any act of Congress in substitution therefor. The policy contained in the Social Security Act is adopted for purposes of this act, since the taxes herein are in place of the taxes under title VIII of the Social Security Act.

Section 7 sets up the procedure for the collection and payment of taxes, giving the Commissioner of Internal Revenue all powers necessary to enforce collections and making applicable other provisions of law contained in other statutes which may be useful in connection with the administration of this tax measure. By reason of the expansion in the coverage of this bill as compared with the present act, some taxpayers have begun to pay taxes under title VIII of the Social Security Act who will now find those taxes not to have been due.

Section 7 (e) provides for the adjustment of such payments made under title VIII of the Social Security Act and the taxes due under this measure, and will cover both the existing situation and any which may arise in the future.

Section 8 provides that the several district courts of the United States and the District Court of the United States for the District of Columbia shall have jurisdiction in connection with the enforcement of obligations under this measure.

Section 9 (a) prescribes that the term "employment" as defined in section 811 (b) of the Social Security Act is not to include service performed by an individual as an employee or as an employee representative. It is possible to interpret the present act in such a way that employee representatives be included, both under that act and title VIII of the Social Security Act. While this interpretation has not been given the language, it is now made clear that employee representatives can be covered only by the Carriers Taxing Act.

Section 9 (b) prescribes that the Secretary of the Treasury shall, at intervals not longer than 3 years, estimate the reduction in the amoung of taxes collected under title VIII of the Social Security Act by reason of the fact that persons and employees paying taxes under this act do not pay taxes under the said title VIII.

Section 10 contains the usual separability provision.

Section 11 provides for the repeal of the act of August 29, 1935, as amended, entitled "An act to levy an excise tax upon carriers and an income tax upon their employees, and for other purposes." It is made clear, however, that while this act is repealed, the present bill, when it becomes an act, will be a substitution therefor and that there will, therefore, be no invalid retroactive application of any taxing provision.

Since the effective date of the new act will be January 1, 1937, rather than March 1, 1936, and since the tax rates for the period since January 1 are lower than under the existing statute, there will be certain refunds due of amounts heretofore collected as taxes. It is further provided that proceedings pending for the recovery of moneys paid as taxes shall be terminated. Moreover, specific provision is made also for the payment into the Treasury and to employees in the proper proportion, of all moneys held by employers as taxes but never paid into the Treasury.

Section 12 directs the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, to make and publish such rules and regulations as may be required to enforce the act.

Section 13 provides that the act may be cited as the "Carriers Taxing Act of 1937."

CHANGES IN EXISTING LAW

In compliance with paragraph 2a of rule XIII of the Rules of the House of Representatives, the act of August 29, 1935, as amended, which is repealed by the bill, is set forth below enclosed in black brackets:

[AN ACT To levy an excise tax upon carriers and an income tax upon their employees, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

DEFINITIONS

SECTION 1. That as used in this Act

(a) The term "carrier" means any express company, sleeping-car company, or carrier by railroad, subject to the Interstate Commerce Act, and any company which may be directly or indirectly owned or controlled thereby or under common control therewith, and which operates any equipment or facilities or performs any service (other than trucking service) in connection with the transportation of passengers or property by railroad, or the receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, or handling of property transported by railroad, and any receiver, trustee, or other individual or body, judicial or otherwise, when in the possession of and operating the business of any such "carrier": Provided, however, That the term "carrier" shall not include any street, interurban, or suburban electric railway, unless such railway is operating as a part of a general steam-railroad system of transportation, but shall not exclude any part of the general steam-railroad system of transportation now or hereafter operated by any other motive power. The Interstate Commerce Commission is hereby authorized and directed upon request of the Commissioner of Internal Revenue or upon complaint of any party interested to determine after hearing whether any line operated by electric power falls within the terms of this proviso. (b) The term "employee" means (1) each person who at or after the enactment hereof is in the service of a carrier, and (2) each officer or other official representative of an "employee organization", herein called "representative", who before or after the effective date has performed service for a carrier, who is duly designated and authorized to represent employees under and in accordance with the Railway Labor Act, and who, during, or immediately following employment by a carrier, was or is engaged in such representative service in behalf of such employees. (c) A person shall be deemed to be in the service of a carrier whenever he may be subject to its continuing authority to supervise and direct the manner of rendition of his service, for which service he receives compensation.

