GENERAL REVENUE REVISION

(Advisory Group's Reports on Subchapter C (Corporate Distributions and Adjustments); Advisory Group's Reports on Subchapter J (Estates, Trusts, Beneficiaries, and Decedents); Advisory Group's Reports on Subchapter K (Partners and Partnerships); Small Business; General Discussions)

TUESDAY, FEBRUARY 4, 1958

HOUSE OF REPRESENTATIVES,
COMMITTEE ON WAYS AND MEANS,

Washington, D. C.

The committee met at 10 a. m., pursuant to recess, in the committee room, New House Office Building, Hon. Wilbur D. Mills (chairman) presiding.

The CHAIRMAN. The committee will please come to order.

Our first witness this morning is Senator Sparkman. Senator Sparkman has not arrived as yet, and we call our colleague, the Honorable Emmet F. Byrne. Although we know you quite well, for purposes of this record will you identify yourself by giving your name, address, and the capacity in which you appear?

STATEMENT OF HON. EMMET F. BYRNE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

Mr. BYRNE. I am Congressman Emmet F. Byrne, representing the Third District of Illinois.

The CHAIRMAN. You have introduced several bills, Mr. Byrne, and without objection your bills will be included in the record.

(The bills are as follows:)

[H. R. 5194, 85th Cong., 1st sess.]

A BILL To amend the Internal Revenue Code of 1954 to increase the amount of the personal exemption to which a taxpayer is entitled with respect to a spouse or dependent who is a student and whose educational expenses are paid by such taxpayer

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) section 151 (b) of the Internal Revenue Code of 1954 (relating to personal exemptions for taxpayer and spouse) is amended by striking out "and an additional exemption" and inserting in lieu thereof "and (except as provided in subsection (f)) an additional exemption." (b) Section 151 (e) (1) of such Code (relating to additional exemption for dependents) is amended by striking out "An exemption" and inserting in lieu thereof "Except as provided in subsection (f), an exemption".

(c) Section 151 of such Code is further amended by adding at the end thereof the following new subsection:

"(f) INCREASE IN AMOUNT OF CERTAIN EXEMPTIONS WHERE SPOUSE OR DependENT IS A STUDENT.-The amount of any exemption otherwise allowed the tax

payer for the taxable year with respect to his spouse under subsection (b) or with respect to a dependent under subsection (e), if such spouse or dependent is a student (as defined in subsection (e) (4)) at an educational institution (other than a public school) which imposes tuition and other charges and is accredited by the accrediting agency of a State or Territory or by a regional accrediting agency, and if the taxpayer pays over half of the educational expenses incurred by such student during the calendar year in which such taxable year begins, shall (in lieu of the amount of such exemption as provided in such subsection (b) or (e)) be—

"(1) ELEMENTARY SCHOOL.-$700 if such spouse or dependent is enrolled in any of the first eight grades; or

"(2) HIGH SCHOOL.-$800 if such spouse or dependent is enrolled in the ninth, tenth, eleventh, or twelfth grade; or

"(3) COLLEGE and graduate SCHOOL.-$1,100 if such spouse or dependent is enrolled at any level higher than the twelfth grade.

The grade in which any such spouse or dependent is enrolled shall be determined as of the close of the calendar year in which such taxable year begins. For purposes of this subsection, the term 'educational expenses' includes expenses of tuition, books, customary fees and charges, uniforms, and (in the case of a spouse or dependent attending an educational institution away from home) transportation, board, and lodging, and any other expenses necessarily incurred in or incident to the effective pursuit of an education at such institution."

SEC. 2. The amendments made by the first section of this Act shall apply only with respect to taxable years beginning after December 31, 1956.

[H. R. 7127, 85th Cong., 1st sess.]

A BILL To amend the Internal Revenue Code of 1954 to increase the amount of the personal exemption to which a taxpayer is entitled with respect to a dependent who is a student and whose educational expenses are paid by such taxpayer

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) section 151 (e) (1) of the Internal Revenue Code of 1954 (relating to additional exemption for dependents) is amended by striking out "An exemption" and inserting in lieu thereof "Except as provided in subsection (f), an exemption”.

(b) Section 151 of such Code is further amended by adding at the end thereof the following new subsection:

"(f) INCREASE IN AMOUNT OF EXEMPTION FOR DEPENDENT WHERE DEPENDENT IS A STUDENT.-The amount of any exemption otherwise allowed the taxpayer for the taxable year with respect to a dependent under subsection (e), if such dependent is a student (as defined in subsection (e) (4) at an educational institution and the taxpayer pays over half of such dependent's educational expenses during the calendar year in which such taxable year begins, shall (in lieu of the amount of such exemption as provided in subsection (e)) be—

"(1) ELEMENTARY SCHOOL.-$700 if such dependent is enrolled in any of the first eight grades; or

"(2) HIGH SCHOOL.-$800 if such dependent is enrolled in the ninth, tenth, eleventh, or twelfth grade; or

"(3) COLLEGE AND GRADUATE SCHOOL.-$900 if such dependent is enrolled at any level higher than the twelfth grade.

The grade in which any such dependent is enrolled shall be determined as of the close of the calendar year in which such taxable year begins. For purposes of this subsection, the term 'educational expenses' includes expense of tuition, books, customary fees and charges, uniforms, and (in the case of a dependent attending an educational institution away from home) transportation, board, and lodging, and any other expenses necessarily incurred in or incident to the effective pursuit of an education at such institution."

