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October 3, ivU
Chairman Secies

Chengee in Sooi&l Security

received the following information through Kr. Currie f s
office for your confidential use.
The Social Security Board i s making th© following roeoxanondations. I t i s not clear ishether those recomends-tions have been accepted
by the President and by th© Treasury.
The Board i s recosa:endir.g extension of coverage under th© Old
Agt Insurance System to agricultural laborers, domestic servants, employees
of non-profit organizations, fttTft operators and other solf-enployed persons
raid government employees. The Board i s recommending extension of coverage
under unemployment insurance to ©mployees of establishments hairing less
than eight workers not covered under the present systeri*
She Board estimates that the extension in coverage and c inm
crease in the tax rate for old-age insurance from 2 to h per cent would
raise th© yield of t h i s t J fron th® present annual rate of about $000
million to about |2 b i l l i o n . The Board proposes to raise the present
3 per cent tax. for employment insurance to I; per cent and to nationalize
the system which Is now administered by the State governments with
different scales of employment benefits prevailing in each Btat@. They
estimate that these ehanges would raise th© yield of this tax from i t s
present level of about $900 million to $1,600 million. Th® change-over
to a fully federalized busie -will require some time and i t will not be
possible to make this change fully effective before 19^3* 3&e Board elso
proposes to set up a system of disability and hospital!2ation benefits and
to levy a special 2 per cent t&x for this purpose yielding about $800
million a year.
The combined effect of these proposals would be an increase
ifom the collections of 01.7OO million in I9I42 that would be made if the
system were left unchanged to %3$10Q million. In 19^3 collections would
increase to ll^l+GO million*
The old»age tcaee ar© levied one-half ;Xpon employers and onehalf upon employees. H© unenployment tsates ar© levied wholly upon
' i
employers* I t i s generally b@li©v©d that except in special situations
th© employers' pert of the tax i® passed on to th© consuming public i s th©
form of higher prices or back to ©mployees in the form of lower wages than
would be paid in the abeenc© of th© tax.