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PAYMENT TO STATES
Section 3: The Federal Government will match what the States put up for old-age assistance, by paying quarterly
to each State one-half of the total amount paid as assistance to people in the State who are at least 65 years
old and who are not inmates of public institutions. (If the State wishes to pay pensions with respect to aged people
over 65 in private institutions, the Federal Government will match those payments; but it will not match payments
to persons less than 65, or to persons in public institutions.) Federal payments with respect to any person, however,
will not be more than $15 per month. If the State gives a pension of $20 the Federal Government will pay half of
it; of $30, the Federal Government will pay half of it; of $40, the Federal Government will match only the first
$15 put up by the State, so that the Federal share will be $15 and the State will put up the other $25. Federal
payments shall be made on a pre-payment basis, on the strength of estimates by the State and the Board, with later
adjustments if the actual expenditures differ from the estimates. The Federal Government will also help the States
to meet administrative costs, paying therefor an additional amount equal to 5 percent of the regular quarterly
payment to the State. These payments, and all other payments under this bill, are to be made without a prior audit
by the General Accounting Office; but there will be a post-audit. It is understood by the committee that, in the
case of grants to States, the General Accounting Office, in making this audit will seek to ascertain only (in the
absence of fraud) whether the certifications were based on the findings which the Board is required to make prior
to certifying, and whether payments were made in accordance with the certifications. It is not the practice to
question the findings.
OPERATION OF STATE PLANS
Section 4: A State with an approved plan will not receive payments if the Board finds that the State is not
substantially complying with its plan. The House bill has been amended by assuring that the Board's finding shall
be made only after the State has had "reasonable" notice and opportunity for hearing.
ADMINISTRATION
Section 5: $250,000 is authorized to be appropriated for the fiscal year 1936 to meet the administrative expenses
of the Board under this title. There is no limit on appropriations for future years.
DEFINITION
Section 6: Old-age assistance is confined to payments in cash.
TITLE II. FEDERAL OLD-AGE BENEFITS
This title provides for the payment of cash benefits to every individual who has attained the age of 65 and
has fulfilled certain qualifications. These benefits will be paid to him monthly as long as he lives in an amount
proportionate to the total amount of wages received by him for employment before he attained the age of 65.
OLD-AGE RESERVE ACCOUNT
Section 201: For the purpose of building up a reserve sufficient to supply the funds necessary to pay the benefits
provided for in this title as such payments accrue, there is created in the Treasury of the United States an "old-age
reserve account", to which an annual appropriation, beginning with the fiscal year ending June 30, 1937, is
authorized. The amounts of such appropriations will vary from year to year, but the amount appropriated for any
year shall be that amount determined (in accordance with accepted actuarial principles, and on the basis of such
mortality tables as the Secretary of the Treasury shall from time to time adopt, and of an interest rate of 3 percent
per annum compounded annually), to be sufficient as the premium necessary for such year to build up the required
reserve.
It shall be the duty of the Secretary of the Treasury to invest such portion of the amounts credited to the
account as is not, in his judgment, required to meet current payments. Such investments shall be made in interest-bearing
obligations of the United States or in any obligations guaranteed as to both principal and interest by the United
States.
All amounts credited to the account shall be available for making payment of the benefits provided for in this
title.
OLD-AGE BENEFIT PAYMENTS
Section 202: Every qualified individual (as defined in sec. 210) shall be entitled to receive, with respect
to the period beginning on the date he attains the age of 65, or on January 1, 1942, whichever is later, and ending
on the date of his death, an old-age benefit. Payments of such benefits shall be made as nearly as possible at
monthly intervals, but not necessarily on the first of each month. The rate of the payments will vary from $10
a month to $85 a month, depending upon the total amount of wages earned by the recipient after December 31, 1936,
and before he attains the age of 65.
If, during the course of payments to any recipient, it is found that he has been overpaid or underpaid, adjustment
shall be made in connection with subsequent payments. The committee has added an amendment, to the effect that
for every month during which the Board finds that an aged person, otherwise qualified for benefits, is regularly
employed, a month's benefit will be withheld from such person.
PAYMENTS UPON DEATH
Section 203: If any individual dies before receiving any payment of a benefit, there shall be paid to his estate
3.5 percent of the total wages earned by him after December 31, 1936, and before he attains the age of 65.
If any recipient dies before the total of the payments of benefits to him has equaled 3.5 percent of the total
wages earned by him after December 31, 1936, and before he attains the age of 65, the remainder shall be paid to
his estate.
If any recipient has, through error or otherwise, been underpaid and has died before adjustment has been made,
the amount of the underpayment shall be paid to his estate.
PAYMENTS TO AGED INDIVIDUALS NOT QUALIFIED FOR BENEFITS
Section 204: If any individual, upon attaining the age of 65, is not qualified to receive benefits, an amount
equal to 3.5 percent of the wages earned by him after December 31, 1936, and before he attains the age of 65, shall
be paid to him (or, if he has died before receiving such payments) to his estate.
AMOUNTS OF $500 OR LESS PAYABLE TO ESTATES
Section 205: If the amount payable to an estate under section 203 or 204 is $500 or less, the Social Security
Board may pay it directly to the persons it determines to be entitled thereto under the law of the State in which
the deceased was domiciled.
OVERPAYMENTS DURING LIFE
Section 206: If any recipient, through error or otherwise, has received benefit payments in excess of the amount
to which he is entitled, and dies before such overpayments have been adjusted, there shall be repaid to the United
States by his estate the amount of such overpayments; except that if the amount to which he was entitled was less
than 3.5 percent of the total wages earned by him after December 31, 1936, and before he attained the age of 65,
the amount of the repayment shall be merely the difference between the amount received by him and such 3.5 percent.
METHOD OF MAKING PAYMENTS
Section 207: The Social Security Board shall from time to time (presumably monthly) certify to the Secretary
of the Treasury the name and address of every individual entitled to receive payment under this title, the amount
of such payment, and the time at which it should be made, and the Secretary of the Treasury shall make payment
in accordance with such certification.
ASSIGNMENT
Section 208: The right of any individual to receive any payment under this title shall not be transferable or
assigned, and none of the moneys paid or payable or rights existing under this title shall be subject to execution,
levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.
PENALTIES
Section 209: Whoever, in any application for any payment under this title, makes any false statement as to any
material fact, knowing such statement to be false, shall be fined not more than $1,000 or imprisoned for not more
than 1 year, or both.
DEFINITIONS
Section 210 (a): This subsection defines "wages." Wages include not only the cash payments made to
the employee for work done, but also compensation for services in any other form, such as room, board, etc. The
term "wages" does not necessarily apply to the total remuneration received from the employer by the employee;
the term includes only the first $3,000 of wages received by an employee from his employer with respect to employment
during the calendar year. The following example will illustrate how the rule applies: Employer A pays employee
B a salary of $500 a month beginning with the calendar year 1937. At the end of the sixth month B has received
from his employer $3,000. The balance of his salary for 1937 is not included as part of the wages. However, this
is only the case where the employee continues in the employment of the same employer throughout the year. If the
employee leaves the service of employer A on June 30, 1937, and enters the service of employer C on that date and
continues with employer C at the same salary throughout the remainder of the year, the remuneration receive by
employee B during the remaining portion of the calendar year 1937 will be included in his wages.
