Untaxed additional compensation employer-paid contribution to pension plan to provide $150 a month for life beginning at 65... Net actual annual compensation, spendable and deferred.. "If Smith, in order to keep up with the Joneses, were to buy an annuity to provide himself a $150 a month income for life, beginning at 65, Jones and Smith would each have the actual spendable income shown below: Net spendable dollars after taxes and after providing for $150 a month retirement income plan.. "In other words, Smith either will have to be satisfied with a net spendable income of $4,253.97 (while Jones has $5,400) or he will have to somehow increase his yearly income from his drugstore by an additional $1,404.03 before taxes in order to keep up with Jones. "Gross annual income.. Taxable income... Income tax.. Net spendable dollars. Gross 1st year premium on annual premium retirement annuity.. Net after taxes and after having provided for $150 a month on which to retire.. "Actually, if you are self-employed, it is considerably harder than even these figures indicate to keep up with the Joneses. If Jones' relationship with his company is fairly typical, he will pick up in addition to his salary and in addition to his pension benefits one or all of the following security provisions. Contributions by Jones' company for each of these benefits are tax deductible by the corporation and although additional compensation, nonetheless tax-free to Jones: Paid vacations, sick leave without loss of income, group life insurance, group hospitalization, group medical protection, and long-term salary continuance in case of disability. "It is obvious that the self-employed Smiths cannot begin to catch up with the Joneses. The reason is not hard to find. "The income tax law allows-it encourages-Jones to defer or escape altogether the tax on his fringe compensation, but Smith, the law says, must pay tax on all of his compensation. And with the steeply graduated rates of taxation, the higher Smith's income climbs, the greater the tax advantage enjoyed by Jones." The National Association of Retail Druggists joins in supporting H. R. 9 and H. R. 10, with its two other teammates in the medical arts profession, namely; the American Medical Association and the American Dental Association. STATEMENT BY LEON CHATELAIN, JR., F. A. I. A., PRESIDENT OF THE AMERICAN INSTITUTE OF ARCHITECTS IN SUPPORT OF H. R. 9 AND H. R. 10 (JENKINS-KEOGH) The American Institute of Architects is the national organization of the architectural profession in the United States. Its 127 chapters and 11 State organizations are located in every State and in certain United States possessions. With a membership of almost 13,000 registered architects, the institute repre sents the majority of practicing architects in the Nation and is qualified to speak in behalf of the profession. We are aware that the American Thrift Assembly, of which I am a director, is making a comprehensive presentation of the reasons why more than 10 million self-employed persons in the professions, small business, and agriculture favor this legislation. I do not wish to repeat the arguments that will be put forth so ably by others, nor do I wish to load the record unnecessarily with a repetition of the points raised in the very excellent statement which the executive director of the American Institute of Architects, Edmund R. Purves, F. A. I. A., gave to your committee in June 1955. His statement appears in full in the record of the hearings held at that time. Therefore, I shall limit myself to a brief comment on just one point. The architects of this country, whom I represent here, along with other self-employed individuals, are not asking for any sort of dispensation or special kind of treatment. We are seeking only the same treatment given to employed persons who are granted tax deferment on a limited portion of their income set aside for retirement. In other words, we too would like to be permitted to save some of the money we ourselves earn to provide for our old age. The present tax code discriminates against the self-employed in that respect. Your distinguished chairman, Mr. Mills, as well as many members of this committee and the Congress, are on record as favoring the correction of inequities in taxation. Speaking for a profession which is subject to one form of tax discrimination, I earnestly request favorable action on H. R. 9 and H. R. 10. STATEMENT SUBMITTED BY CHESTER D. SWOPE, D. O., CHAIRMAN, DEPARTMENT OF PUBLIC RELATIONS, AMERICAN OSTEOPATHIC ASSOCIATION, ON H. R. 9, AND H. R. 10 This statement is submitted January 24, 1958, to the Committee on Ways and Means of the House of Representatives for inclusion in the record of hearings on H. R. 9 and H. R. 10, and similar bills, cited as the "Self-Employed Individuals' Retirement Act of 1957," by Dr. Chester D. Swope, of Washington, D. C., as chairman of the department of public relations of the American Osteopathic Association. The American Osteopathic Association supports the so-called Jenkins-Keogh bills (H. R. 9 and H. R. 10) with a technical amendment changing the reference to "physicians" to "doctors of medicine" in order to conform to the text of section 1402 (c) of the Internal Revenue Code. The bill allows a self-employed person to deduct from gross income each year a limited amount of self-employment income contributed by him to a restricted retirement fund or paid in as premiums to purchase an insurance policy with retirement features. He can deduct annually up to $5,000 or 10 percent of selfemployment income, whichever is less, but not more than a total of $100,000 during his life time. There's a 5-year carryover of unused deductions, subject