(d) The term "compensation" means any form of money remuneration for active service, received by an employee from a carrier, including salaries and commissions, but shall not include free transportation nor any payment received on account of sickness, disability, or other form of personal relief.

(e) The term "effective date" means March 1, 1936.

(f) The term "enactment" means the date on which this Act may be approved by the President or be finally passed.

INCOME TAX ON EMPLOYEES

SEC. 2. In addition to other taxes, there shall be levied, collected, and paid upon the income of every employee, 31⁄2 per centum of the compensation of such employee (except a representative) not in excess of $300 per month, received by him after the effective date.

DEDUCTION OF TAX FROM WAGES

SEC. 3. (a) The tax imposed by section 2 of this Act shall be collected by the employer of the taxpayer, by deducting the amount of the tax from the compensation of the employee as and when paid. Every employer required so to deduct the tax is hereby made liable for the payment of such tax and is hereby indemnified against the claims and demands of any person for the amount of any such payment made by such employer.

(b) If more or less than the correct amount of tax imposed by section 2 is paid with respect to any compensation payment, then, under regulations made

under this Act by the Commissioner of Internal Revenue, proper adjustments, with respect both to the tax and the amount to be deducted, shall be made, without interest, in connection with subsequent wage payments to the same employee by the same employer.

EXCISE TAX ON CARRIERS

SEC. 4. In addition to other taxes, every carrier shall pay an excise tax of 81⁄2 per centum of the compensation not in excess of $300 per month paid by it to its employees after the effective date.

ADJUSTMENT OF TAX

SEC. 5. If more or less than the correct amount of the tax imposed by section 4 is paid, with respect to any compensation payment, then, under regulations made by the Commissioner of Internal Revenue, proper adjustments with respect to the tax shall be made, without interest, in connection with subsequent excisetax payments made by the same employer.

REFUNDS AND DEFICIENCIES

SEC. 6. If more or less than the correct amount of the tax imposed by sections 2 or 4 of this Act is paid or deducted with respect to any compensation payment and the overpayment or underpayment of the tax cannot be adjusted under sections 3 or 5, the amount of the overpayment shall be refunded, or the amount of the underpayment shall be collected in such manner and at such times (subject to the statute of limitations properly applicable thereto) as may be prescribed by regulations under this Act as made by the Commissioner of Internal Revenue.

INCOME TAX ON EMPLOYEES' REPRESENTATIVE

SEC. 7. In addition to other taxes, there shall be levied, collected, and paid upon the compensation of each employees' representative received by such representative an income tax of 7 per centum annually upon that portion of the compensation of such employees' representative not in excess of $300 per month. The compensation of a representative for the purpose of ascertaining the tax thereon shall be determined according to such rules and regulations as the Commissioner of Internal Revenue shall deem just and reasonable and as near as may be shall be the same compensation as if the representative were still in the employ of the last former carrier.

COLLECTION AND PAYMENT OF TAXES

SEC. 8. (a) The taxes imposed by this Act shall be collected by the Commissioner of Internal Revenue and shall be paid into the Treasury of the United States as internal-revenue receipts. If the taxes are not paid when due, there shall be added as part of the tax (except in the case of adjustments made in accord with the provisions of this Act) interest at the rate of 6 per centum per annum, or for any part of a month, from the date the tax became due until paid.

(b) Such taxes shall be collected and paid quarterly in such manner and under such conditions not inconsistent with this Act as may be prescribed by the Commissioner of Internal Revenue.