Section 210 (b): This subsection defines the term "employment" as any service of whatever nature performed
within the United States, or on an American vessel, by an employee for his employer. It should be noted in this
connection that section 1001 (a) (6) includes in the definition of "employee" an officer of a corporation.
Services performed by aliens, whether resident or nonresident, within the United States or on an American vessel,
are included; but services performed outside the United States (unless on an American vessel), whether by a citizen
or an alien, are not included. The term "United States" is defined in section 1001 (a) (2) to include
the States, Alaska, Hawaii, and the District of Columbia. The following services are excluded even though performed
within the United States: (1) Agricultural labor; (2) domestic service in a private home; (3) casual labor not
in the course of the employer's trade or business. This would not exclude casual labor performed in the course
of an employer's trade or business. For instance, if a department store employed emergency help during the rush
season in connection with its trade or business, the services performed by such help would not be excluded under
this title.
Services performed by Federal and State or political subdivision employees are also excluded.
Services performed in the employ of religious, charitable, scientific, literary, humane, or educational institutions,
no part of the net earnings of which inures to the benefit of any private shareholder or individual, are also excluded.
For the purpose of determining whether services for such an organization are excluded, the use to which the income
is applied is the ultimate test of the exclusion rather than the source from which the income is derived. For instance,
if a church owns an apartment building from which it derives income which is devoted to religious, charitable,
educational, humane, or scientific purposes, services for it are still excluded. The organizations, services for
which will be excluded, are churches, schools, colleges, and other educational institutions not operated for private
profit, the Y.M.C.A., the Y.W.C.A., the Y.M.H.A., the Salvation Army, and other organizations which are exempt
from income tax under section 101 (6) of the Revenue Act of 1932.
The committee amended the House bill so that service on an American vessel is now considered as employment under
this title.
Section 210 (c): The term "qualified individual" is defined to mean an individual who is at least
65 years of age, and who has received in wages for employment after December 31, 1936, and before he attained the
age of 65, not less than $2,000, some part of which employment was performed in each of at least 5 different calendar
years.
TITLE III. GRANTS TO STATES FOR UNEMPLOYMENT COMPENSATION ADMINISTRATION
This title provides for Federal grants-in-aid to States for meeting the administrative costs of their unemployment
compensation systems. The money is not to be used for compensation itself, but only for expenses of administration.
There is no requirement of matching by the States.
APPROPRIATION
Section 301: $4,000,000 is authorized to be appropriated for the fiscal year 1936, and $49,000,000 for each
year thereafter, to be granted to the States for meeting the proper administrative costs of the State unemployment
compensation laws.
PAYMENTS TO STATES
Section 302: Payments shall be made from time to time to each State with an unemployment compensation plan which
is found by the Board to comply with this title, in amounts determined by the Board to be necessary for the proper
administration of the State law. In deciding how much to pay to a State, the Board shall take into account the
population of the State, and the estimated number of persons covered by the State law, as well as other relevant
factors.
PROVISIONS OF STATE LAWS
Section 303 (a): The State will receive aid under this title only if its law was approved by the Board under
title IX, and only if, in addition to the provisions necessary for it to obtain such approval, it also includes
provision for administrative methods, other than those relating to personnel, approved by the Board as reasonably
calculated to insure full payment of compensation when due; opportunity for a fair hearing for persons denied compensation;
the making of reports to the Board; and cooperation with any Federal agency concerned with public employment which
seeks to obtain information, relating to employment, about persons who are receiving compensation or who have finished
their period of compensation and are available for work.
(b): A State will not receive grants under this title if the Board finds that it is not substantially complying
with its law.
TITLE IV. GRANTS TO STATES FOR AID TO DEPENDENT CHILDREN
This title provides for Federal grants-in-aid to States, for carrying out State plans for aid to dependent children,
often inaccurately called "mothers' pension" laws. The grants are to be made on a one-third matching
basis, the Federal Government putting up $1 for every $2 provided by the State, except that in no case will the
Federal Government's share, with respect to any single dependent child, exceed $6 per month, or, with respect to
any other dependent child in the same home, exceed $4 per month.
APPROPRIATION
Section 401: $24,750,000 is authorized to be appropriated for the fiscal year 1936, and for each fiscal year
thereafter sums sufficient to carry out the purposes of this title. The money is to be paid to States whose plans
for aid to dependent children have been approved by the Chief of the Children's Bureau, as complying with the requirements
of section 402; and the committee has revised the House bill's declaration of policy so as to indicate that the
underlying purpose of this title is to help dependent children in need. The committee has further amended this
section and in fact the whole title so that the Children's Bureau and Secretary of Labor perform the functions
which, in the House bill, were duties of the Social Security Board.
STATE PLANS FOR AID TO DEPENDENT CHILDREN
Section 402: To be approved, a State plan must meet certain requirements laid down in subsection (a), and must
have a sufficiently liberal residence requirement, in accordance with subsection (b).
(a) Requirements which must be met by the State law:
(1), (2), (3): The plan must be State-wide in operation. If, as is the case at present in several States, it
is to be administered by the counties, it must not be optional with each county whether or not it will give aid
to dependent children, but rather must be mandatory upon all the counties. Whether the administration is in the
hands of the counties or not, there must be some direct financial participation by the State itself, and some one
State agency (whether already existing, or newly established) must be charged with final administrative responsibility.
This agency does not necessarily have to confine itself to aid to dependent children; it may have other functions.
(4): An individual whose claim for aid is denied (for instance by a county board) must be given the right to
a fair hearing before the State agency. This does not affect the right of further appeal to the courts.
(5) and (6): The methods of administration of the State plan, insofar as they are found by the Chief of the
Children's Bureau to be essential to the plan's efficient operation, must be approved by the Chief of the Children's
Bureau, and reports must be made to the Secretary of Labor; but the State will not be impeded in the exercise of
its full discretion in the matters of the selection, the tenure of office, and the compensation of State and local
personnel.
(b) Liberality of residence requirement: No residence requirement shall be imposed which results in the denial
of aid with respect to an otherwise eligible child, if the child was born in the State within the year, or has
resided in the State for at least a year immediately preceding the application for aid; and the House bill has
been changed so that, in the case of a child born within the State during the year, a State could deny aid unless
the child's mother had lived in the State for a year prior to the child's birth. The State may be more lenient
than this, if it wishes. It may, furthermore, impose such other eligibility requirements--as to means, moral character,
etc.--as it sees fit. No State is required to give aid to nonresidents.
PAYMENT TO STATES
Section 403: Payments to the States are to be made quarterly, in a method similar to that described in connection
with section 3, except that under this title the Federal Government will bear only one-third of the total cost
instead of one-half. Furthermore, the money paid by the Federal Government will be used to carry out the purposes
of the State plan without any distinction being drawn between the actual payments of aid and the administrative
costs of the State plan. The amount of the Federal share, with respect to any dependent child, shall not exceed
$6 if 1 dependent child is in the home, and shall not exceed $6 for 1 dependent child, and $4 for each other dependent
child, if there is more than 1 dependent child in the home. Thus, the Federal Government will pay one-third of
a monthly payment of $18 for one child. If the State wishes to have such child receive more than $18 per month,
the State will have to pay the excess.
OPERATION OF STATE PLANS
Section 404: A State with an approved plan will not receive payments if the Secretary of Labor finds that the
State is not substantially complying with its plan. The House bill has been amended by assuring that the Secretary's
finding shall be made only after the State has had "reasonable" notice and opportunity for hearing.
