tions. As we are all aware, these issues are too complex to be satisfactorily resolved in that kind of a crisis atmosphere. In conclusion, the United Steelworkers of Amerca believes that the maintenance of a sound single employer termination insurance program is essential to our goal of true retirement income security for all members of our society. The enactment of a substantial increase in the single employer termination insurance premium is a vital element in the preservation of that insurance program and we urge the committee to quickly approve such an increase. Mr. DOWNEY. Thank you. Mr. Snyder. STATEMENT OF OLE M. BERGE, CHAIRMAN, RAILWAY LABOR EXECUTIVES' ASSOCIATION, AS PRESENTED BY JAMES R. SNYDER, CHAIRMAN, LEGISLATIVE COMMITTEE, AND NATIONAL LEGISLATIVE DIRECTOR, UNITED TRANSPORTATION UNION, ACCOMPANIED BY WILLIAM J. MAHONEY, COUNSEL Mr. SNYDER. Thank you, Mr. Chairman, members of the committee. On behalf of Railway Labor Executives' Association, it is a pleasure to be here. With me is Mr. William J. Mahoney, attorney for the Railway Labor Executives' Association. My name is James R. Snyder. I am chairman of the RLEA Legislative Committee. I appear today for Mr. Ole M. Berge, chairman of the RLEA Committee on Railroad Retirement, who is unavoidably away from the city. Mr. Berge has a prepared statement which I ask be received into evidence as if read. I appear before you today on behalf of 1 million beneficiaries of the railroad retirement system and 400,000 active railroad employees. As you know, because of inflation and a loss of 25 percent of the railroad industry's work force between July 1980 and January 1982, the Railroad Retirement System, only 2 years ago, was faced with extinction. However, the industry, both management and labor, including 1 million retireee beneficiaries, and the Congress removed that threat with the enactment of the Railroad Retirement Solvency Act of 1983 which required significant sacrificies by the retirees and active employees, including for the first time in the act's 50year history a tax of retirement benefits. In its budget for fiscal year 1986, the administration has recommended that taxes on some portions of the tier 1 annuities payable under the Railroad Retirement Act be increased. This would be accomplished by treating those benefit amounts like private pensions for tax purposes rather than like Social Security benefits as is provided under current law. The reason for this tax increase proposal is, of course, that it would produce additional revenue for the Federal Government, thereby reducing the deficit to a minor extent. Obviously, any tax increase will reduce the deficit to some degree. However, we must strongly object to a proposal which would increase the tax burden on only one segment of the public, and at that a segment consisting entirely of elderly and disabled persons, at a time when the administration is adamantly opposing tax increases on an across-the-board, even-handed basis as a means of dealing with the Federal deficit. This tax increase proposal is particularly objectionable in view of the fact that the increase would come on top of another tax increase effective in 1984, when Railroad Retirement annuities became taxable for the first time in the 50-year history of the Railroad Retirement System. In early 1983, when legislation dealing with the financial problems of the Social Security System imposed a tax on Social Security benefits, it was considered equitable by all the parties involved to tax tier 1 railroad retirement annuities in the same manner because those annuity amounts are computed under the Social Security benefit formulas and are based on a railroad worker's combined railroad and Social Security earnings. Likewise, when legislation was enacted later in 1983 to restore the Railroad Retirement System's solvency, it as considered acceptable to tax tier 2 railroad retirement annuities in the same manner as private pensions because those annuity amounts are often viewed as being comparable to benefits paid under private plans. However, again to increase the tax burden on retired and disabled railroad workers only 2 years after this previous increase is, in our view, totally unsupportable at a time when the general policy is to reduce the Federal tax burden on individuals, particularly those in the lower income brackets. We must strenuously object to any further tax increase imposed on railroad retirement annuities alone rather than on all personal income generally. We respectfully submit there is no justification in equity and disabled railroad workers while deferring to some uncertain future date the question whether the small percentage of super rich in this country should have a tax reduction of 10 percent and whether highly profitable corporations should pay any tax at all. We strongly urge that this tax increase proposal of the administration be rejected. Thank you for this opportunity to present these views of rail labor and the active and retired employees we represent. Mr. Chairman, on behalf of Railway Labor, we wish to make the record be known we support wholeheartedly the position of the AFL-CIO on the tax reform. Thank you very much. [The statement of Mr. Berge follows:] STATEMENT OF OLE M. BERGE, CHAIRMAN, RAILWAY LABOR EXECUTIVES' ASSOCIATION My name is Ole M. Berge. I am Chairman of the Railway Labor Executives' Association and President of the Brotherhood of Maintenance of Way Employes. The Railway Labor Executives' Association is an unincorporated association with which are affiliated the chief executive officers of all of the standard national and international railway labor unions in the United States. The organizations whose chief executive officers are members of the RLEA are listed below: American Railway & Airway Supervisors Brotherhood of Railway, Airline and Bartenders International Union International Brotherhood of Boilermakers International Brotherhood of Electrical International Brotherhood of Firemen & Oilers International Longshoremen's Association Association Railroad Yardmasters of America Sheet Metal Workers' International Association Seafarers International Union of North America Transport Workers Union of America This nation's Railroad Retirement System antedated its Social Security System. In fact, the original Social Security Act based its tax benefit separation scheme on that developed in the 1935 Railroad Retirement Act. There are today some 1,000,000 persons receiving benefits under the Act, many of whom devoted their working lives to the railroad industry in large part because of the existence of the Retirement Act. Everyone of the persons actively employed in the industry today began his employment protected by the provisions of that Act. In its budget for fiscal year 1986, the Administration has recommended that taxes on some portions of the tier 1 annuities payable under the Railroad Retirement Act be increased. This would be accomplished by treating those benefit amounts like private pensions for tax purposes rather than like social security benefits as is provided under current law. The reason for this tax increase proposal is, of course, that it would produce additional revenue for the Federal government, thereby reducing the deficit to a minor extent. Obviously, any tax increase will reduce the deficit to some degree. However, we must strongly object to a proposal which would increase the tax burden on only one segment of the public - and at that a segment consisting entirely of elderly and disabled persons at a time when the Administration is adamantly opposing tax increases on an across-the-board, even-handed basis as a means of dealing with the Federal deficit. This tax increase proposal is particularly objectionable in view of the fact that the increase would come on top of another tax increase effective in 1984, when railroad retirement annuities became taxable for the first time in the 50 year history of the Railroad Retirement system. From the time of the enactment of the Railroad Retirement Act in the mid-1930's until 1983 it had been the policy of Congress that the benefits payable under that Act should be exempt from taxation just as it had been the policy that benefits payable under the Social Security Act should be exempt from taxation. This longstanding policy was specifically reaffirmed by legislation in 1955 after it appeared that the enactment of the Internal Revenue Code of 1954 might have inadvertently removed the exemption with respect to railroad retirement benefits. Nevertheless, in early 1983 when legislation dealing with the financial problems of the Social Security system imposed a tax on social security benefits, it was considered equitable by all the parties involved to tax tier 1 railroad retirement annuities in the same manner because those annuity amounts are computed under the social security benefit formulas and are based on a railroad worker's combined railroad and social security earnings. Likewise, when legislation was enacted later in 1983 to restore the Railroad Retirement system's solvency, it was considered acceptable to tax tier 2 railroad retirement annuities in the same manner as private pensions because those annuity |