to certain limitations. An individual who has reached age 50 before the effective date is allowed to deduct an additional amount, to help him build up an adequate interest in the fund or obtain more than a token annuity. In his case, the normal deduction limit is increased by one-tenth for each year of age over 50 and not over 70. The contribution, plus accumulations, become taxable when distributed, and may be withdrawn at any time. However, where withdrawals take place before age 65 the tax is 10 percent greater than otherwise payable, but the payment is treated as having been received pro rata during the taxable year and the 4 preceding years. Lump-sum payments after age 65 are given special treatment. It takes from 7 to 9 years after high school to train an osteopathic physician. By the time he has experienced the lean years of establishing a practice, another similar period will have transpired. In other words, osteopathic physicians, and other professional persons similarly situated, must depend on their middle-age earnings to provide for their retirement, a dependency that is dissipated by taxation that ignores it as an equitable consideration. The present tax structure offers inducements for the establishment of pension funds for employees. It is only fair and just that professional persons, being self-employed, be permitted to participate in restricted retirement funds that take into consideration the deferred and limited duration of their earning years. In December 1951, the board of trustees of the American Osteopathic Association resolved in favor of the fair tax principles now embodied in the JenkinsKeogh bill. The resolution has been continued in full force and effect. On behalf of the 12,500 physicians of the osteopathic school of medicine now active professionally in the United States in private practice, we urge adoption of the legislation, with the corrective amendment suggested. COMMITTEE ON WAYS AND MEANS, HOUSE OF REPRESENTATIVES, Washington, D. C., January 17, 1958. House of Representatives, Washington, D. C. GENTLEMEN: I understand that you have scheduled hearings on the JenkinsKeogh bills for January 24. Personally I am entirely in favor of the principle involved in both H. R. 9 and H. R. 10, and I want to go on record in the hearings as advocating a favorable recommendation from your committee. DEAR DR. BOWERS: Referring to your letter of February 7, I have been pleased to forward your request to the chief clerk of the Committee on Ways and Means and have been assured the resolution of your association in support of H. R. 9, and H. R. 10 will be made a part of the printed hearing record. With every good wish. Cordially, CECIL R. KING, Member of Congress. Hon. CECIL R. KING, SOUTHERN CALIFORNIA STATE DENTAL ASSOCIATION, Committee on Ways and Means, House Office Building, Washington, D. C. HONORABLE SIR: On March 14, 1957, this association addressed a letter to the House Committee on Ways and Means containing a resolution in support of the Jenkins-Keogh bills H. R. 9 and H. R. 10. That letter represents the exact plea still existent in this association and reads as follows: "Whereas there are now pending before the Congress, H. R. 9 and H. R. 10, commonly referred to as the Jenkins-Keogh bills, which bills would grant to selfemployed persons substantially the same tax benefits as are now available to employed persons participating in corporate pension plans; and "Whereas common justice demands that self-employed citizens of the United States have available to themselves the same tax benefits as are provided for employed persons: "Resolved, That the Southern California State Dental Association, in annual session assembled, urges the 85th Congress to enact the said proposal into law; further "Resolved, That a copy of this resolution be sent to each Senator and Representative from California and to the Vice President of the United States." We earnestly hope that hearings will be held on this proposal and that our resolution be placed in the record of such hearings. We shall be very grateful to you, sir, for all that you may do to advance so wholesome and so worthy a cause. Sincerely yours, JAMES P. BOWERS, D. D. S., President. Hon. JERE COOPER, HOUSE OF REPRESENTATIVES, Washington, D. C., October 8, 1957. Chairman, House Ways and Means Committee, House of Representatives, Washington, D. O. MY DEAR COLLEAGUE: It seems to me to be in the best interests of a great many self-employed professional people to have favorable consideration by your committee of the Jenkins-Keogh bill which provides for tax exemption of income pension funds. It will be recognized by you that much of our community leadership springs from the self-employed. Generally speaking, you will find self-employed professional people in the van of community, State, and National progress. They are the ones, by and large, who seize the initiative and press forward in most instances where there is a need for communal improvement. It naturally followS that theirs is not a narrow and selfish interest, but one in which altruism and unselfishness play a great part. The pending Jenkins-Keogh bill will do much toward encouraging the aforementioned professional men and women toward devoting even greater portions of time and effort for the benefit of all if they can feel that their fundamental effort for individual security meets with some recognition in the way of tax relief by the Federal Government. At your discretion, will you consider making this letter a part of the official committee record at the time of your hearings on this legislation? Sincerely yours, WILL E. NEAL, Member of Congress. MEDICAL SOCIETY OF THE COUNTY OF NEW York, New York, N. Y., January 