ADMINISTRATION
Section 405: $250,000 is authorized to be appropriated for the fiscal year 1936 for the administrative expenses
of the Children's Bureau under this title. There is no limit on appropriations for future years.
DEFINITIONS
Section 406: "Dependent child" is confined to children less than 16 years old, living with a near
relative in a residence (house, room, or other place of abode) maintained by such relative as his own home; and,
by committee amendment, is further confined to only those of such children who have been deprived of either parental
support or parental care because a parent of the children has died, or is continuously away from home, or is unable,
due to physical or mental incapacity, to provide such support or care. Thus if a baby's father were an imbecile,
unable even to care for the baby at home, the baby would be a "dependent child" even though it had a
mother who had a job, for the baby would be without normal parental care. "Aid to dependent children"
is confined to payments in cash.
TITLE V. GRANTS TO STATES FOR MATERNAL AND CHILD WELFARE
Part 1. Maternal and Child-Health Services
This part provides for Federal grants-in-aid to States, to help them extend and improve their services for promoting
the health of mothers and children. Some of the available money is to be allotted equally among the States, some
on the basis of the number of live births in each State, some on the basis of need. All the money except that allotted
on the basis of need is to be granted on an equal matching (50-50) basis.
APPROPRIATION
Section 501: $3,800,000 is authorized to be appropriated for the fiscal year 1936, and for each fiscal year
thereafter.
ALLOTMENTS TO STATES
Section 502 (a): $20,000 is to be allotted by the Secretary of Labor to each State, and $1,800,000 is to be
divided among all the States, as determined (according to the committee's amendment) by the Census Bureau, on the
basis of the number of live births in each State in proportion to the total number of live births in the United
States.
(b): The remaining $980,000 shall be allotted by the Secretary of Labor according to the financial need of each
State for assistance in carrying out the State plan. In making this allotment, and in determmmg such need, the
Secretary of Labor shall take into consideration the number of live births in the State.
(c): An allotment made under subsection (a) shall be available for payment to the State for 2 fiscal years after
the fiscal year for which the allotment is made.
APPROVAL OF STATE PLANS
Section 503 (a): Requirements which must be met:
(1) and (2): The State plan must provide for direct financial participation by the State; and the State health
agency, whatever State department is charged with the responsibility for health conditions and public-health work,
must be charged with final administrative responsibility.
(3): The methods of administration of the State plan, insofar as they are essential to the plan's efficient
operation, must be approved by the Chief of the Children's Bureau; but the State will not be impeded in the exercise
of its full discretion in the matters of selection, the tenure of office, and the compensation of State and local
personnel. The committee has amended this paragraph so that final judgment as to what methods are necessary in
the State rests with the courts rather than the Chief of the Children's Bureau.
(4): Reports are to be made to the Secretary of Labor.
(5), (6), and (7): The State plan must also provide for the extension and improvement of local services; cooperation
with medical, nursing, and welfare organizations; demonstration services in areas which lack financial resources
and among groups in need of such special services.
(b) Approval of State plan: The Chief of the Children's Bureau is charged with passing on the State plan, and
if it is approved, the Secretary of Labor and the State health agency concerned are to be notified.
PAYMENT TO STATES
Section 504 (a) and (b): From the allotments made under section 502 (a) payments will be made to the States
on an equal-matching (50-50) basis, on the strength of estimates made by the State and the Secretary of Labor.
(c): From the allotments made from the $980,000 available under section 502 (b) payments shall be made in accordance
with certifications by the Secretary of Labor in amounts and at times specified by the Secretary of Labor. These
payments need not be matched. In meeting the matching requirements under subsections (a) and (b) of this section
money paid to a State under subsection (c) out of the $980,000 will be considered part of the State's money.
OPERATION OF STATE PLANS
Section 505: A State with an approved plan will not receive payments if the Secretary of Labor finds that the
State is not substantially complying with its plan. The House bill has been amended by assuring that the Secretary's
finding shall be made only after the State has had "reasonable" notice and opportunity for hearing.
Part 2. Services for Crippled Children
This part provides for Federal grants-in-aid to States to help them extend and improve their services for discovering
crippled children, and for providing such children with medical, surgical, corrective, and other services and care
in connection with their physical disability. Some of the available money is to be allotted equally among the States,
and some on the basis of need. All of the money is to be granted on an equal-matching (50-50) basis.
APPROPRIATION
Section 511: $2,850,000 is authorized to be appropriated for the fiscal year 1936, and for each fiscal year
thereafter.
ALLOTMENTS TO STATES
Section 512 (a): $20,000 is to be allotted by the Secretary of Labor to each State, and the remaining amount
available is to be divided among all the States on the basis of need, as determined by the Secretary of Labor after
taking into consideration the number of crippled children in the State, and the cost of furnishing services to
them. (b): An allotment made under this section shall be available for payment to the State for 2 fiscal years
after the fiscal year for which the allotment is made.
APPROVAL OF STATE PLANS
Section 513 (a): Requirements which must be met: (1), (2), (3), and (4): A State plan must include provisions
relating to financial participation, administration, efficient methods of administration, and reports to the Secretary
of Labor, these requirements being similar to those under section 503, except that here the bill does not mention
any particular State agency. The committee's amendments are similar to those made to section 503.
(5): A State plan must provide for carrying out the purposes of part 2, mentioned above.
(6): The State plan must provide for cooperation with medical, health, nursing, and welfare groups, and also
with any agency in the State which is charged with administering the State law providing for vocational rehabilitation
of physically handicapped children.
(b): The Chief of the Children's Bureau is charged with passing on the State plan, and if it is approved, the
Secretary of Labor and the State agency concerned are to be notified.
PAYMENT TO STATES
Section 514: From the allotments made under section 512, payments will be made to the States on an equal-matching
(50-50) basis on the strength of estimates made by the State and the Secretary of Labor.
OPERATION OF STATE PLAN
Section 515: A State with an approved plan will not receive payments if the Secretary of Labor finds that the
State is not substantially complying with its plan.
Part 3. Child-Welfare Services
Section 521. This section, which constitutes part 3 of this title, has been completely revised by the committee,
chiefly for the sake of clarity and completeness, although the policy in the House bill has been somewhat liberalized.
The sum of $1,500,000 is to be appropriated for each fiscal year to enable the United States, through the Children's
Bureau, to cooperate with State public-welfare agencies in the work of establishing and extending public-welfare
services for the care of children who are either homeless or neglected. The services with which the Children's
Bureau is thus authorized to cooperate are those which are especially carried on in predominantly rural areas,
or in areas in special need. From the money made available under this section, $10,000 is to be allotted to each
State which, in cooperation with the Children's Bureau, has developed plans for such services, and the rest is
to be divided among the States in the proportion which the rural population bears to the total rural population
of the United States. An allotment to a State shall be available for payment to the State for 2 fiscal years after
the fiscal year for which the allotment is made.
