X. TAXATION

A. REVENUE ACT OF 1964

Provisions in Public Law 88-272, Revenue Act of 1964 (approved February 26, 1964), which benefit the elderly:

1. Sale of residence. Section 206 permits a taxpayer 65 years of age or over who sells his residence occupied by him for more than 5 of the 8 years preceding the sale to exclude from his taxable income any gain attributable to up to $20,000 of the sale price.

2. Medicine and drug expenses. Section 211 permits deduction of all medicine and drug expenses of a person over 65, whether paid by such person himself or by a relative upon whom he is dependent, instead of requiring that the first 1 percent of such expenses be disregarded, as must be done when the expenses are those of a person under 65.

3. Minimum standard deduction. Section 112 permits a "minimum standard deduction" for taxpayers who elect not to itemize nonbusiness deductions. Being based upon the number of personal exemptions to which the taxpayer is entitled, this section particularly favors taxpayers over 65. The minimum standard deduction for a couple both of whom are over 65 will be $600, and such a couple will have no Federal income tax on the first $3,000 of income.

4. Retirement income credit. Section 202 provides a more liberal retirement income credit under certain circumstances where a husband and wife, both of whom are over 65, file a joint return. It provides a credit half that of the husband for a wife who has not had prior earnings experience.

5. Dividends exclusion. Section 201 increases from $50 to $100 the amount of dividends which are permitted to be excluded from gross income. (Exclusion will be $200 for a couple if they file a joint return and each has at least $100 of dividend income.) This will be of particular benefit to senior citizens who depend upon dividend income during retirement. While the 4 percent dividends received credit was repealed, the net effect should benefit those who receive dividends, with the exception of those with large total annual dividends.

Summary: As a result of enactment of this act, it is estimated that older American taxpayers will enjoy a tax saving of $675 million a year, as their total tax liability dropped from over $4 billion to less than $3.4 billion a year.

B. LABOR RETIREMENT HOMES

Public Law 88-380 (July 17, 1964) permits exclusion from taxable income of certain income earned by a labor organization which is used to establish, maintain, or operate a retirement home, hospital, or other facility for the exclusive use and benefit of the aged and infirm members of such labor organization, which income might otherwise be taxed as "unrelated business taxable income."

XI. VETERANS

A. COMPENSATION, PENSIONS, RETIRED PAY, AND ANNUITIES

1. Public Law 88-21 (May 15, 1963) provided a cost-of-living increase in rates of dependency and indemnity compensation payable to parents (and other dependents) of veterans dying of serviceconnected causes.

2. H.R. 1927, which revises the pension program for veterans of World Wars I and II and the Korean conflict, passed the House and the Senate in final form on October 3, 1964, and was sent to the President.

3. Public Law 88-132 (October 2, 1963) provided increases in armed services retired pay and directed that there be an automatic increase in each future year when the rise in the Consumer Price Index amounted to 3 percent or more during the immediately preceding year. 4. H.R. 9718 gives credit for Reserve retired pay purposes for active commissioned service in the Public Health Service and the Coast and Geodetic Survey during times when such organizations have the status of military services. It passed the House and the Senate and was awaiting action by the President on October 3, 1964.

5. S. 2021 proposed that the Contingency Option Act be amended. to protect the right to annuities of survivors of a retired serviceman who dies after meeting all statutory requirements for receiving retirement pay and making an election for a reduced annuity but before receiving his first retired pay. It was passed by the Senate on September 24, 1964.

6. Public Law 88-445 (August 19, 1964) prohibits downgrading a disability rating of any degree for compensation purposes after such rating has been in effect for 20 or more years, unless the rating was based upon fraud.

B. NATIONAL SERVICE LIFE INSURANCE

1. Public Law 88-355 (July 7, 1964) authorizes the inclusion of a total disability income provision in national service life insurance policies, providing for the payment of total disability income benefits if the insured becomes totally disabled prior to age 65, instead of prior to age 60, as previously required.

2. Public Law 88-364 (July 7, 1964) raised from 60 to 65 the age limit on waiver of insurance premiums for national service life insurance policies.

3. H.R. 220 proposed that veterans be permitted to convert term policies of national service life insurance to a new modified level premium plan. This facilitates conversion by World War II veterans of their term insurance to avoid the periodic increase in term premiums which would otherwise culminate in a crushing burden when they reach advanced ages. This bill passed the House on April 1, 1963, and the Senate, amended, on June 20, 1963. No further action was

taken on this bill, but its substance was added as an amendment to H.R. 1927 (see XI-A-2) and passed as a provision in that bill.

4. In passing H.R. 1927 (see XI-A-2) the Senate added an amendment which would have reopened the national service life insurance program for 1 year to veterans who were eligible after October 7, 1940, and before January 1, 1957. This was compromised in conference to limit this privilege to veterans with service-connected disabilities and those who are ineligible for life insurance coverage by commercial insurance companies, even at substandard rates. The conference report was adopted in the Senate and the House on October 3, 1964.

C. HOSPITALS AND NURSING HOMES

1. Nursing homes (see IV-C-3).

2. Report of Special Subcommittee on Construction of Military Hospital Facilities (see IV-C-4).

D. FEDERAL CIVILIAN EMPLOYMENT

1. Employment of retired Regular officers (see II–B–7).

XII. FEDERAL CIVILIAN PERSONNEL

A. RETIREMENT

1. H.R. 8427 proposed an improved retirement and disability system for a limited number of employees of the Central Intelligence Agency whose work is of a demanding or specialized nature. passed both Houses and on October 3, 1964, was awaiting action by the President.

It

2. S. 745 would have permitted certain Foreign Service officers to make an election which would provide or increase survivor annuities for their widows. After passing the Senate and House, it was sent to conference. The House agreed to the conference report on September 30, 1964, but no further action was taken by the Senate.

3. H.R. 2155 proposed an increase in civil service retirement annuities. It was reported from the House Post Office and Civil Service Committee on September 22, 1964, but no further action was taken before adjournment.

B. EMPLOYMENT OF RETIRED REGULAR OFFICERS

Public Law 88-448 (see II-B-7).

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XIII. GENERAL AND MISCELLANEOUS

A. PRESIDENT'S MESSAGE

President John F. Kennedy on February 21, 1963, transmitted to Congress his message entitled "Elderly Čitizens of Our Nation." This message contained 28 major recommendations on the needs and interests of the elderly.

B. SPECIAL COMMITTEE ON AGING

Resolutions extending the life of the Senate Special Committee on Aging for 1 year each were passed by the Senate on March 14, 1963, and January 30, 1964, respectively. The latter resolution continues the committee through January 31, 1965.

C. SENIOR CITIZENS' MONTH

By proclamation signed April 18, 1963, President Kennedy designated May 1963 as "Senior Citizens' Month." A similar proclamation was signed by President Johnson on March 26, 1964, so designating the month of May 1964.

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