Mr. CHRISTOPHER. If she inherited this property, whatever it brought is profit in its entirety?

Mr. DRIVER. It would be charged to her just exactly as if she had received it in cash.

Mr. DORN. Thank you, gentlemen, very much.

Mr. DORN. Our colleague from Michigan, Mr. Rabaut, desires to make a statement in support of H. R. 904. Mr. Rabaut?

STATEMENT OF HON. LOUIS C. RABAUT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. RABAUT. Mr. Chairman, I appreciate the opportunity to appear before your committee in support of H. R. 904, the bill I reintroduced in this Congress to provide that, in determining income of World War I veterans and their widows for the purpose of ascertaining eligibility for pensions, payments under title II of the Social Security Act shall not be taken into account.

Our World War I veterans are now past 60 years of age. A very great number of them are retired and drawing social-security benefits. A few have been fortunate enough to have been associated with firms offering company pension plans. During their productive years they drew the veteran pension benefits to which they were entitled.

Now, in the sunset of life, they find that if their social-security benefits and, in some cases, coupled with their company-pension benefits, exceed the income limitation they must forfeit their veteran pension.

The income limitation as established by Public Law 357, 82d Congress, May 23, 1952, as $1,400 for an unmarried veteran and $2,700 for a married veteran with a minor child or children. I realize, Mr. Chairman, that the basic purpose of this law was intended primarily to afford a modest allowance to seriously disabled veterans who are in limited financial circumstances, but whose condition is not the outgrowth of their war service.

I fully realize, too, that it was not intended to provide full support. But the legislation we enacted in May 1952 which increased the income limitation was predicated on the increased cost of living. A look at the Consumer Price Index of the Bureau of Labor Statistics, United States Department of Labor, for May 1952, shows the cost-ofliving index as 113.0 points, and for May 1957 it is 119.6 points, or an increase of 6.6 index points. This represents a tremendous increase in the cost of living for all of us, but especially for our World War I veterans who, mostly retired now, are living on fixed incomes.

Mr. Chairman and members of the committee, I plead for favorable consideration of my bill which will allow our older, retired citizens to enjoy the social-security benefits which they have earned, and that they not be taken into account in determining their eligibility to retain their pension benefits.

Mr. DORN. Mr. Stover, of the Veterans of Foreign Wars.

STATEMENT OF FRANCIS W. STOVER, LEGAL COUNSEL, NATIONAL LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS, UNITED STATES

Mr. STOVER. Mr. Chairman and members of the subcommittee, my name is Francis W. Stover, legal counsel for the national legislative service of the VFW. I have no prepared statement.

Mr. DORN. Just make any comments you care to make, Mr. Stover. We are glad to have you with us.

Mr. STOVER. I appreciate the opportunity and privilege of appearing here this morning to present the national viewpoint of the Veterans of Foreign Wars.

I would like to read into the record, if I may, several resolutions which we adopted at our last national encampment, and which resolutions control our legislative activities during this session.

Mr. DORN. Without objection, go right ahead, provided they are not too long.

Mr. STOVER. We, of course, have overall resolutions which favor the increasing of the limitation of the present $1,400 and $2,700. We feel that is too restrictive and not in keeping with the present high cost of living. However, we do have several specific resolutions which apply to several of these bills, which are under consideration today. Mr. DORN. How much would you suggest the $1,400 and $2,700 limitations be increased?

Mr. STOVER. Our delegates which met in Dallas last year favor the present $1,400 be increased accordingly up to $2,700 and the $2,700 be increased accordingly up to $3,600.

Our resolution No. 2 (d) states as follows:

When a person otherwise eligible to pension is legally eligible to and does waive receipt of a fraction or all of an annuity not recoverable, the amount so waived shall not be considered income for part III purposes.

Pursuant to that resolution, we requested and Congressman Fino kindly introduced a bill which is under consideration here today. Mr. FINO. H. R. 3225.

Mr. STOVER. That is right. Our resolution 2 (h) states:

Any amount of funds expended by a widow to cover the cost of last illness and burial expenses of her husband (veteran) should not be considered income for pension purposes during the calendar year in which such expenses were paid.