Part 4. Vocational Rehabilitation
Section 531: This section, which constitutes part 4 of this title, has the effect of increasing the present
authorization for grants to States for vocational rehabilitation of the physically disabled, under the act of June
2, 1920, as amended (U. S. C., title 29, ch. 4; U. S. C., Supp. VII, title 29, secs. 31, 32, 34, 35, 37, 39, and
40). (a): For the fiscal years 1936 and 1937, the present authorization of $1,097,000 is increased by $841,000,
and there is an authorization for each fiscal year thereafter of a similar total sum, namely $1,938,000. These
sums are to be apportioned among the States and Hawaii in accordance with existing law. It should be noted that
under the existing law, grants are not made to Alaska or to the District of Columbia.
(b): The Office of Education (designated specifically under the committee's amendment) likewise is given an
increased authorization for 1936 and 1937. For 1936 and 1937 the present authorization of $80,000 is increased
by $22,000 and for each fiscal year thereafter the total amount, namely, $102,000 is authorized.
Section 541: $425,000 is authorized for the year 1936, for the expenses of the Children's Bureau in administrating
parts 1, 2, and 3 of this title; and the Children's Bureau is authorized to make studies and investigations relative
to the efficient administration of those parts. There is no limit on appropriations for future years. The Security
of Labor is directed to include a full account of the administration of parts 1, 2, and 3 in his annual report
to Congress. The committee has inserted language to make it perfectly clear that the Children's Bureau has no connection
with part 4 of this title.
TITLE VI. PUBLIC HEALTH WORK
This title provides for Federal grants-in-aid to States to assist them and their political subdivisions in establishing
and maintaining adequate public-health services, and also provides for the investigation of disease and problems
of sanitation by the Public Health Service.
APPROPRIATION
Section 601: There is authorized an annual appropriation of $8,000,000 to be allotted as provided in section
602:
STATE AND LOCAL PUBLIC HEALTH .SERVICES
Section 602: The Surgeon General of the Public Health Service with the approval of the Secretary of the Treasury,
shall, at the beginning of each fiscal year, allot to the States the amount appropriated for such year pursuant
to section 601, together with any balances of any allotments for the preceding fiscal year remaining unpaid at
the end of such year. The amounts of such allotments shall be determined on the basis of (1) the population; (2)
the special health problems; and (3) the financial need of the respective States (quarterly payments shall be made
to each State from the sum allotted to it in amounts to be determined by the Surgeon General in accordance with
rules and regulations prescribed by him after consultation with a conference of the State and territorial health
authorities.
Such payments shall be made by the Division of Disbursement of the Treasury Department. The moneys so paid to
a State must be expended in carrying out the purposes specified in section 601, and in accordance with plans presented
by the health authorities of the State and approved by the Surgeon General.
Any money allotted to a State for a fiscal year and not paid to such State in that year remains available for
allotment to States in the succeeding fiscal year, in addition to the amount appropriated for that purpose for
that year.
INVESTIGATIONS AND ADMINISTRATION
Section 603: There is authorized an appropriation of $2,000,000 for each fiscal year for expenditure by the
Public Health Service in investigating disease and problems of sanitation, and in cooperating with the health authorities
of the States. It is provided that the personnel of the Public Health Service shall be detailed to cooperate with
the health authorities of a State only upon the request of the State for such cooperation.
TITLE VII. SOCIAL SECURITY BOARD
ESTABLISHMENT
Section 701: This section, which has been considerably revised by the committee, establishes the Social Security
Board in the Department of Labor. Not more than two members of the Board shall belong to the same political party,
and all the members of the Board shall devote all their time to the work of the Board. The Board is to be composed
of three members who are to be appointed by the President, by and with the advice and consent of the Senate. Each
member's salary is to be $10,000 a year and the terms of office shall be 6 years, except that for the first 3 members
appointed, 1 will hold office for 2 years, 1 for 4 years, and 1 for 6 years. The President is to designate one
of the members as chairman of the Board.
DUTIES OF SOCIAL SECURITY BOARD
Section 702: The Board's duties shall include those imposed upon it by this act (under titles I, II, III, IX,
and X), and the Board is also to study and make recommendations concerning the possibility of furthering economic
security through social insurance, and as to legislation and matters of administrative policy concerning social
insurance, and various other subjects relating to the present bill.
EXPENSES OF THE BOARD
Section 703: The Board is authorized to appoint employees and fix their compensation, subject to the civil-service
laws and Classification Act, and to make necessary expenditures. By committee amendment, however, attorneys and
experts may be appointed without regard to the civil service laws.
REPORTS
Section 704: The committee's revision makes it the duty of the Board to report annually to Congress through
the Secretary of Labor rather than directly.
TITLE VIII. TAXES WITH RESPECT TO EMPLOYMENT
This title levies two taxes. The first is an income tax on employees and the second an excise tax on employers.
INCOME TAX ON EMPLOYEES
Section 801: This section imposes a tax upon the income of every individual measured by the wages received by
him with respect to employment after December 31, 1936. The tax does not apply to all wages but only applies to
wages as defined in section 811 of the bill. Likewise section 811 restricts the application of the tax to employment
as therein defined. The rates of tax are as follows:
Percent
For the calendar years 1937, 1938, and 1939_____________________________ 1
For the calendar years 1940,1941, and 1942_____________________________ 1 1/2
For the calendar years 1943, 1944, and 1945_____________________________ 2
For the calendar years 1946, 1947, and 1948_____________________________ 2 1/2
For the calendar year 1949 and subsequent calendar years___________________ 3
DEDUCTION OF TAX FROM WAGES
Section 802 (a): This subsection requires the employees' tax to be collected at the source by requiring the
employer to deduct the tax from the employee's wages at the time they are paid. To insure collection of the tax,
the employer is made personally liable for it. His liability attaches to the correct amount of tax which he is
required to deduct from the employee's wages, regardless of the amount actually deducted. To protect the employer,
he is indemnified against any claims and demands with respect to that part of the wages of the employee which he
withheld, up to the correct amount withheld and paid to the United States.
Section 802 (b): In case the tax is underpaid or overpaid, adjustments are permitted to be made in connection
with subsequent wage payments made by the employer to the employee. For instance, if the employee receives a salary
of $100 per month for the calendar year 1937 and the employer by a mistake deducts 80 cents instead of $1, assuming
this to be the correct amount of the tax, the tax to be deducted from the next wage payment of the employee will
be $1.20 instead of $l. On the other hand, if the employer deducts from the first wage payment in the same example
$1.20 instead of $1 the tax to be deducted from the next wage payment will be 80 cents instead of $1. Such adjustments
are to be made in accordance with regulations to be prescribed under this title.
DEDUCTIBILITY FROM INCOME TAX
Section 803: Under section 23 (c) of the Revenue Act of 1934 Federal income taxes are not allowed as a deduction
in computing the income tax imposed by that act. Since the tax on employees is a Federal income tax, this section
makes it clear that such a tax is not deductible in computing the income tax imposed by the Revenue Act of 1934
or in computing a corresponding income tax imposed under any subsequent revenue act.
EXCISE TAX ON EMPLOYERS
Section 804: This section imposes an excise tax upon every employer for the privilege of having individuals
in his employ. The tax is measured by the wages paid to employees after December 31, 1936, with respect to employment
after that date. As in the case of the tax on employees, the rate of tax on employers is as follows:
Percent
For the calendar years 1937, 1938, and 1939____________________________________1
For the calendar years 1940, 1941, and 1942____________________________________1 1/2
For the calendar years 1943, 1944, and 1945.____________________________________2
For the calendar years 1946, 1947, and 1948_____________________________________2 1/2
For the calendar year 1949 and subsequent calendar years ___________________________3
Like the tax on employees under section 801, this tax does not apply to all wages or employments but only to those
defined as such in section 811.
