will be alleviated when our society provides the increases in Social Security payments which are needed to allow older people to more nearly keep pace with our expanding economy.

With others, the problem will be eased when the Congress blankets in for minimum Social Security payments those over age 70 who did not have an opportunity to qualify during their working years.

Allowing others to earn up to $2,400 annually without loss of Social Security benefits will not only provide more income for another large segment, but it will provide our labor force with the benefit of their skills and experience. Furthermore, a substantial improvement in the retirement income credit is definitely needed to provide more nearly equality of tax treatment for those older Americans who, in cooperation with their board of education or other employer, have built up for themselves a modest, if fixed, pension or annuity.

Senator SMATHERS. All right, sir.

Mr. Giddings, thank you very much.

May I ask you just this question? With respect to these recommendations, have you had an opportunity or have you learned from the Treasury what they consider that each one of them would cost the Government?

Mr. GIDDINGS. No. We have no way of determining an estimate and we have not learned that Treasury has made such an estimate. Senator SMATHERS. All right.

Mr. Norman has indicated he will be willing to try to find this out for us from Treasury. (A letter providing this information was subsequently received from the Treasury Department, as follows:)

Mr. J. WILLIAM NORMAN,

TREASURY DEPARTMENT, Washington, D.C., August 3, 1966.

Staff Director, Senate Special Committee on Aging, New Senate Office Building, Washington, D.C.

DEAR MR. NORMAN: The following revenue estimates are provided in response to your requests. The estimates are based on our presently available information and our understanding of the details of the proposals. They could be modified by later information.

1. Extra $600 exemption for aged dependents over 65. Estimated at $0.4 billion.

2. Raise the $600 gross income limit for claiming as dependents persons over 65 to $1,200. Estimated at $50 million. It would cost about $55 million if the limit were changed from gross income to adjusted gross income. Lowering the age limit to 60 would add about $15 million to the cost of either version of this proposal.

3. Allow the deduction of medical expenses paid on behalf of persons aged 60 or over with gross income not in excess of $1,200, subject to present floors on medical deduction, even though the 50 percent support provision is not met. Since these expenses have never been deductible there is little to go on, but the cost may be on the order of $15 million.

4. (a) If the 50 percent support test is met, a taxpayer would be allowed to claim an exemption for persons over 18 who are not students, where their adjusted gross income does not exceed $600, even though their gross income may be greater than $600. Assuming this provision adds 10 percent to the number of dependents who could be claimed, the cost would be roughly $50 million. About $40 million would be attributed to relatives 60 years of age or older.

(b) Assuming proposal (2) were already in effect, the additional cost of moving the $600 limitation on other than aged dependent's income from gross income to adjusted gross income would be about $25 million. This liberalization would affect all dependents aged 19 to 64 except full-time students. About $10 million would be attributable to extra exemptions for persons 60 to 64 years of age.

5. This proposal would permit the purchase of special U.S. Bonds, the interest on which would be payable to a designated person 60 years of age or older and would be taxable to him rather than to the owner of the bonds. This would decrease the use of some existing trust arrangements and would attract taxpayers not interested in setting up a trust. The cost would be appreciable, but we have no satisfactory way of estimating it. It would benefit only taxpayers with at least moderate incomes and a considerable amount of liquid assets. 6. This would provide that in a jurisdiction where an individual is under legal obligation to support an aged relative, the income of a trust set up for such a purpose would be non-taxable to the grantor under the same circumstances that it would be in jurisdictions with no such obligation. The direct revenue involved would be limited, but data for an estimate are lacking.

7. It is proposed that section 214 of the Internal Revenue Code be amended to provide that a single man be allowed to deduct the expenses of caring for a dependent 60 or over who is physically or mentally incapable of caring for himself without regard to the $3,000 income limit. This provision is now available to women, widowers and husbands with incapacitated wives. The cost may run about $3 million.

8. In the case of married women and husbands with incapacitated wives, raise from $6,000 to $7,000 the income limit beyond which expenses of caring for a dependent is reduced dollar for dollar, but only where dependent is over 60 and incapable of self support. The cost may run about $2 million.

Sincerely yours,

STANLEY S. SURREY,
Assistant Secretary.

Senator SMATHERS. As you know, the Treasury's estimate of revenue loss is always surprising and overwhelming if they are opposed to a proposal. If they are not, it does not cost very much.

Mr. GIDDINGS. As you know, Senator, we have discovered that fact. We have had a number of pieces of legislation before the Congress over the past several years; and we believe the Congress has made some wise decisions on them in spite of the opposition of Treasury when items that may seem small in relation to the whole tax program nevertheless have been acted upon favorably by the congressional committees and by the Congress to provide a degree of tax equity to meet certain specified needs of older people.

Senator SMATHERS. Yes, sir.

Well, thank you.

We think the Congress will continue to move in that direction. We appreciate these recommendations which you have made and I am glad to say that I as one member of the committee agree with all of them.

Thank you very much.

The committee will stand in recess until further call of the Chair. (Whereupon, at 12:10 p.m., the committee recessed, subject to the call of the Chair.)

APPENDIXES

APPENDIX A

LETTERS TO WHICH CHAIRMAN REFERRED IN HIS OPENING STATEMENT

DEAR SENATOR SMATHERS:

MAY 21, 1966.

I am a schoolteacher, the sole support of my fifteen year old daughter and my father and mother, aged 82 and 78, respectively.

At the time of my divorce I went to live with my parents in their home, hoping to provide a stable atmosphere for my daughter, who was then two years old. My parents supported us on a very limited income and assisted me in finishing my college education. This was a tremendous financial burden for them, especially in view of the fact that, although I had tried many times, I was unsuccessful in obtaining enforcement of a Court order for child support from my former husband.

