrated. These self-employed, independent contractors may have one or two or more employees. They may go on collecting and paying old-age insurance taxes only to find out, perhaps, that they are employees, and their employees, if any, are employees of the contracting company for part or all of their working time. It seems clear that havoc will be wrought in the dairy industry and great confusion and unnecessary costs and expenses will be involved if the two Federal bureaus are to be given such unlimited power and discretion. No dairy industry or other firm could say with any degree of certainty which of the self-employed independent contractors were his employees if paragraph (4) of the definition of "employee" is adopted or which continue to be independent contractors.

The "combined effect" of the seven factors for old-age insurance, if enacted into law, will open the way for amending the Federal and State unemployment compensation laws by inserting a similar definition of "employee" in those laws and then in the wage-and-hour laws and the Federal income-tax law for withholding purposes. It seems only realistic to suggest such action if "employee" is to be defined as proposed in H. R. 6009. If we are correct in our belief, then the combined effect of such a definition of "employee" will nullify the efforts by thousands of self-employed. Small employers will be wiped out. The firms who have dealt with those individuals for years as independent contractors will necessarily have to demand of such individuals information as to their socialsecurity numbers, their ages, the value of their services separate from the price paid for the use of their vehicles and their operation of the same, or the operation of the vehicles by their employees, and separate from their store rentals and other expenses as allocated to the activities of cream buyers, and the financial interest of such individuals "in facilities for work."

If an individual, for years classified and regarded as an independent contractor is held to be an employee because of the elusive "combined effect" of the seven factors and other Federal and State laws are amended, as above indicated, so that there is a uniform definition of employee, then it may be expected that claims for personal injury or property damage will be filed against the contracting company for the negligence of someone operating a vehicle or performing some other service under contract over whom the company has no control and who may be a stranger to it.

Seif-employed individuals are to be brought within the Federal old-age insurance field, and we favor this broadening of the coverage. We most respectfully and definitely submit, however, especially because of such broadening of coverage,

that it is unnecessary and improper to invest the Federal Social Security Agency and the Treasury Department with the unlimited power and discretion contained in paragraph (4) of the definition of employee.

SECOND POINT

H. R. 6000 provides for an increase in the amount of old-age insurance payments. This appears to be a sound move. But, beginning with 1951 and for 8 years thereafter, the proposed tax for old-age insurance is to be increased from 11⁄2 percent on the employer and 11⁄2 percent on the employee to 2 percent on each, and the tax base is to be increased from the first $3,000 per year per employee to the first $3,600 per year per employee. Provision is also made for increasing the tax rate up to 3 percent on the employer and on the employee by 1967. After 13 years of experience with the Federal old-age insurance law on a 1 percent tax against the employer and the same tax against the employee, and on a tax base of the first $3,000 per year per employee, 13.8 billions of dollars have been collected on which the general taxpayers have paid 1.27 billions of dollars in interest. Out of old-age and survivors' insurance trust funds, 2.9 billions have been paid out in old-age pensions (Social Security Bulletin of the Federal Security Agency, January-February 1950, p. 26). As of the end of November 1949 there was in the fund 11.85 billions. For each of the fiscal years 1947-48 and 1948-49, there was paid out in old-age insurance benefits approximately one-third of the income to the fund in each of those years.

With an 11.85 billion fund as of November 1949 and three times as much money coming into the fund currently as is being paid out, it seems unnecessary at this time to increase either the tax rate for employers and employees or the tax base as proposed in H. R. 6000.

You will doubtless recall that the original Social Security Act provided for a tax rate of 1 percent on the employer and 1 percent on the employee for 1937, 1938, and 1939 and one-half of 1 percent increases on each every 3 years until a 3 percent rate on each would be applicable with respect to employment after December 31, 1948. These increases in the tax rates were not put into effect. Instead, the 1 percent rate was continued until January 1, 1950, when the present rate of 12 percent on each became effective. The Congress wisely modified the law with reference to the tax rate and should not now approve an increase in the rates as proposed in H. R. 6000. When the payments from the old-age insurance fund more nearly approximate the income to the fund from the taxes on the employer and employee, then we advocate a reexamination of the subject.