ADJUSTMENTS IN CASE OF MISTAKE BY EMPLOYER
Section 805: This section permits the employer to correct errors in the tax reported in connection with any
wage payment made to his employees by making proper adjustments in connection with subsequent wage payments. It
is similar in principle to section 802 (b) and the adjustments are to be made under regulations to be prescribed
under this title.
REFUNDS AND DEFICIENCIES
Section 806: This section relates to the tax imposed with respect to both employers and employees. If any part
of the employer's or employee's tax is underpaid or overpaid and the error cannot be adjusted in connection with
subsequent payments, the underpayment is to be collected or the overpayment refunded under regulations prescribed
under this title. Situations of this character will usually arise when an employee leaves the service of the employer
so that it is impossible to make adjustments in subsequent wage payments.
COLLECTION AND PAYMENT OF TAXES
Section 807 (a): This subsection requires the tax due from employers and employees to be collected by the Bureau
of Internal Revenue and to be deposited in the Treasury as internal-revenue collections.
Section 807 (b): This subsection gives the Commissioner of Internal Revenue, with the approval of the Secretary
of the Treasury, authority to collect the taxes imposed with respect both to employers and employees by stamps,
coupons, tickets, books, or other devices, or by requiring the making and filing of returns. The administrative
provisions relating to the tax on pistols and revolvers imposed by section 600 of the Revenue Act of 1926, as well
as the provisions relating to the stamp taxes imposed by section 800 of that act, are also applicable to the taxes
provided under this title with respect to both employers and employees. The administrative provisions are, therefore,
not confined to those contained in sections 600 and 800 of the Revenue Act of 1926, but embrace all administrative
provisions not otherwise inconsistent, applicable to the taxes imposed by such sections. For instance, the periods
of limitation upon assessment and collection set forth under section 1109 of the Revenue Act of 1926, as amended,
also apply to the taxes levied under this title. Likewise the periods of limitation upon refunds and credits prescribed
in section 3228 of the Revised Statutes will apply to the taxes under this title. If the tax or any part thereof
is not paid when due, the unpaid portion will bear interest at the rate of one-half of 1 percent per month from
the time the tax became due until paid. The Board of Tax Appeals has no jurisdiction over these taxes. If they
are not paid when due, they may be collected by distraint as provided in section 3187 of the Revised Statutes,
leaving the taxpayer to his remedy by way of claim and suit for refund. In order that the employer, who collects
and withholds the tax due from the employee, may be treated as a trustee or proceeded against by distraint, the
provisions of section 607 of the Revenue Act of 1934 are also made to apply to this title. Section 607 of the Revenue
Act of 1934 impresses the amount of taxes withheld or collected with a trust and makes applicable for the enforcement
of the Government's claim the administrative provisions for assessing and collecting taxes.
For administrative reasons, a fractional part of a cent is disregarded unless it amounts to one-half cent or
more, in which event it is treated as 1 cent. This corresponds to a similar provision appearing in the revenue
acts.
RULES AND REGULATIONS
Section 808: This section gives the Commissioner of Internal Revenue, with the approval of the Secretary of
the Treasury, authority to make and publish rules and regulations for the enforcement of this title.
SALE OF STAMPS BY POSTMASTERS
Section 809: This section authorizes the sale of stamps, coupons, or other devices prescribed for the collection
or payment of the taxes under this title by the various postmasters of the United States. The postmasters are required
to deposit the receipts from such sales with the Postmaster General and render accounts to him at such time and
in such form as he shall prescribe. The Postmaster General is given authority to require a bond from the various
postmasters receiving such stamps or other devices in such increased amount as he may find necessary to protect
the interests of the Government. The Postmaster General is required to transfer the receipts from the sale of such
stamps or other devices monthly to the Treasury as internal revenue collections.
DEFINITIONS
Section 810 (a): This subsection imposes a fine of $10,000, or imprisonment for not more than 6 months, or both,
for using, transferring, exchanging, or pledging any stamp or other device prescribed by the Commissioner of Internal
Revenue for the collection or payment of the taxes under this title in any manner except as authorized by law or
regulations made thereunder.
Section 810 (b): This subsection imposes a fine of $5,000, or imprisonment for not more than 5 years, or both,
in the following cases where there is an intent to defraud: (1) Altering, forging, or counterfeiting any stamp
or other device prescribed by the Commissioner of Internal Revenue for the collection or payment of taxes due under
this title; (2) using, selling, lending, or having in possession any such altered, forged, or counterfeited stamp
or other device; and (3) making, using, selling, or having possession of any material in imitation of the material
used in the manufacture of such stamp or other device.
DEFINITIONS
Section 811 (a): This subsection defines "wages." Wages include not only the cash payments made to
the employee for work done, but also compensation for services in any other form, such as room, board, etc. The
term "wages" does not necessarily apply to the total remuneration received from the employer by the employee;
the term includes only the first $3,000 of wages received by an employee from his employer with respect to employment
during the calendar year. The following example will illustrate how the rule applies: Employer A pays employee
B a salary of $500 a month beginning with the calendar year 1937. At the end of the sixth month B has received
from his employer $3,000. The balance of his salary for 1937 is not subject to taxation either with respect to
the employer's tax or the employee's tax. However, this is only the case where the employee continues in the employment
of the same employer throughout the year. If the employee leaves the service of employer A on June 30, 1937, and
enters the service of employer C on that date and continues with employer C at the same salary throughout the remainder
of the year, both employer C and employee B will be liable for the tax in respect of the wages received during
the remaining portion of the calendar year 1937.
Section 811. (b): This subsection defines the term "employment" as any service of whatever nature
performed within the United States or on an American vessel by an employee for his employer. It should be noted
in this connection that section 1001 (a) (6) includes in the definition of "employee" an officer of a
corporation. For instance, resident and nonresident aliens performing services within the United States are subject
to the tax under this title. On the other hand, service performed outside the United States (unless on an American
vessel), whether by a citizen of the United States or by a nonresident alien, is not subject to the tax. The term
"United States" is defined in section 1001 (a) (2) to include the States, Alaska, Hawaii, and the District
of Columbia. Due to the difficulties in collecting the tax in the case of certain kinds of employment, the following
services are exempt from taxation even though performed within the United States: (1) Agricultural labor; (2) domestic
service in a private home; (3) casual labor not in the course of the employer's trade or business. This would not
exempt casual labor performed in the course of an employer's trade or business. For instance, if a department store
employed emergency help during the rush season in connection with its trade or business, the services performed
by such help would not be exempt from taxation under this title.
Exemption from taxation under this title is also granted in the case of Federal and State or political subdivision
employees.
Services performed in the employ of religious, charitable, scientific, literary, humane, or educational institutions,
no part of the net earnings of which inures to the benefit of any private shareholder or individual, are also exempt
from the tax imposed by this title. For the purpose of determining whether such an organization is exempt, the
use to which the income is applied is the ultimate test of the exemption rather than the source from which the
income is derived. For instance, if a church owns an apartment building from which it derives income which is devoted
to religious, charitable, educational, humane, or scientific purposes, it will not be denied the exemption. The
organizations which will be exempt from such taxes are churches, schools, colleges, and other educational institutions
not operated for private profit, the Y. M. C. A., the Y. VV. C. A., the Y. M. H. A., the Salvation Army, and other
organizations which are exempt from income tax under section 101 (6) of the Revenue Act of 1932.
