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Mr. SCOTT. I haven't had a great deal of opportunity to think about it because of the time element that was involved. This could be a possible approach to this solution, and there have been others that some of our members have asked to discuss with us but time has not permitted us to really probe this matter and come up with a solution that would be fair to the employer as well as to the employee.

Senator DOUGLAS. It seem a possibility to you at least?

Mr. SCOTT. I would think this would have a possibility.
Senator DOUGLAS. Thank you.

Senator SMATHERS. May I ask one further question on this point. Do you have any estimate as to how many of the employees who work in restaurants throughout the Nation, how many of them belong to unions and how many of them do not? What is the percentage of them?

Mr. SCOTT. I do not know the answer to that question, Senator. I could only tell you for our own company, where about 75 percent of our 5,000 employees are members of unions. I can't answer that for the industry.

Senator DIRKSEN. Mr. Scott, when did you first become aware that this item might be inserted in the House bill?

Mr. Scorr. I don't have the date. Mr. Nunn, do you have the date? Mr. NUNN. Senator, we became aware of it, first of all, when the Committee on Ways and Means proposed to report the Social Security Amendments of 1964. Not before that date.

Senator DIRKSEN. In other words, they were already preparing their report.

Mr. NUNN. Yes, sir. They were.

Senator DIRKSEN. At that point the

Mr. NUNN. We found out about it and pointed out some of the difficulties, and they told us that, "Well, you may send us a letter in which you will describe your technical difficulties, the burdens of this thing, but you need not address yourself to the philosophy because we have determined about this."

We sent a letter up, and they incorporated it as well as they could, some of the minor matters that we pointed out. But we first knew about it after the decision had been made, Senator. Senator DIRKSEN. And the hearings were closed? Mr. NUNN. Hearings were closed, sir.

Senator DIRKSEN. Had there been any testimony on this in prior years?

Mr. NUNN. Some years ago, I believe there had been, Senator, not in my time, not within my memory.

The CHAIRMAN. Any further questions?

It is now 11:10, so I assume we won't have time for the next witness And we will recess until 2:30 this afternoon.

(At the request of the chairman, the following are made a part of the record:)

STATEMENT OF S. COOPER DAWSON, JR., CHAIRMAN, GOVERNMENTAL AFFAIRS COMMITTEE, AMERICAN MOTOR HOTEL ASSOCIATION

Mr. Chairman and members of the Senate Finance Committee, my name is S. Cooper Dawson, Jr., owner and operator of a motel and restaurant in Alexandria, Va. I am filing this statement as chairman of governmental affairs of the American Motor Hotel Association, after our request for oral testimony in opposition to section 9 of H.R. 11865 was denied at the hearing held today.

The American Motor Hotel Association has been the spokesman for the motel industry since motels came into being. No other organization speaks for the motel industry as a whole.

We are opposed to section 9 of the proposed social security bill (H.R. 11865) because it is ill conceived, unjust, and unworkable and was drafted without hearing of those who would be most vitally concerned.

This section 9 is asking me to be a new kind of tax collector. I don't want to be this kind of tax collector and those I speak for feel the same way.

Most of the employees in motels and restaurants are people with minimum skills and limited business dealings. They are always scared stiff in any dealings or involvement with (1) the policeman and (2) the Internal Revenue man. It is hard enough to explain to them that their pay is, say $60 a week, and after present taxes the take-home portion is $40 a week. It would be next to impossible to explain to them that they must now report the amount of their tips to us, so we can take out another big slice of their take-home pay for the Federal Government.

I don't want to further jeopardize my employee relations by becoming another nasty type of tax collector. The others I represent think likewise. We do not feel that this section is right or fair to either the employer or the employee.

From 32 years' experience in this business, I know of no practical way to determine the amount of tip income of an employee. It is his money and it is paid to him directly by the customer or guest he serves. Only tips of record, or those that are collected by the management, can be accurately pinned down for taxing purposes. We have no quarrel with taxing tips of record and this can be handled with reasonable efficiency. This type of tip deduction by management is understood by most employees.

Tips not of record, those given direct to the employee by the customer or guest, are the big problem. Any deductions from this type of tip income will cause much friction and ill will between employee and employer. This loss of this proper relationship can and will be costly to motel and restaurant operations. In our estimation, it will be of such magnitude, in many instances, as to cause business failures.

Disgruntled employees, in the service industries, often pass their grievances along to the customer or guest.

We feel sure that members of this committee are not fully informed as to the many ramifications of section 9 of H.R. 11865 and how they will adversely affect the motel and restaurant industries.

We were not given the opportunity to participate in public hearings on this section as none were held. The legislation was brought to the floor of the House under a closed rule which prevented the offering of amendments.

