In summary, our views are specifically (1) that the present income limitations of $1,400 and $2,700 should be raised to not less than $3,000 and $4,000, respectively, and (2) that all social-security benefits and insurance payments to a widow or dependents should be excluded from the computation of the annual income in determining eligibility for a pension, and likewise (3) that any funds received from the sale or rental of a domiciliary home of a widow or dependents should not be included as income in the computation of the limiting amount governing eligibility for a pension.

The association thanks the committee for affording us the opportunity to present our views on this important matter now before you for your consideration.

Mr. DORN. We now hear from a former member of this committee, the gentleman from Pennsylvania, Mr. Byrne.

STATEMENT OF HON. JAMES A. BYRNE

Mr. BYRNE. Mr. Chairman, I appreciate the opportunity of having the committee consider my bill, H. R. 6411, which I introduced March 27 at the request of a group of retired policemen in the city of Philadelphia who felt that they were being discriminated against as a result of the current interpretation of income limitations applicable to nonservice-connected pensions.

The bill proposes that in determining the annual income limitations-which as the members of the committee know are $1,400 if the veteran has no dependents or $2,700 if he has a wife, child, or children-there shall not be included in such determination any pension which has been waived by retired policemen.

Under existing law, civil-service retirement, railroad retirement, and retirement from the District of Columbia may be waived, if the retired person desires, in order to qualify for a monthly pension by the Veterans' Administration in the amount of $66.15; $78.75 if the veteran is 65 or more years of age; $135.45 if the veteran is helpless or blind. This provision does not apply to private pension plans or to pension plans administered by State or municipal government. Frankly, from an equitable standpoint, I cannot see why there should be any discrimination. If it is valid for the Federal Government to permit a Federal employee to waive a portion of his retirement annuity in order to obtain a veterans' pension when the Federal Government has paid at least one-half of the Federal retirement annuity, it seems only equitable that a private pension plan or one administered by a State or municipality which has not been the subject of a Federal contribution, should be permitted to be waived.

My bill, of course, is restricted to retired policemen and thus would not have broad application. I doubt that it would cost very much money. I certainly think that it is worthwhile legislation and legislation which could be enacted by the House with little or no difficulty.

Again, I appreciate this hearing and hope that the subcommittee and the full committee will see fit to report this bill favorably to the House.

Mr. DORN. We will now hear from our distinguished friend, Mr. Thompson of Louisiana. You go right ahead. You have a good adviser with you.

STATEMENT OF HON. T. A. THOMPSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA

Mr. THOMPSON. I thought somebody more familiar with the workings of your committee might help me. Congressman Long condescended to sit by my side and help me out on things I might not be able to explain.

I appreciate your allowing me to be heard on this this morning because it is a matter very pressing in my State and perhaps in other States. It has to do with the computation of annual income for the purpose of payment of pension for nonservice-connected disability or death in certain cases. It proposes to exclude from computation as annual income for purposes of nonservice-connected disability or death pension any payment of veterans' bonus by a State, Territory, possession of the United States, the District of Columbia or the Commonwealth of Puerto Rico to persons who served in the Armed Forces of the United States and their widows and children.

Under present law, payment of pensions to veterans of World War I, World War II, or the Korean conflict cannot be made if the veteran's annual income exceeds $1,400 if he is unmarried or $2,700 if he is married or if he has minor children. Also, in the case of death pensions to widows, pensions cannot be paid to any widow without child or to a child whose annual income exceeds $2,700. Under VA Regulation 1228, certain income, including adjusted compensation, is not considered in the computation of annual income as authorized by law. H. R. 5212 would not affect the existing exclusions in computing annual income, but would add an exclusion of any payment of veterans' bonus by a State, Territory, possession of the United States, the District of Columbia or the Commonwealth of Puerto Rico.

Adjusted compensation based on service in World War I is restricted to payments by the Federal Government. I feel that a like payment by a State government may well be considered in the same income category, since it is a monetary recognition of service rendered in time of war to those citizens who entered the Armed Forces to protect the State as well as the Nation.

Very briefly, my bill will allow my State to pay a much-deserved bonus to these pensioners of World War I or their widows or children. At present the way that the Federal law reads in many cases where you do have pensioners drawing a pension from the Federal Government the payment of a bonus will actually cause a loss to them instead of the bonus as was intended.