I obtained a teaching position in 1958 and have taught in Ohio and Florida public schools to the present time. My teaching field is in the area of exceptional children the mentally retarded, emotionally disturbed, and physically handicapped.

This area of education requires extra training, in addition to the normal requirements for regular teaching certification. At present I am working on the master's degree program in special education, through extension courses and summer school, from the University of Florida. With the exception of nine semester hours last summer, for which I received a $200 Florida State scholarship, I have paid for all these extra courses myself. (I enjoy working with these children, and I believe I have been somewhat successful in helping them. I find it very gratifying and personally rewarding; although many teachers are not inclined to go into this field because of the fact that it requires extra training, certification requirements are more demanding, and there is no extra salary increment for public school teachers of the handicapped-at least in the areas in which I have taught.)

My salary for 1958 was $3,397.83. For 1965 it was $5,743.01. Family medical expenses during these years were staggering. My father, crippled with arthritis, has been confined to a wheelchair since 1958. My mother has had several hospital confinements and major surgery during this period. In 1958 the medical and drug costs were $795.00; in 1959, $897.07; in 1960, $1,318.25; in 1961, $1,364.62; in 1962, $1,106.24; in 1963, $1,093.44; in 1964, $1,420.46; and in 1965, $1,466.55. (The latter figure does not include bills which have not yet been paid.) In eight years, nearly one fourth of my yearly salary has gone for medical and drug bills, primarily for my parents.

In the Spring of 1960 I was notified by the Internal Revenue office that my tax return for 1959 was being audited. They were questioning my dependency claim for my mother and daughter. My father's social security benefits amounted to about $700 yearly, so I did not claim him as a dependent. At this time I was paying the taxes on their home (which I was not allowed to take as a deduction), food costs, utility, medical, and clothing bills-everything-outside of my father's contribution.

Because I had claimed my mother as a dependent in 1958 and that fact had not been questioned, I had no reason to foresee that I should save receipts for clothing expenditures for her. This was one of the government's main objections. As nearly as I could estimate, I had spent about $226 for her clothing for that year. Since I had no receipts, I was told, they would allow $80.00 as a "reasonable amount when not verified."

1 See p. 1.

From April until July of 1961, I was in a mental turmoil as a result of the harassing letters from the IRS. My teaching assignments are frequently exhausting; yet I had to take time to go over all my statements and answer their innumerable requests for verification, and fight the mounting feelings of frustration at their 'disallowed' amounts, etc., etc., etc.

*

Much has been done, legislatively, to rectify previously existing inequities in many important areas. This has been done, I feel, as a result of the vociferous outcries and tremendous publicity campaigns of many organized groups.

The people in my position have no lobby; we can join no boycott; we do not march with posters and banners in protest parades. But hopefully, with the help of investigators such as yourself, some consideration will be given to those who are trying, despite great odds, to do what is morally right.

I have now been notified that my 1965 tax return is being audited.

Again, the dependency of status of my daughter and my parents is being questioned. My income, after deductions, was $2,832.32 last year.

What is not reflected in the return is the fact that in order to support my family last year, I withdrew over $900 in Teacher Retirement Funds from Ohio the entire amount-and $1,300-my total credits-from the Florida Teacher Retirement System. In addition to these amounts, I was forced to borrow $1,000 from a personal friend. (In fact, my indebtedness at this time is so great that a lawyer advised me to declare personal bankruptcy. However, I feel that this is the dishonest way out. I incurred the debts and I will pay them. But I do need time to discharge my obligations.)

Investigating the problems of those who care for their aged parents might be compared to examining an apparently harmless skin lesion and discovering cancer. Those of us who want to keep our parents with us are doing so under the most trying economic and psychologic circumstances. Increasing the exemption allowance for aged parents is a small step in the right direction. No tax assistance, however, can solve the potential emotional problems which can arise in families where there are three generations. I would like to see concerted social action directed toward solving these problems also.

Each generation has its own mental and physical problems which can produce conflict with the other family members. (In my own case, all of these tensions, aggravated by financial problems which worried my parents also, resulted in the need for psychiatric treatment for my daughter. This remains one of my unpaid debts.)

Two prominent contributing factors in emotional disorders are undue anxiety and stress. These factors are predominant in households where each member is aware that financial security and basic needs are threatened daily. Where these needs are dependent upon one woman, whose varying roles as breadwinner and homemaker create almost superhuman demands, and whose loyalties as mother and daughter are often in conflict, the situation becomes overwhelming.

I feel that I speak for many women in my circumstance. There must be thousands of women all over the country-divorcees who are supporting children and parents without assistance-who need tax relief at least. The special tax table for the 'Unmarried Head of Household' affords little concession to the woman who is trying to hold her family together. This cold, unyielding categorization grants no discount for working while you are concerned about a sick child or disabled parents at home. The 'attached schedules' verifying amounts spent for support do not show the petty economies practiced in buy. ing at bargain-basement sales and in menus of weiners or hamburger-and those, only on occasion. There is no special column for totaling the night hours spent in hospital corridors, worrying about a parent's condition, knowing it was necessary to get to work on time the next day. There are no reductions in tax rates for visits to the doctor which were not made because there was no money to pay for them.

I do not pretend that these conditions are peculiar only to those who care for their parents. To others who share my experiences let me say: I hope someone does something about your plight, too. But it does add insult to injury when, after trying to maintain a good, positive, healthy outlook on life and persuading yourself that these are just the necessary concomitants of today's living, you have to appear before an official of the IRS to explain why you should not have to pay extra taxes for the high and riotous manner in which you are carrying on.