SEC. 2. The amendments made by the first section of this Act shall apply only with respect to taxable years beginning after December 31, 1957.

Mr. BYRNE. Mr. Chairman and members of the Ways and Means Committee, it is a privilege to appear before you gentlemen on this cold morning in Washington, and I appear in behalf of two bills which were submitted within the 1st session of the 85th Congress. I refer to H. R. 5194, and H. R. 7127.

Both of these bills afford relief to the heavy tax burden on parents today, I believe.

In the first bill, H. R. 5194, the salient elements relative to this proposed legislation have to do with parents who have children attending private or parochial schools.

In the area that I represent, the southwestern part of Chicago, when I refer to parochial schools, I refer to schools of all religious denominations and private schools.

I have in mind schools in my area such as the Morgan Park Military Academy, which is a high school, the Loring School for Girls, which is a private school for girls that is nondenominational, and schools of the elementary character as distinguished from public schools.

In an area such as I represent, and in all parts of Chicago and adjacent counties, there are schools of the type that I speak of. My proposal is that the deduction of the head of a household who has a child be increased from $600 to $700, and in the instance where a child is attending a parochial or private high school that that deduction be increased from $600 to $800. In the instance of one attending a college, it would be increased from $600 to $1,100.

Now, in the Chicago area-and it is comparable in other sections of the United States of America-some figures might be of interest. In what is called the diocese of Chicago, for instance, as far as one particular religion is concerned, the Catholic religion, there is in that area some 415 elementary schools, 91 high schools, and 6 colleges. The enrollment at this time in those schools is some 329,566.

In the same area, too, as a comparative figure on the public schools as distinguished from the private schools or parochial schools, you have a number somewhat comparable to that. The total enrollment in the public schools is some 411,097, as contrasted to the number that I have just outlined.

In addition to the religion that I have mentioned so far in my remarks, there are parochial schools divided among some 6 or 8 other religions that total 212 schools in the Illinois area, and a total of some 23,962.

Some people might suggest that there are schools in an area such as Chicago, the public schools, and if a person does not avail themselves of those schools, they are entitled to no type of reduction in taxes of any kind.

But in the area that I represent, and all of Chicago and in Cook County, an interesting analysis of the tax rate, I think, might serve a good purpose.

In that area, for instance in the year 1955-we are always 1 year behind on the spreading of the assessment and I do not have the later breakdown of the tax rate, but it is somewhat comparable to this although it is somewhat higher-here in the Cook County area there is a tax made upon each $100 of taxable property. In other words, for each $100 of assessed valuation in the year 1955, the tax rate was $3.618.

That is divided up in the Chicago park district, where it is 0.3442, and the city of Chicago is 1.338, and the sanitary district, which takes care of some 96 or 98 percent of the private and industrial waste, has a tax of 0.288. The forest reserve, which is a park area, is 0.40. The county part of the tax, outside of the city of Chicago but within Cook County, is 0.264. For Chicago schools it is 1.324.

In other words, the Chicago school tax as compared with the total tax of 3.618 would be approximately 30 cents out of every dollar paid in taxes.

As a man with a family, I have been familiar with this situation for a long time, and as the record shows, I only arrived as a Congressman in the 85th Congress. The two bills that I have spoken of were submitted in the first session.

Needless to say I could not introduce a bill before I got here. So I introduced them as soon as I did get here. I was a little bit impelled in the presentation of these bills by my own personal experience.

My thought is that in times such as these, when we are giving so much attention to missiles and things that have to do with the protection of our country but deal out elements of destruction, it seems to me that the fathers and mothers of America ought to be given some consideration when, to me, they are the backbone of America.

I was not exactly a boy wonder when I got married. I was 30 years of age. But after that age I acquired eight children. Prior to the time I became a Congressman I had educated 3 of them in college here in Washington, D. C., and when I arrived here I had 2 in college right here in the Nation's Capital, and looking back of me, just like these fine young men and young women who are here today, in this beautiful committee room, I have others that are coming along toward college.

It will be late, of course, for me to get any relief as far as I am concerned, but I think the mothers and fathers who have children in grammar school and in the high school and college are entitled to a break.

Now, today, the future is bright for the aged and for those who will be reaching 65 within a few years. The individual reaching 65 has social security, a company pension in many instances, and $1,200 personal exemption from Federal income tax. He has no tax to pay on his pension, priority in getting low-cost housing, liberal tax reductions for medical expense, and the privilege of earning up to a year in addition to any other pension or investment income without losing social security.

If you compare this with the outlook for the young man and young woman just getting started-they have a family to raise in a period of high cost of living and obligations in the future there are no breaks on his Federal and State income tax. He has liability for military service, he has steadily increasing social-security taxes on his pay, and he has the expense of providing his own insurance against sickness and disability since social-security pay is not available until he reaches 50.

It strikes me that that younger group is the type that today is entitled to some relief. The relief I speak of, I think, should be provided now.

From some figures that were taken from the 1950 census in Chicago, and figures that were taken from the 1956 county and city data book as compiled by the Bureau of Census, the enrollment in Illinois in elementary and secondary schools is some 440,103, which I believe I have already mentioned.

But in 1949 the median income was $3,956, and half of the population was making more than that and half of them were making less.