I submitted this bill in February of this year at the request of our director of the Department of Veterans' Affairs in Louisiana, Mr. David Bell. Mr. Bell has recently sold bonds, the proceeds of which will go to the payment of veterans' bonuses. These bonuses are not in my opinion to be construed as current income.

Had the State been able to do it years ago, they would have paid this bonus prior to any question arising from the pension payment by the United States. It is our hope that we will be able to pass this legislation in the very near future because many of the bonuses will have to be held up or maybe not paid at all for fear of being an economic loss in the long run to the man the bonus is to go to.

A similar bill has passed the Senate unanimously, I might say. The only difference between my bill, H. R. 5212, and S. 2080 is that they

have added in the Senate a provision which limits the effectiveness of the provisions of the bill. My bill, of course, makes it effective on enactment. The Senate bill puts a limitation of January 1, 1958.

I am agreeable to that being done because the bonus will have been paid by that time provided this legislation goes through. If the legislation does not go through, many of the bonuses will not be paid for reasons of not wanting to hurt the pensioner. But, on the other hand, it is our distinct feeling that if our State wanted to, we could pay this bonus and put a premium on dishonesty insofar as the pensioner or veteran is concerned. We could pay him and advise him informally not to report this amount on his income report to the Veterans' Administration.

We in Louisiana feel that would not be the proper thing to do. It has come to my attention that certain States have done this. I will not name the States. I am sure the records are available if the committee should care to check them. But several States have already paid such bonuses and because of the Federal limitations have advised informally the recipients of these bonuses to merely not report it on their annual income statement. Frankly, I do not think that is fair or proper treatment to the veterans and neither is it within the dignity of what a State department should do.

I hope, Mr. Chairman, I can get speedy and favorable consideration on this.

Inasmuch as it has passed the Senate unanimously in the form of S. 2080, I would have no objection to adding the limitations that the Senate bill has had imposed in it. I would appreciate as early consideration as possible on the bill.

I have my colleague here, your illustrious member of this committee, and if he should care to add to my testimony, I would welcome it. Mr. DORN. Dr. Long.

Mr. LONG. I would like to associate myself with the splendid statement just made by my colleague, Mr. Thompson, of Louisiana, and urge favorable consideration of this bill.

Mr. THOMPSON. Thank you, Mr. Chairman. I shall be available to you for any further information.

Mr. DORN. Mr. Christopher.

Mr. CHRISTOPHER. I think I understood you to say S. 2080 has a 1958 limitation. What effect would that limitation have on other States who might declare a bonus to their veterans at a later date if that has a 1958 limitation? Should it not be open-end legislation, so if the same condition arose in some other State that presently obtains in Louisiana, it would be taken care of? Why go about this thing one State at a time?

Mr. THOMPSON. It would be my distinct feeling, Mr. Christopher, that the limitation should not be included in the legislation as it is not included in mine. The situation either exists now or will exist perhaps in every other State in the Union. I think everyone should be given like treatment but make the law so they can receive this treatment and still be honest in making their reports.

Mr. CHRISTOPHER. I agree with the gentleman from Louisiana. Your bill does not have that limitation?

Mr. THOMPSON. No, it does not have the limitation. I only mentioned that it would be acceptable to me to include the limitation if

that were the sense of the committee in order to make it conform to the Senate bill and not require conference.

I would, first, prefer that the entire matter be settled once and for all. I have had extensive meetings with Mr. Higley and his chief counsel, Mr. Birdsall, I believe it is, on this matter. I frankly believe even though their report to the committee might have been worded in a way that it is hard to tell whether they approve or disapprove, it was my distinct feeling at the time of my conversations with them that they would have no real objection personally to this going through. They do know that if it were brought up and the matter were checked into in these other States who have paid bonuses in the absence of such legislation, that there would be embarrassment, and I would hope that would not occur.

Mr. CHRISTOPHER. I like your bill better than the Senate bill because I do not like the 1958 limitation. We will have other States paying bonuses. Many States have not paid any bonus and they will as they become financially able. We might just as well end this thing once and for all.