The Federal Security Agency, 3 to 5 years before the payments from the fund approximate the income, should advise Congress as to the tax necessary to provide the payments anticipated for 2 or 3 years.

A reserve fund of over 11 billions of dollars is unnecessary. The higher we build the old-age trust fund, more taxes the general taxpayer will be compelled to pay to provide interest on the taxes already paid by the employers and employees and others covered under the law, and the greater the tendency, in all probability, to veer more sharply from the use of insurance principles in this huge old-age and survivors insurance undertaking. Respectfully submitted.

THE DAIRY INDUSTRY COMMITTEE,

M. H. BRIGHTMAN, Executive Secretary.

STATEMENT OF THE ASSOCIATED BLIND, INC., CONCERNING THE AMENDMENTS TO TITLE 10 OF THE FEDERAL SECURITY ACT AS EMBODIED IN S. 2066

The Associated Blind welcomes the opportunity to state its position with reference to S. 2066. A vast majority of the blind people who constantly turn to our organization for help are on "blind assistance." Furthermore, the Associated Blin' is an organization conducted an 1 directed by blind "eople themselves; and, therefore, in this double capacity of directly representing the blind themselves as well as living with this handicap ourselves, we feel you will find our views and experience most valuable in determining the course of action to be taken. The blind have long struggled to minimize and eventually eliminate entirely the attitude of giving pauper relief and subsistance standards to any blind person compelled to seek public financial assistance. With the advent of the Federal Security Act in 1935, in which title 10 made it possible for the various States to grant this much-needed assistance to the blind, it was hailed with much joy and

enthusiasm by the blind, because it reduced the inadequacy of living standards and also took the first step toward that distant goal for the right to live as normal and decent human beings. However, this was short-lived when in 1940 there was an amendment to title 10 of the Federal Security Act requiring States to take into account all sources of income before granting financial assistance. Consequently, the means test was used in its most restrictive sense, thus reviving the attitude of pauper relief and marginal subsistance. Moreover, the administrative policies and regulations of the separate States indicated that public assistance was to be regarded in the light of emergency relief rather than as permanent assistance. Since a very small minority of blind people were able to secure full-time remunerative employment, it thereby developed the unhealthy situation where only paupers and indigents were considered eligible for assistance, whereas those blind people who might become partially self-supporting through their own labor were deprived of the incentive to work at all because the meager earnings derived from partial employment would be deductible from their request for assistance. All this created a deplorable situation in which the public agencies on the one hand catered to pauperism and indigence and reduced assistance to the minimum while, on the other hand, the blind who wished to engage in remunerative employment were penalized for it in the corresponding reduction of their earnings from the needed assistance, thus destroying all desire for incentive, initiative, and the hope to live as useful and self-supporting citizens.

As a result of this glaring defect and injustice in our public-assistance laws, the Associated Blind, along with other sympathetic groups, constantly sought to have such inadequacy corrected to the best interests of all concerned. To accomplish this, our organization strongly favored and advocated the principle of "exempt earnings." In other words, it was felt that a definite amount of money should be deductible annually from a blind person's income from all sources after which assistance would then be granted. In this way, a person of visual impairment would not be penalized for his efforts to seek and retain employment and at the same time be freed from the degrading investigation into his every activity as to the possible source of his income. The blind person would be encouraged to exercise initiative and be stimulated to take every advantage of self-improvement until such time that he felt he could gladly forego the benefits of public assistance. Thus, when this principle of granting an outright exemption was incorporated in H. R. 6000 (introduced into Congress in 1949), the Associated Blind was proud to announce to the blind that considerable progress had been made in this direction. However, H. R. 6000 restricted this principle of granting exemption only to those blind people seeking vocational rehabilitation, and the amount of exemption would be determined by the agencies administering this law. As to what exemp tions would be granted would be left entirely to the discretion of such administrating agencies. This again involved the question of the means test and lacked universal application. In other words, the amount of exemption would differ from person to person and retain all the evils of prying investigation. Moreover, it excluded entirely that large group of blind people who had to apply for blind assistance but who could not avail themselves of any exemption because they were not on vocational rehabilitation.