The committee amended the House bill, so that service on an American vessel is now considered as employment
under this title; and further amended the House bill so that individuals over 65 years of age are not exempt from
taxation under this title.
TITLE IX. TAX ON EMPLOYERS OF FOUR OR MORE
This title levies upon employers an excise tax payable annually, measured by wages, and allows each taxpayer
to credit against his tax the amount of contributions he has paid under State unemployment compensation laws.
IMPOSITION OF TAX
Section 901: An annual excise tax is imposed on each employer (as defined in sec. 907) on the privilege of having
individuals in his employ. His tax, payable annually, will be at a rate of 1 percent of the total wages payable
by him with respect to employment (as defined in sec. 907) in the calendar year 1936. This means that the tax is
measured by wages which are payable as remuneration for services performed during that calendar year, regardless
of the time when the actual payment is made.
The rate of tax, after being 1 percent for the year 1936, shall increase to 2 percent for 1937, and 3 percent
thereafter.
CREDIT AGAINST TAX
Section 902: A taxpayer may credit against his tax the total amount of contributions he has paid to State unemployment
compensation funds in accordance with State unemployment compensation laws. The credit against the tax measured
by wages payable with respect to employment in a calendar year will be allowed only for contributions which themselves
are paid (before the date for filing the tax return under this title for such year) with respect to employment
in such year.
The total credit which a taxpayer may claim against his tax for any year shall not be more than 90 percent of
the tax. Thus if the tax is $100 the total credit which may be claimed cannot be more than $90, even though the
total amount of contributions may be greater than that. Credit shall be allowed only for contributions made under
the laws of States certified for the taxable year under section 903.
CERTIFICATION OF STATE LAWS
Section 903 (a): A State law to be approved must provide that--
(1): Unemployment compensation is to be paid through public employment offices in the State, to the extent that
such offices exist and are designated by the State for the purpose. Under the House bill, unemployment compensation
was required to be paid through public employment offices in the State.
(2): No compensation shall be payable with respect to any day of unemployment occurring before the expiration
of 2 years after the first day of the first period with respect to which contributions are required. For example,
if March 15, 1936, is the beginning of the first period with respect to which contributions are required under
the State law, then no compensation may be paid for any day of unemployment occurring before March 15, 1938.
(3): All the money paid into the State unemployment fund (whether paid as contributions for employers or paid
in by employees or contributed by the State itself) shall promptly be paid over to the Secretary of the Treasury
to the credit of the unemployment trust fund established by section 904.
(4): All the money withdrawn from the unemployment trust fund by the State agency shall be used solely in the
payment of compensation; none of it may be used to meet administrative costs.
(5): A person otherwise eligible for compensation shall not be denied it on the ground that he has refused to
take a new job when his denial is due to the fact that the position offered to him is vacant due directly to a
strike, lockout, or other labor dispute, or is due to the fact that the wages, hours, or other conditions of the
work offered are substantially less favorable than those prevailing for similar work in the locality, or that;
as a condition of taking or retaining the new job, he would have to join a company union, or would have to resign
from a labor organization, or would have to agree not to join a labor organization.
(6): The State law must contain a provision indicating that any rights, privileges, or immunities conferred
under it may be taken away by the subsequent amendment or repeal of the law.
(b): If any State law, submitted to the Social Security Board, fulfills the conditions enumerated in this section,
the Board shall within 30 days approve the law, and shall notify the State governor of its action. On December
31 of each year, each State which has an approved law shall be certified by the Board to the Secretary of the Treasury,
unless in the meantime the Board finds that the State has changed its law in some material respect, or has failed
substantially to fulfill any of the enumerated conditions. The Board is under the duty to warn the governor of
the State whenever it has reason to believe that in spite of having an approved law a State may not be certified
at the end of the year.
UNEMPLOYMENT TRUST FUND
Section 904: Subsection (a) of this section establishes in the Treasury of the United States a trust fund with
the Secretary of the Treasury as trustee and with the respective State Agencies, administering the State unemployment
compensation laws, as beneficiaries of the trust. The Secretary of the Treasury is directed to receive and hold
in such fund all moneys deposited with him or with any Federal Reserve bank or member bank of the Federal Reserve
System designated by him to receive such deposits, by such State agencies.
Under subsection (b) it is the duty of the Secretary of the Treasury to invest the fund (except such part as
is, in his opinion, required to meet current withdrawals) in interest-bearing obligations of the United States
or in obligations guaranteed as to both principal and interest by the United States. In order to provide suitable
investments for the purpose, authority is given for the issuance of special obligations to the fund from time to
time as required. Such obligations shall bear an interest rate equal to the average rate of interest, computed
as of the end of the calendar month next preceding the date of such issue, borne by all interest-bearing obligations
of the United States then forming part of the public debt; except that where such average rate is not a multiple
of one-eighth of 1 percent, the rate of interest shall be the multiple of one-eighth of 1 percent next lower than
such average rate. In addition to such special obligations, outstanding obligations may be purchased at the market
price, and original issues may be acquired at par, if the yield thereupon will be not less than the yield which
would be required in the case of special obligations. Such special obligations (under the provisions of subsection
(c) may be redeemed at par plus accrued interest, while all other obligations may be sold at the market price.
Subsections (d) and (e) provide that the fund shall be invested as a single fund, but that the Secretary of
the Treasury shall maintain a separate book account for each State agency and shall credit quarterly to each such
account a proportionate part of the earnings of the fund for such quarter.
The Secretary of the Treasury (under subsection (f)), is directed to pay out of the amount to the credit of
a State agency such amounts as the State agency shall duly requisition, not to exceed the amount standing to the
credit of such State agency.
ADMINISTRATION, REFUNDS, AND PENALTIES
Section 905: Subsection (a) of this section provides that the tax shall be collected by the Bureau of Internal
Revenue and shall be paid into the Treasury as internal-revenue collections.
Subsection (b) requires returns of the tax to be made by each employer not later than January 31 of each year
in respect to employment in the preceding calendar year.
Subsection (c) makes the returns filed under this title open to inspection according to the rules laid down
for income-tax returns under the Revenue Act of 1926.
Subsection (d) allows the taxpayer to pay his tax in equal quarterly installments as is the case with the Federal
income tax.
Subsection (e) gives the Commissioner the right to give extensions of time for the payment of tax or installments
thereof, and subsection (f) provides that in the payment of tax a fractional part of a cent shall not be counted
unless it amounts to one-half cent or more in which case it shall be counted as 1 cent.
INTERSTATE COMMERCE
Section 906: This section provides that no person required under a State law to make payments to an unemployment
fund shall be relieved from compliance therewith on the ground that he is engaged in interstate commerce, or that
the State law does not distinguish between employees engaged in interstate commerce and those engaged in intrastate
commerce.
DEFINITIONS
Section 907: The definitions set up by this section are very important in connection with the application and
scope of the entire title. They are as follows:
(a) Employer: The term "employer" includes only those persons who, in each of at least 13 weeks in
the year, have a total number of 4 or more employees. (In the House bill it was 20 weeks and 10 or more employees.)