The motel industry, representing nearly 62,000 operations, with an invested capital of $124 billion and gross income of well over $4 billion was not notified that a proposal to base social security coverage on tip income as well as wages, would be considered as part of the Social Security Act of 1964. No other affected industries were notified.

We can see little valid need for the hasty action proposed in section 9 of this bill. The reporting of tip income is a highly involved procedure if any semblance of accuracy is to be secured.

Customarily the value of tips is a thing never revealed by an employee to his employer. The employer is loath to seek out, or to seem to seek out, this information. Employees would resent giving employers a written statement of tips. The very announcement of such a requirement would at once create friction between employers and their tipped employees.

There is no guarantee of an accurate reporting of tips. There is inducement not to report accurately. A young employee, not mindful of social security benefits would report low so as to reduce his payments and avoid the revelation of his income tax liability. A casual employee, a transitory employee, would tend to do this also. An old tipped employee approaching retirement would give greatest importance to social security benefits soon to be realized and tend to report high. In either case, the employer and the Government would be at the mercy of the employee.

What of the employee who does not report in writing? The bill provides that if an employee does not report within 10 days from the end of the month in which the tips were earned the employer shall have no responsibility with respect to that month's tips.

36-453-64--20

Bear in mind that all manner of tipped employees are covered by this bill. There are bartenders, bellmen, and barbers as well as porters, tax drivers, parking lot employees, chambermaids, and beauticians. There are others who are not often thought of as recipients of tips or gratuities.

There is no objection to the principle of applying tips to social security payments since the social security system has long been the law of the land. But there is objection to doing so in the manner proposed by this bill. Tips are unique. They are different. They represent a transaction between the employee and the customer.

The employer never has custody, possession, or control of tips. He does not know the value of tips. He is not going to find this out with accuracy. It is unfair to impose the burden of collection upon him.

If the employee is to count his tips for social security, let the law provide that he may do so as if he were self-employed as is now provided in the unique situations of ministers of the Gospel, tenant farmers, and court reporters. So there is no need for haste. Extensive hearings should be held by the Committee on Ways and Means of the House and the Committee on Finance of the Senate. Many industries used tipped employees. All should have an opportunity to be heard.

This provision (sec. 9 of H.R. 11865) should be held over for hearings by another Congress next year when proper time can be devoted to it.

Hon. HARRY F. BYRD,

U.S. Senate, Washington, D.C.

HAWAII RESTAURANT ASSOCIATION,
Honolulu, Hawaii, July 31, 1964.

DEAR SENATOR BYRD: It is our understanding that H.R. 11865, which was given a closed rule by the House Rules Committee on July 21, contains a social security tax based on tips feature. We strongly urge you to do all in your power to remove this feature from the bill. Our objections are based on the fact that no hearings were held on this subject and the restaurant industry was given no notice of its inclusion in the bill prior to approval.

We believe the social security tax based on tips feature would affect employee morale to a considerable degree and ultimately have a negative bearing on employer-employee relationship since tipped income has been traditionally respected by the employer as belonging solely to the employee and therefore unaccountable to the employer. Aside from this aspect, there is the burdensome cost of recordkeeping. In all fairness to those most concerned with this feature, it would seem highly advisable to consider it later as a separate measure when some of the problems involved may be presented and when changes may be suggested.

We shall very much appreciate your efforts on our behalf in this matter.

Sincerely,

ROY E. KING, Jr., President.

DETROIT, MICH., July 29, 1964.

Re H.R. 11865, the social security bill.

Senator HARRY F. BYRD,

Chairman, Senate Finance Committee,
Washington, D.C.

DEAR SENATOR BYRD: As president of the Metropolitan Restaurant Association of Detroit, I have been urged to write you regarding the social security based on tips of restaurant employees of H.R. 11865.

The complexities involved in such action and the resultant problems would seriously disrupt an industry which presently is just recovering from the "expense-account slump."

We would welcome the opportunity of discussing this problem with you and sincerely feel that the social security on tip income feature of this bill should be considered later as a separate measure.

Very truly yours,

R. C. SCHWEIZER,

President, Metropolitan Restaurant Association of Detroit. (Whereupon, at 11:10 a.m., the committee recessed to reconvene at

2:30 p.m., the same day.)

AFTERNOON SESSION

Senator DOUGLAS. The committee will come to order.

The first witness this afternoon is Dr. John G. Sugg, of the American Optometric Association.

Dr. Sugg, we are very glad to have you.

I see you are accompanied by an old friend of mine, Mr. William MacCracken.

Won't you testify, Dr. Sugg?