While the principle of exemptions was desirable and a long step in the right direction, it was more than offset by the disadvantages that were in turn created. Hence, the blind do not endorse H. R. 6000 and reject its provisions in its entirety. It should be pointed out that H. R. 6000 states, on page 95, a revised definition of legal blindness. Whereas at present this is 20/200, it would be 5/200. The downward trend of this definition would work an undue hardship on many visually handicapped people who ranged between these two limits. Medical records and accumulated experience reveal unmistakenly the need of a large group of people to receive help from public-assistance laws due to the many pecularities of visual impairment ranging from 5/200 to 20/200, so that this entails social and economic deprivation.

In view of the foregoing, it should be abundantly clear that the Associated Blind is highly in favor of endorsing S. 2066 for the following reasons:

S. 2066 seeks to grant a flat exemption to all blind people seeking assistance. Its universal application removes, to a large degree, fear and degradation for the blind people subjected to needless investigation. It promotes initiative and encourages incentive for those blind who may become partially or fully employed. It is our strong belief that S. 2066, while yet inadequate and falls short of the desired goal, will nevertheless go a long way toward bringing about that social and economic security which is so essential to the spiritual welfare and human dignity of every American citizen.

RESOLUTION ADOPTED BY THE CALIFORNIA COMMISSION ON INTERSTATE COOPERATION

Whereas the Federal Unemployment Tax Act provides for a 3-percent excise tax upon pay rolls, and that a taxpayer who has paid into a State unemploymentinsurance fund may offset such payments against the said 3-percent Federal tax to the extent of 90 percent thereof, provided that the State unemployment-insurance law is certified by the Secretary of Labor as being in conformity under the provisions of the Federal Unemployment Tax Act; and

Whereas the Federal Unemployment Tax Act requires that certain provisions be included in a State unemployment-insurance law in order that the same may be certified; and

Whereas the said Federal Unemployment Tax Act further provides that on December 31 of each calendar year the Secretary of Labor shall certify to the Secretary of the Treasury each State whose law he has approved and that the Secretary of Labor shall not certify a State law which he finds, after notice and hearing, has changed its law so that it no longer contains the provisions required in the Federal Unemployment Tax Act, or where the said Secretary has found that the State has failed to comply substantially with any of the required provisions; and

Whereas during December 1949, the Secretary of Labor threatened to refuse to certify the California Unemployment Insurance Act as being in conformity with the Federal Unemployment Tax Act on the ground that the California Unemployment Insurance Appeals Board had removed from the California statute the required provisions by interpreting them in a manner which the Secretary of Labor did not approve; and

Whereas the Secretary of Labor, through hearings held in Washington, D. C.. in December 1949, endeavored to coerce the California State Department of Employment and the California Unemployment Insurance Appeals Board into delegating to the Federal Government the power to interpret the California unemployment insurance law under threat of withholding cert fication upon failure to so agree; and

Whereas the failure or refusal of the Secretary of Labor to certify the California Unemployment Insurance Act would have imposed a retroactive tax burden of approximately $200,000,000 upon California taxpayers and further, would have caused the immediate suspension of the entire California unemployment-insurance program, including immediate cessation of the payment of benefits to unemployed workers in California; and

Whereas it is the opinion of the California Commission on Interstate Cooperation that the intent and purpose of the Congress of the United States was to delegate to a Federal official the duty to ascertain whether the State laws contained the statuory provisions required by the Federal Unemployment Tax Act, and that it was not the intent or purpose of the Congress to authorize any Federal official to dictate to a State unemployment-insurance appeals board, a State department of employment, or the State supreme Court the interpretation of State laws; and

Whereas there is no effective judicial review of a decision of the Secretary of Labor for the protection of a State: Now, therefore, be it

Resolved, That the California Commission on Interstate Cooperation requests the Council of State Governments to take immediate action and to sponsor amendments to the Federal Unemployment Tax Act so as to provide, in effect, the following:

(1) That the power and authority of the Secretary of Labor under the provisions of the Federal Unemployment Tax Act be limited to a determination as to whether or not State unemployment-insurance laws contain the statutory provisions required by said Federal Unemployment Tax Act;

(2) That certification of a State law shall continue so long as such required provisions are contained in said State law, and so long as any judicial proceedings with respect thereto are pending; and

(3) That, if after hearing, the Secretary of Labor determines that a State law does not conform to said Federal requirements, adequate judicial review be provided; and be it further

Resolved, That the executive secretary of this commission be directed to forward copies of this resolution (1) to the executive secretary of the Council of State Governments with the urgent request that this matter be immediately considered by the board of managers of said council so that remedial proposals may be immediately considered by the Congress of the United States; and (2) to the president of the National Association of Attorneys General requesting their immediate cooperation in the presentation of said remedial proposals.

STATEMENT BY W. R. BULL, DIRECTOR OF SOCIAL SECURITY AND INSURANCE DEPARTMENT, NEW JERSEY STATE CHAMBER OF COMMERCE, NEWARK, N. J.

INTRODUCTION

Mr. Chairman and members of the Senate Finance Committee, my name is W. R. Bull. I am director of the social security and insurance department of the New Jersey State Chamber of Commerce, and secretary of the social security committee of the State chamber.

The membership of the State chamber consists of more than 1,500 business and industrial firms in New Jersey. The social security committee is composed of 40 executives from representative firms all of which are affected by and interested in the Social Security Act and its impact upon our present and future economy. The State chamber and its social security committee have given much time and careful consideration to the problem of revising the provisions of the Social Security Act. The basic premises from which we began should be clearly stated. General concepts

We believe that the old-age and survivors' insurance provisions of the Social Security Act should provide a basic floor of income at retirement and that coverage under these provisions should as far as possible be universal. We feel that any changes should be made within the confines of the present law and within our ability to meet not only the present costs of this program but also the future costs, which must of necessity rise.

We are hopeful that as a result of the study of social security by this committee the present imbalance between the old-age and survivors' insurance program and old-age assistance will be corrected. Despite the fact that the original intent of the Social Security Act was to supplant old-age assistance payments by insurance payments this goal has not been reached. There are at this time about 60 percent more persons receiving old-age assistance than are being paid benefits under the old-age and survivors' insurance program; furthermore, the average old-age assistance payment is nearly 100 percent larger than the average benefit under old-age and survivors' insurance.

In view of this situation we feel that the provisions in H. R. 6000 calling for increased Federal matching contributions to States for old-age assistance are not in accord with the basic tenet of our social security system. We therefore recommend that our insurance program be strengthened and extended so the Federal Government may withdraw at the earliest possible time from the StateFederal public assistance program and the statutory requirements necessary to carry out this provision should be included in the law.

It is in the light of these primary concepts that we respectfully submit the following recommendations.

Extension of coverage

We recommend that coverage under old-age and survivors' insurance be extended even beyond the limits set forth in H. R. 6000. In fact, we are in favor of universal coverage insofar as it is practicable, whereby a basic, minimum floor is provided for virtually all gainfully employed persons. By providing the broadest possible coverage the problem encountered at the present time with individuals who fluctuate between covered and uncovered employment would be largely eliminated, thus reducing in large part the need for future old-age assistance payments.

Retention of present tax base

To keep our system in line with this basic floor concept, which is the basis of all social insurances, we strongly urge that the taxable wage base remain at $3,000 and that benefits be computed from that base. We deem this basic floor concept essential if we are to preserve our traditional incentives of thrift and self-reliance, whereby the individual may build for himself additional security when he has earnings greater than his basic requirements.

Revision of benefit formula

Payments to beneficiaries under old-age and survivors' insurance do not provide a basic floor income when measured by the present cost of living. Accordingly, we recommend that the benefit formula be increased. We are concerned, however, that both the present and the future costs be kept in mind when an increase in the benefit level is considered. We, therefore, suggest that the minimum primary benefit be increased to $25; but we also suggest that the maximum primary benefit proposed in H. R. 6000 should be altered in view