This means that if on 1 day a week for 13 weeks (which need not be consecutive) there are 4 employees, the employer
is covered. The employees (who need not necessarily be the same people) need not all be employed at the same moment;
it is enough if during the day the total number is at least 4. The employees are not counted unless they are employed
in "employment" as defined in this section.
(b) Wages: The term "wages" is defined to mean all remuneration for employment, including the cash
value of all remuneration paid in any other medium than cash. That is, in addition to money payments, it includes
payments in kind, rent, food, lodging, etc.
(c) The term "employment" is defined to mean any service performed within the United States by an
employee for his employer with the following exceptions:
(1) Agricultural labor.
(2) Domestic service in a private home.
(3) Service performed as an officer or member of the crew of a vessel on the navigable waters of the United
States. (This does not exempt the services of longshoremen and others who work in connection with loading vessels.)
(4) Service performed by an individual in the employ of his son, daughter, or spouse, and service performed
by a child under 21 in the employ of his parent.
(5) Service performed in the employ of the United States Government or of an instrumentality of the United States.
(6) Service performed in the employ of a State, or political subdivision thereof, or an instrumentality of one
or more States or political subdivisions.
(7) Service performed in the employ of corporations or organizations organized exclusively for religious, charitable,
scientific, literary, or educational purposes, no part of the net earnings of which accrue to any private individual
or shareholder.
If the service is within the excepted classes, the employer is exempt from tax on the wages payable with respect
to such service.
(d) The term "State agency" is defined to mean any State officer, board, or other authority, designated
under a State law to administer the State unemployment fund.
(e) The term "unemployment fund" is defined to mean a special fund, established by State law and administered
by a State agency, for the payment of unemployment compensation. A committee amendment strikes out the requirement
of the House bill that the assets of the fund be mingled and undivided, and that no separate account be maintained
with respect to any person.
(f) The term "contributions" is defined to mean payments required to be made by an employer under
a State law into an unemployment fund, except that any payments which have been or may be deducted from the wages
of the individuals in his employ are not to be considered as contributions under the definition.
(g) The term "compensation" is defined to mean cash benefits payable to individuals with respect to
their unemployment.
RULES AND REGULATIONS
Section 908: This section authorizes and directs the Commissioner of Internal Revenue, with the approval of
the Secretary of the Treasury, to make and publish such rules and regulations for the enforcement of this title
as are necessary. The exception is made, however, that the authorization and direction above noted do not apply
to section 903, relating to certification of State laws, and to section 904, relating to the unemployment trust
fund.
ALLOWANCE OF ADDITIONAL CREDIT
Section 909: The Committee has added this section, and its companion section 910, to the House bill. Subsection
(a) provides that a taxpayer under section 901 may, for 1938 or any taxable year thereafter, obtain an additional
credit against his tax, under certain conditions. Let us assume, for the purpose of giving a relatively simple
example, that he carries on business in only one State. He will credit against the tax the amount of his contributions
under the law of that State; and, under this new section, he will also credit the amount by which his contributions
are less than they would have been if he had been contributing at the maximum rate in the State. The additional
credit, however, is limited by not allowing it to exceed the difference between the actual amount paid and the
amount he would have paid at a 2.7 percent rate; and subsection (b) also provides for limiting the additional credit
to the proper difference allowed by the State law, diminishing it if the employer has failed to make any of the
contributions required of him.
In figuring what contributions the employer would have paid at the maximum rate, the highest rate applicable
to an employer each time when contributions are payable is the rate considered.
Subsection (c) provides that even if an employer is getting credit under section 902 and additional credit under
this section. he shall never credit against tax more than 90 percent of the tax.
CONDITIONS OF ADDITIONAL CREDIT ALLOWANCE
Section 910: This section places restrictions on the allowance of the additional credit under section 909.
(1) The taxpayer whose case was considered in the discussion in section 909 may have been contributing to a
pooled fund in the State. If he is contributing at a lower rate than that imposed on other employers in the State,
he will get the additional credit; but only if he has had at least 3 years of compensation experience under the
State law, and only if his lower rate is fixed as a result of his comparatively favorable experience. A State rate
might, therefore, vary at the outset among different employers or industries, but the additional credit would not
be given until the compensation experience of the favored employer had justified the variation.
(2) The taxpayer may have guaranteed the employment of his employees, and be contributing to a guaranteed employment
account maintained by the State agency. In this case, if he claimed the additional credit under section 909, he
would get it only if his guaranty had been fulfilled and only if his guaranteed employment account amounted to
at least 7.5 percent of his guaranteed pay roll.
(3) The taxpayer may be contributing to a separate reserve account, from which benefits are payable only to
his employees. If he claims the additional credit under section 909, it would be allowed only if in the preceding
year, those of his employees who became unemployed and were eligible for compensation received compensation from
the reserve account. Furthermore: the additional credit would be allowed only if the reserve account amounted to
7.5 percent of his pay roll, and was at least five times larger than the amount paid out from it, in compensation,
in that year (among the 3 preceding years) when the greatest amount was thus paid out from it.
Subsection (c) defines terms used in this section; the committee having added sections 909 and 910 as a new
and distinct addition superimposed upon the title, these definitions were placed here rather than in section 907.
(1) "Reserve account" is defined as a separate account in a State unemployment fund, from which compensation
is payable only to the former employees of the employers, contributing to the account. The account may be maintained
with respect to one employer or a group of employers.
(2) "Pooled fund" is an unemployment fund (or part of such a fund, if some employers are maintaining
separate accounts in the fund) in which all contributions are mingled and undivided. Compensation is payable from
it regardless of whether the claimant was formerly in the employ of an employer contributing to the pooled fund;
but where some employers in the State have reserve accounts, their former employees get compensation from the pooled
fund only if the reserve accounts are exhausted.
(3) "Guaranteed employment account" is, like a reserve account, a separate account in an unemployment
fund, but it can be maintained only with respect to certain employers. Compensation is payable from it to those
of such employer's employees who, having been guaranteed employment, nevertheless become unemployed due to a failure
to fulfill the guaranty, or become unemployed at the end of the year for which the guaranty was made, due to the
nonrenewal of the guaranty. To be a "guaranteed employment account", such separate account would have
to be maintained with respect to an employer who had guaranteed the wages of all of his employees (or, if he maintains
more than one distinct business establishment, of all the employees in at least one such establishment), for at
least 40 weeks in a 12-month period. The wages guaranteed should be for at least 30 hours a week; but if 41 weeks,
for instance, were guaranteed instead of 40, the weekly hours guaranteed could be cut from 30 to 29; and if 42
weeks were guaranteed, only 28 hours wages per week would need to be guaranteed. While ordinarily all the employees
would have to be covered, the employer would not have to extend the guaranty to any new employee until the latter
had served a probationary period of not more than 12 consecutive weeks.
(4) "Year of compensation experience", used only in relation to an employer, is defined as any calendar
year during which, at all times in the year, a former employee of such employer, if there was one who was eligible
for compensation, could receive compensation under the State law.
TITLE X. GRANTS TO STATES FOR AID TO THE BLIND
This title (which is inserted by committee amendment) provides for Federal grants-in-aid to States, for the
payment of assistance to persons who are permanently blind. The grants are to be made on an equal matching (50-50)
basis, except that in the case of no individual will the Federal Government's share exceed $15 per month.