We have two resolutions dealing with the insurance limitations, as imposed in the consideration of income for pension purposes. Resolution No. 230, which may give you some views as to the thinking of the delegates, reads as follows:

Whereas commercial life insurance paid to a beneficiary upon the death of a veteran is considered as income for death pension purposes; and

Whereas this matured commercial life insurance is merely a return for premium payments made by the veteran during his lifetime; and

Whereas the proceeds of such matured commercial life insurance paid to widows creates a bar to entitlement to death pension benefits; and

Whereas in most cases where matured commercial life insurance is paid to widows a greater portion or sometimes all of such proceeds from this commercial life insurance is used by the widow to defray funeral, hospital, and other expenses, generally accumulated during the veteran's terminal illness: Now, therefore, be it

Resolved by the 57th National Encampment of the Veterans of Foreign Wars of the United States, That the Congress be memorialized to amend the Insur

ance Act to provide that commercial life insurance paid to widows be not considered for death-pension purposes.

Our resolution No. 266 is along the same lines, and it would accomplish the same purpose as resolution No. 230.

We did not have any specific resolutions concerning the exclusion of bequests and inheritances as defined in the Internal Revenue Act, nor did we have any specific resolution concerning the State bonuses not being considered income. However, I feel sure that, considering and in view of the long history of the VFW, our organization would certainly endorse these bills liberalizing the definition of income. In conclusion, rather than belabor the subcommittee with a long analysis of the philosophy behind this pension legislation, and the definition of income, I would like to say that our organization would favor the reporting and passage of one of each of these bills that deals with the various categories of income.

I thank you very much for the privilege of appearing here this morning.

Mr. DORN. Are there any questions?

If not, thank you, Mr. Stover.

I might say that you have done a fine job for your great organization.

Mr. STOVER. Thank you very much.

Mr. DORN. Mr. Kraabel, of the American Legion.

STATEMENTS OF B. G. DAVIS, LEGISLATIVE ASSISTANT TO THE DIRECTOR, NATIONAL LEGISLATIVE COMMISSION; T. 0. KRAABEL, DIRECTOR, NATIONAL REHABILITATION COMMISSION; CHARLES W. STEVENS, ASSISTANT DIRECTOR, NATIONAL REHABILITATION COMMISSION; AND JOHN MEARS, LEGAL CONSULTANT, NATIONAL REHABILITATION COMMISSION, THE AMERICAN LEGION

Mr. DAVIS. Mr. Chairman, I am B. G. Davis, legislative assistant to the director of the national legislative commission. We have three witnesses this morning, Mr. T. O. Kraabel, director, national rehabilitation commission, accompanied by Mr. Charles W. Stevens, assistant director, and Mr. John Mears, legal consultant. We do not have a prepared statement. Mr. Kraabel will testify.

Mr. DORN. Mr. Kraabel, you go right ahead and make whatever statement you think is desirable.

Mr. KRAABEL. Mr. Chairman and members of the subcommittee, again the American Legion is very appreciative of the opportunity of being heard on some of the bills which encompass principles and expressions on which we have had mandates over the years, and in which we are vitally interested.

We have these classified in four groups, Mr. Chairman, as to those which we would favor. If it is all right, I would like to just enumerate those.

H. R. 416 and 5815 would permit the exclusion of life insurance payments in the annual income computation for death pension-as to 416-or compensation and indemnity compensation purposes.

We favor the exclusion of a limited amount of other than Government insurance, say $3,000, and for dependency and indemnity com

pensation purposes, favor the exclusion of all payments under United States Government life insurance and national service life insurance contracts.

Then the second group, H. R. 3225, 6411, 6837 and 6880, provide for the waiver of certain annuity payments to bring income within the statutory limitation for pension purposes. We favor H. R. 6880 as it does not require an irrevocable waiver; it does provide that income from a pension or annuity which is waived or renounced, and is not thereafter payable, will not be considered as income for pension purposes.

H. R. 2007, in the third group, would exclude the expenses for final illness and the funeral and burial of the person who served in determining annual income for death pension purposes-that is, for the widow-whether such payments are made in the year of the veteran's death or the following year. We favor that.

Then the final group, S. 2080, H. R. 5135, and 5212, have the identical purpose of excluding payment of a State bonus based upon service in the Armed Forces, or similar cash gratuity, to a veteran or his survivors from the annual income computation for disability or death pension purposes.