Mr. THOMPSON. I agree sir. As an expediency, I would accept the additional language. As a matter of principle, I should think the language should not be included. That is my position. Mr. CHRISTOPHER. Thank you. Mr. DORN. Any further questions? Thank you very much. Our next witness is Judge Lanham. We are happy to have Judge Henderson Lanham of Georgia, a very distinguished and able Member of the House.

STATEMENT OF HON. HENDERSON LANHAM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA

Mr. LANHAM. Thank you, Mr. Chairman. I appreciate the opportunity of appearing before you today. Last year I had the privilege of appearing before this committee urging the passage either of H. R. 8479 or H. R. 8480, both of which I introduced. No action was taken by your committee on either of these bills. Consequently, I am glad of the opportunity now afforded me to call the matter to your attention again and to urge that one of the two bills, now numbered H. R. 326 and H. R. 324, respectively, be reported favorably or perhaps preferably included with other amendments which may be proposed to other pension legislation.

These bills were introduced by me after the situation they are intended to correct was called to my attention by a friend of the widow, Mrs. Willie F. Mathis, 406 Chattanooga Avenue, Dalton, Ga., of a veteran, Sidney J. Mathis, who was injured in combat in World War I. When he died in 1954 the Veterans' Administration refused to put her on the pension list due to the fact that the veteran left a small amount of insurance payable to his widow out of which she had to pay the funeral expenses. Her pension began January 1955, and was issued under the provisions of section 503 (c), title 38, United States Code Annotated, which provides that pension shall not be issued to any widow without child whose annual income exceeds $1,400.

Mrs. Mathis inherited a farm from her husband from which she derives very little income. Having no income other than the pension

from the Veterans' Administration of $50.40 a month she has been forced to get a job and work to earn her living.

Mrs. Mathis desires to sell her farm but took the precaution of writing the Veterans' Administration in Philadelphia for a ruling on the status of her pension in the event she decided to sell the farm. The VA takes the position that any money realized by her from such sale above capital expenditures would be treated as income. An examination of section 503 (c) of title 38 failed to show that Congress intended the word "income" in that section to have another or different meaning than that ordinarily applied to that word.

The widow contends, and I am inclined to agree with her, that the meaning of the word "income" in the cited section should be the same as is applied in the laws relating to Federal income tax, section 102, title 26, United States Code Annotated. This section provides that the value of such property at the time of the husband's death should not be included in gross income. Section 1001 of title 26 United States Code Annotated provides how gain or loss is computed, the gain being excess of the adjusted basis. Section 1014 of title 26 provides that the fair market value at the time of the husband's death would be the adjusted base. These sections were written into the Internal Revenue Act of 1954. Mr. Mathis died on September 11, 1954, after these sections had become a part of the law.

Of course, the Veterans' Administration relies upon one of its regulations defining "income" differently.

I am including with this statement a brief summary of the law which we believe applicable to this problem.

The difference between the two bills, H. R. 324 and H. R. 326, is that the latter is the more comprehensive section and provides that in determining the income of beneficiaries, the Administrator of Veterans' Affairs shall not include certain amounts which are not considered as "income" for the purposes of the Internal Revenue Code of 1954. In contrast to this, H. R. 324 provides that in determining the income of beneficiaries, the Administrator of Veterans' Affairs. shall not include the value of certain property acquired by bequest, devise, or inheritance.

It is immaterial in the present case which bill is reported by the committee but I do hope that something will be done to correct this obvious misinterpretation of the law as applied to income which if exceeded prevents the widow from drawing her pension. I will appreciate your sympathetic consideration of this legislation and your reporting 1 of the 2 bills as you deem it advisable after your usual thorough consideration of the matter.

(The summary of the law referred to above follows:)

MISCONSTRUCTION OF THE WORD "INCOME" BY THE VETERANS' ADMINISTRATION PERTAINING TO THE RIGHTS OF THE WIDOW OF A VETERAN

Since Congress, in using the word "income" with reference to the pension of widows, as contained in title 38 of United States Code Annotated, gives no special meaning to said word, construing the statutes as to the intent of Congress, the ordinary meaning of the word should be applied.

See in this connection 59 C. J. section 577, pages 974-977, Statutes, which reads in part as follows:

"3. Meaning of language-a. Construction of words and phrases-(1) in general. While the meaning to be given a word used in a statute will be determined from the character of its use, words in common use are to be given their