APPROPRIATION
Section 1001: $3,000,000 is authorized to be appropriated for the fiscal year 1936, and for each fiscal year
thereafter sums sufficient to carry out the purpose of this title. The money is to be paid to States whose plan
for aid to the blind has been approved by the Social Security Board, as complying with the requirements of section
1002.
STATE PLANS FOR AID TO THE BLIND
Section 1002: To be approved, a State plan must meet certain requirements laid down in subsection (a), and must
be sufficiently liberal in its eligibility requirements, in accordance with subsection (b).
(a) The requirements which must be met by the State law are similar to the first six requirements which a State
old-age assistance plan, under section 2, must meet, likewise similar to the conditions which a State plan for
aid to dependent children must meet under section 402 (a). An additional requirement is that the plan must provide
that no aid under the plan will be furnished to any individual with respect to any period for which he is receiving
old-age assistance under the State plan approved under section 2.
(b) The liberality of the eligibility requirements, which a State plan must contain, are worded in a similar
fashion to paragraphs (2) and (3) of section 2 (b). These relate to residence and citizenship. In the State plan
for aid to the blind no limitation is placed upon any age requirement which the State may impose.
PAYMENTS TO STATES
Section 1003: Payments to the States are to be made quarterly, in a method similar to that described in connection
with section 3. The State payments will be matched (up to $15) regardless of the age of the blind recipient.
OPERATION OF STATE PLANS
Section 1004: A State with an approved plan will not receive payments if the Board finds that the State is not
substantially complying with its plan.
ADMINISTRATION
Section 1005: $30,000 is authorized to be appropriated for the fiscal year for the administrative expenses of
the Board. There is no limitation on the appropriation for future years.
DEFINITION
Section 1006: Aid to the blind is confined to payments in cash, to persons permanently blind.
TITLE XI. UNITED STATES ANNUITY BONDS
This title (which is inserted by committee amendment) provides that the United States may borrow money to meet
public expenditures and retire the public debt by the issuance under the Second Liberty Bond Act, as amended, of
annuity bonds payable in installments, but the amount payable to any individual shall not exceed $100 a month.
AUTHORITY FOR ISSUANCE
Section 1101: The Secretary of the Treasury is authorized, with the approval of the President, to borrow funds
to meet public expenditures and to retire the public debt and to issue therefor under the authority of the Second
Liberty Bond Act, as amended, bonds to be known as "United States Annuity Bonds". The Secretary of the
Treasury is authorized to prescribe the forms, amounts, terms, and conditions of such bonds.
TERMS OF ANNUITY BONDS
Section 1102 (a): Annuity bonds shall be payable in installments.
(b): The Secretary of the Treasury may offer annuity bonds to be payable during (1) a fixed term of years, or
(2) the life of the annuitant or the lives of two annuitants, or (3) a term of years fixed or the life of the annuitant,
whichever period may be the longer, or (4) a term of years fixed or the lives of two annuitants, whichever period
may be the longer.
(c): The installments shall be such as to afford an investment yield not in excess of 3 percent per annum compounded
semiannually.
(d): Annuity bonds shall be redeemable (1) in case of the death of the annuitant, or (2) in such other cases
as the Secretary of the Treasury may prescribe.
TERMS AND CONDITIONS OF ISSUE
Section 1103 (a): Annuity bonds may be purchased by payment in full (1) in cash, or (2) by surrender of United
States savings bonds at redemption value thereof, or (3) in installments.
(b): Annuity bonds may be issued only to citizens of the United States and in amounts to provide an annuity
of not less than $60 or more than $1,200 in any 1 year, and no individual shall be entitled to receive under United
States annuity bonds, annuities aggregating more than $1,200 in any 1 year.
CONTRACTS FOR ANNUITY BONDS
Section 1104: The Secretary of the Treasury is authorized to make contracts for the issuance of annuity bonds
under which the annuity bonds may be bought by the payment of small amounts from time to time.
TAXES AND TAX EXEMPTIONS
Section 1105: Annuity bonds shall be exempt from taxation, but annuity and redemption payments shall be subject
to taxation by the United States, the States, and local taxing authorities to the extent that such payments upon
other annuity bonds or agreements are taxed.
GENERAL CONDITIONS
Section 1106: Annuity bonds, contracts therefor, and rights existing thereunder shall not be transferable or
assignable in law or in equity, except that if the Secretary of the Treasury is furnished with a copy of an order,
judgment, or decree of a court establishing that the payments for the annuity bond were made with the actual intent
to defraud creditors of the person making the payment, the Secretary of the Treasury shall pay into the court an
amount equal to the payments so made. In such cases the Secretary is authorized to cancel the annuity bond or contract
therefor upon payment of any balance to the annuitant or contracting party, or to reduce the amount of the installments
under the annuity bond.
RECEIPTS AND PAYMENTS
Section 1107: All payments received for or on account of annuity bonds shall be covered into the Treasury as
public-debt receipts and the Secretary is authorized and directed to make, from any money in the Treasury not otherwise
appropriated, as public-debt redemptions, the payments provided for in the annuity bonds.
PENALTIES
Section 1108: Whoever, in any application for an annuity bond or contract therefor, makes any false statement
as to any material fact, knowing such statement to be false, shall forfeit to the United States twice the difference
between (1) the net value of the annuity bond or the credits under such contract, at the time of such forfeiture,
and (2) the amount which would have been the net value of such annuity bond or credits at that time had such false
statement not been made. The Secretary of the Treasury is authorized to enforce such forfeiture in any court of
competent jurisdiction, and upon such forfeiture the Secretary of the Treasury shall cancel such annuity bond or
contract therefor and make payment of the balance to the annuitant or contracting party after satisfying the forfeiture
and any costs of the proceedings.
FISCAL AGENCY SERVICES
Section 1109: At the request of the Secretary of the Treasury, the Postmaster General shall require the employees
of the Post Office Department and of the Post Service to perform such fiscal services as may be desirable in connection
with the sale and delivery of annuity bonds, contracts therefor, and stamps and other evidence or means of payment
therefor.
DEPOSITS WITH POSTAL SAVINGS SYSTEM
Section 1110: At the request of the Secretary of the Treasury, the board of trustees of the Postal Savings System
is authorized to permit (a) the withdrawal of Postal Savings deposits on less than 60 days' notice for the purpose
of. acquiring United States annuity bonds; and (b) deposits with it to the credit of the United States as payment
for United States annuity bonds or under contracts therefor.
REPORTS
Section 1111: The Secretary of the Treasury shall include in his annual report to Congress a full account of
the administration of this title.
TITLE XII. GENERAL PROVISIONS
DEFINITIONS
Section 1201 contains definitions of "State", "United States", "person", "corporation",
"shareholder", and employee.
Section 1201 (d) provides that nothing in this act shall be construed as authorizing any Federal official in
carrying out the provisions of this act to take charge, in violation of the law of a State, of any child over the
objection of the parents.
RULES AND REGULATIONS
Section 1202 provides for the making of regulations by the Secretary of the Treasury, the Secretary of Labor,
and the Social Security Board, respectively, for carrying out the functions with which each is charged.
SEPARABILITY
Section 1203 is the usual separability clause.
RESERVATION OF POWER
Section 1204 reserves to Congress the right to alter, amend, or repeal any portion of the act.
SHORT TITLE
Section 1205 provides that the act may be cited as the "Social Security Act."
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