STATEMENT OF JOHN G. SUGG, O.D., ON BEHALF OF THE AMERICAN OPTOMETRIC ASSOCIATION; ACCOMPANIED BY WILLIAM P. MacCRACKEN, ATTORNEY

Dr. SUGG. Mr. Chairman, my name is John G. Sugg. I am an optometrist practicing my profession in Fayetteville, Ark. My appearance here is in behalf of the American Optometric Association. With me is Mr. William P. MacCracken, Washington counsel of the American Optometric Association.

I am serving my third year as a member of the board of trustees of the American Optometric Association. For 4 years prior thereto I was director of its department of public information. I graduated from the Northern Illinois College of Optometry in 1949 and that same year was admitted to practice in the State of Arkansas. I have served on the board of the State association as its vice president and president. I was awarded an honorary degree of doctor of ocular science by the Illinois College of Optometry. I was president of our local junior chamber of commerce, a director of the U.S. Junior Chamber of Commerce and received that chamber's Distinguished Service Award in 1957. I am past president of the local Rotary Club and I served for 3 years in the U.S. Navy in the Pacific.

The American Optometric Association is the national organization representing the profession of optometry. It has a membership of between 12,000 and 13,000. Every State and the District of Columbia is represented in our house of delegates.

Optometry is the art and science of vision care, and as such, optometrists are primarily concerned with the maintenance of normal efficient vision, the prevention of its deterioration and impairment, the correction of impaired vision by the use of lenses, contact lenses, subnormal vision aids, and visual training as well as the detection of diseases with proper referral for treatment. Members of our profession are to be found not only in the large cities, but also in the smaller rural communities.

There are 10 accredited schools and colleges: Illinois College of Optometry, Indiana University Division of Optometry, Los Angeles College of Optometry, Massachusetts College of Optometry, Ohio State University School of Optometry, Pacific University College of Optometry, Pennsylvania State College of Optometry, Southern College of Optometry, University of California School of Optometry, and University of Houston College of Optometry.

These colleges require that an applicant for admission must have completed 2 years of preoptometric studies at the college level. A minimum of 3 years additional study devoted to optometry is required

and many of the schools require a fourth year for the student who desires to obtain a doctorate degree. There are six points that I would like to emphasize.

(1) Every State of the United States and the District of Columbia by statute, licenses and regulates the practice of optometry.

(2) A substantial majority of our citizens voluntarily seek the services of optometrists for their vision care.

(3) Unfortunately, in the administration of health care programs, financed in whole or in part by congressional appropriations, the beneficiaries thereof have been and are being denied either directly or indirectly the right to avail themselves of the services of optometrists and have the charges paid out of federally appropriated funds.

(4) Congress has heretofore found it necessary and advisable to enact legislation to make the services of optometrists available to the beneficiaries of certain health care programs including title X of the social security law and the law establishing the medical department in the Veterans' Administration.

(5) It is in the public interest that beneficiaries of all health programs which include vision care and are financed in whole or in part by appropriations authorized by the social security law be entitled to obtain the services of a duly licensed optometrist if they so desire; and

(6) That said services should be paid for at the same rate as would similar services rendered by any other duly licensed practitioner. The 1950 amendments to title X of the social security law, required that services of optometrists should be made available to the beneficiaries of the aid-to-the-blind program who desired to utilize them. In 1953, as a result of this amendment, the Industrial Home for the Blind in Brooklyn, N.Y., inaugurated what was known as the optical aids service. Peter J. Salmon was its executive director. He himself was legally but not totally blind. Six weeks ago, in New York City, our association presented him an Apollo Award. It was my privilege to be present on that occasion when he addressed a luncheon audience of approximately 2,000 people. It was an occasion which I shall never forget. I regret that Mr. Salmon is not here in person to repeat what he said then. But I am going to take the liberty of reading to you excerpts from the transcript made on that occasion. At the beginning, he ran his fingers over his manuscript and said, very haltingly as he felt along:

I

The method I am using right now in addressing these few remarks to you is the one used by totally blind persons throughout the world. It is braille. read braille with my fingers for some 40 years, and then something wonderful happened to me-I became the first legally blind person to benefit from the use of optical aids-so much so that I was able to discontinue using my braille and to read everything with my sight, even to looking up a name and number in the telephone book.

At this moment Mr. Salmon reached in his pocket, took out a pair of glasses with telescopic lenses and took out a typed manuscript and said all this:

The thrill I experienced was not only because of what the low-vision service has meant to me, but more because there are now some 50 clinics in the United States modeled after the first pioneered in by the Industrial Home for the Blind. As you know we look to the optometrist to carry on his painstaking, exact, and I must say very fruitful service on behalf of these persons who are classi

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