We favor the enactment of S. 2080, which has passed the Senate. In connection with this subject, which has had considerable discussion today, we have over the years looked upon the Federal adjusted compensation and the State bonuses as more or less an offset of the monetary loss suffered by the individuals who went into service in wartime while the civilians were being given higher wages in employment.

The payments, whenever made, should be looked upon as an additional pay for military and naval service, not as income which might prevent the payment to totally disabled war veterans and to widows and children of deceased veterans.

It is because of this that we strongly support enactment of legislation to exclude State bonus payments from computation of income within the statutory $1,400 and $2,700 limitations for pension pur

poses.

The Federal adjusted compensation payments were excluded by law years ago.

Those are the groups that we favor of the number that you have up for discussion today, Mr. Chairman.

Mr. DORN. Are there any questions?

Does that complete your statement?
Mr. KRAABEL. That is right.

Mr. DORN. Thank you very much. We are always glad to have you appear before us.

Mr. Fino, did you have a statement you wanted to make?

Mr. FINO. I think Mr. Bernstein and Mr. Stover of the VFW made reference to my bill, H. R. 3225, which would permit a veteran to waive part of his retirement pension or annuity in order to be eligible for a veteran's pension.

The purpose of this bill is to cure certain inequities and unfairnesses that exist in the present law. Of course, an additional purpose is to overcome the effect of the opinion of the General Counsel to the VA which was dated March 7, 1955, to the effect that under certain circum

stances, acceptance by a veteran of less than all of his pension or retirement benefit is not acceptable for the purposes of qualifying for a nonservice-connected pension. I believe there is merit to this bill and should be reported out.

That is the extent of my testimony at this point, Mr. Chairman. Mr. DORN. Thank you.

Are there any other witnesses to be heard?

If there is nothing further, the committee will stand adjourned, and without objection, I will insert at this point a letter from the Minneapolis Municipal Employees Retirement Board, a letter from VA General Counsel, and a letteer from AMVETS.

MUNICIPAL EMPLOYEES RETIREMENT BOARD,
CITY OF MINNEAPOLIS, MINN.,

Hon. WALTER H. JUDD,

United States Representative,

July 23, 1957.

Washington, D. C.

DEAR MR. JUDD: In accordance with your suggestion, I have prepared a very brief statement in connection with the waiver of pension bill H. R. 6837, which I will apreciate very much if you will file with the Veterans' Affairs Committee. I want you to know that I am grateful to you for taking time out from your busy schedule to present this matter before the Veterans' Affairs Committee. I know how effective you are, and there is no doubt in my mind as to the outcome. Thanking you again for your efforts in our behalf, I am Sincerely yours,

A. R. JOHNSON, Executive Secretary.

MUNICIPAL EMPLOYEES RETIREMENT BOARD,
CITY OF MINNEAPOLIS, MINN.,

July 23, 1957.

Hon. OLIN E. TEAGUE,

Chairman, Veterans' Affairs Committee,

House of Representatives, Washington, D. C.

Dear Mr. TEAGUE: H. R. 6837 introduced by Congressman Judd relating to waivers of pensions by veterans now before your committee is of paramount importance to the veterans affected.

We here are confronted with two major problems:

1. The policy of the Veterans' Administration permitting waivers for & number of years and then suddenly in May of 1956 discontinuing this practice.

2. The inability of the retired veterans to legally refuse to accept an increase in their pensions granted by the local authority thereby losing their veterans non-service-connected disability pension due to excess income.

Considering point No. 1, may I call your attention to the following congressional acts which, permit certain retirants to waive a part of their pension in order to secure the veterans' non-service-connected disability pension:

Section 3. Public Law 555 of the 82d Congress permitting retired civil service employees to waive:

Section 15, Public Law 746 of the 83d Congress permitting railroad employees to waive;

Public Law 749 of the 83d Congress permitting firemen and policemen of the District of Columbia to waive.

It is assumed that the Veterans' Administration based their policy of permitting waivers on these congressional acts but after a period of time suddenly decided they were without authority except in the above-cited cases and discontinued the practice causing considerable hardship to those affected.

If it was proper that Congress should adopt the above acts, and the writer most assuredly is of the opinion that it was, why should not this privilege be extended to other veterans? If it is considered that the non-service-connected