30, 1958. House Office Building, Washington, D. C. CHAIRMAN, HOUSE WAYS AND MEANS COMMITTEE, DEAR SIR: At the stated meeting of the Medical Society of the County of New York held on Monday, January 27, 1958, the following resolution reaffirming the society's stand favoring the Jenkins-Keogh bill was adopted: "Whereas the Medical Society of the County of New York has previously gone on record favoring the inclusion of self-employed physicians in old-age and survivors (social security) insurance system and in the extended benefits under the Jenkins-Keogh bill; and "Whereas present laws permit the establishment of approved corporation pension plans with the tax result that employees participating in these plans under the statute do not have to include their employers' contribution in their individual gross income, until pensions are received, and company contributions are deductible by the employer in the year in which made; and "Whereas the Jenkins-Keogh bill would give an opportunity to the 10 million self-employed individuals in the United States to provide for their own retirement security; and "Whereas the said bill would do much to reverse the present tax inequity and discrimination against self-employed persons: Therefore be it "Resolved, That the Medical Society of the County of New York again go on record as reaffirming its stand favoring the Jenkins-Keogh bill (H. R. 9 and H. R. 10) currently pending before the House Ways and Means Committee, Washington, D. C.; and be it further "Resolved, That this resolution be transmitted to the appropriate representatives prior to the hearings on tax revision by the Ways and Means Committee on January 7, 1958." Sincerely yours, WILLIAM L. WHEELER, Jr., M. D., THE NATIONAL ASSOCIATION OF INSURANCE BROKERS, INC., Re H. R. 9 and 10, to encourage the establishment of voluntary pension plans by self-employed individuals. Hon. WILBUR D. MILLS, Chairman, Committee on Ways and Means, House of Representatives, Washington, D. C. DEAR REPRESENTATIVE MILLS: During the last session of Congress we were in correspondence with the late Honorable Jere Cooper on behalf of the members of the National Association of Insurance Brokers, Inc., in support of the enactment of the Jenkins-Keogh bill. We sent him a copy of the resolution which was unanimously adopted at our annual meeting last May urging such enactment. We enclose a copy for your information. Since that time a number of our member associations throughout the country have themselves adopted similar resolutions. We previously informed Representative Cooper that we did not plan to have a representative present at the hearings to be held by your committee on this subject. However, we requested that it be recorded in the minutes of such hearings that the National Association of Insurance Brokers, Inc., and its local member associations, comprising thousands of self-employed businessmen throughout the country, are wholeheartedly in favor of H. R. 9 or 10 and urge your committee to favorably report out either of these bills. We strongly believe that the tax credits to savings and pension plans which are now enjoyed by corporate management and employees should be made available to partners and individual proprietors in accordance with the American principles of equality and fair play. We would greatly appreciate your bringing to the attention of your committee our views as stated above. Very truly yours, BARCLAY SHAW. The following resolution was unanimously adopted by the National Association of Insurance Brokers, Inc., at their annual meeting of the board of directors held in St. Louis, Mo., on May 13, 14, and 15, 1957. "Resolved, That the directors of the National Association of Insurance Brokers, Inc., in official session at the Chase Hotel, St. Louis, Mo., on the 13th, 14th, and 15th days of May 1957, do hereby declare themselves in favor of the principles of the Jenkins-Keogh bill which would extend to the partners and individual proprietors the tax credits related to savings and pension plans, which are now available for the benefit of their employees, and would give them the same benefits now enjoyed by corporate management and employees. The secretary is hereby instructed to transmit a copy of this resolution to the ap-. propriate congressional committee. AMERICAN MEDICAL ASSOCIATION, Chicago, Ill., January 23, 1958. Hon. WILBUR D. MILLS, Chairman, Ways and Means Committee, House of Representatives, Washington, D. C. DEAR CONGRESSMAN MILLS: I would like to take this opportunity to submit, for the consideration of the Ways and Means Committee, the views of the American Medical Association concerning H. R. 9 and H. R. 10, 85th Congress, currently being studied by your committee. The American Medical Association vigorously endorses the principle of these bills, which are measures designed to provide tax deferment on retirement funds for self-employed persons. The American Medical Association has endorsed the principle of legislation of this type for a number of years. We have collaborated closely with representatives of the American Bar Association, the original sponsors of this measure, and other national organizations of self-employed taxpayers who would be afforded some measure of tax equity by the enactment of these bills. Early in 1948, our board of trustees was appraised of a movement to promote enactment of Federal legislation under which self-employed persons could finance their own retirement plans through the deduction of amounts from their taxable income. Our board approved this movement, which action was endorsed by our house of delegates, the governing body of the association, at its meeting in June 1948. 20675-58-pt. 2—35 |