(c) All provisions of law, including penalties, applicable with respect to any tax imposed by section 600 or section 800 of the Revenue Act of 1926, and the provisions of section 607 of the Revenue Act of 1934, insofar as applicable and not inconsistent with the provisions of this Act, shall be applicable with respect to the taxes imposed by this Act.

(d) In the payment of any tax under this Act a fractional part of a cent shall be disregarded unless it amounts to one-half cent or more, in which case it shall be increased to 1 cent.

COURT JURISDICTION

SEC. 9. The several Districts Courts of the United States and the District Court of the United States for the District of Columbia, respectively, shall have jurisdiction to entertain an application and to grant appropriate relief in the following cases which may arise under the provisions of this Act:

(a) An application by the Commissioner of Internal Revenue to compel an employee or other pesron residing within the jurisdiction of said court or a carrier subject to service of process within said jurisdiction, to comply with any obliga

tions imposed on said employee, other person, or carrier under the provisions of this Act.

(b) The jurisdiction herein specifically conferred upon the said Federal courts shall not be held exclusive of any jurisdiction otherwise possessed by said courts to entertain actions at law or suits in equity in aid of the enforcement of rights or obligations arising under the provisions of this Act.

PENALTIES

SEC. 10. Any person or any carrier which shall willfully fail or refuse to make any report in accordance with this Act required by the Commissioner of Internal Revenue in the administration of this Act, or which shall knowingly make any false or fraudulent statement, or report in response to any report or statement required by this Act shall be punished on conviction by a fine of not less than $100 nor more than $10,000.

SOCIAL SECURITY ACT

SEC. 11. The term "employment", as defined in subsection (b) of section 811 of Title VIII of the Social Security Act, shall not include service performed in the employ of a carrier as defined in subdivision (a) of section 1 of this Act.

TERMINATION OF TAXES

SEC. 12. The taxes imposed by this Act shall not apply to any compensation received or paid after June 30, 1938.

SEPARABILITY

SEC. 13. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the remainder of the Act, and the application of such provision to other persons or circumstances shall not be affected thereby.]

О

CONSTRUCTION OF CERTAIN AUXILIARY VESSELS FOR THE NAVY

JUNE 22, 1937.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed

Mr. VINSON of Georgia, from the Committee on Naval Affairs, submitted the following

REPORT

[To accompany S. 2193]

The Committee on Naval Affairs, to whom was referred the bill (S. 2193) to authorize the construction of certain auxiliary vessels for the Navy, having considered the same, report it to the House with amendments with the recommendation that it do pass.

Page 1, line 8, strike out the colon and add "at a total cost for all vessels of not more than $50,000,000:".

Page 2, after line 6, add the following sections:

SEC. 2. Not less than fifty per centum of the vessels herein authorized, allocated on an approximate tonnage basis, including such portions thereof as are customarily manufactured in Government plants, shall be constructed or manufactured in Government navy yards, naval stations, naval gun factories, naval ordnance plants or arsenals of the United States: Provided, That the President may, however, should the public interests in his judgment so require, have the vessels built in Government or private yards notwithstanding the allocation otherwise imposed: Provided further, That the provisions of section 3 of the Act entitled "An Act to establish the composition of the United States Navy with respect to the categories of vessels limited by the treaties signed at Washington, February 6, 1922, and at London, April 22, 1930, at the limits prescribed by those treaties; to authorize the construction of certain naval vessels; and for other purposes", approved March 27, 1934 (48 Stat. 505; U. S. C., title 34, sec. 496), as amended, are hereby made applicable to contracts for the construction of the vessels or any portion thereof herein authorized.

SEC. 3. Any bid for the construction on the Pacific coast of any of the vessels authorized by this Act shall have a differential of 6 per centum in its favor which shall be considered by the Secretary of the Navy in awarding contracts for the construction of said vessels.

The fleet in fulfilling its mission of protection in time of an emergency must take up its station far from normal bases of supply and repair. To be effective the combatant vessels of the Navy must be so mobile and so self-sufficient that they can be projected a thousand or more