heard the Senator from North Carolina say. I believe, from what I have heard, that some time in my life, when I get to be an old man, I will undertake to learn the game myself. At the present time, however, I am only acting because of my sympathy with those who are aged and gray and baldheaded who desire to play golf without paying Uncle Sam any royalty on the game.

The VICE PRESIDENT. The question is on agreeing to the amendment.

The amendment was agreed to.

Mr. COPELAND. Mr. President, I send forward an amendment, which I ask to have read.

The VICE PRESIDENT. The amendment will be read. The LEGISLATIVE CLERK. At the proper place in the bill it is proposed to insert:

For the purposes of this act officers and employees of any State or political subdivision shall not be discriminated against because their full-time service is given to a publicly owned and operated water-supply system, street railway, or other public utility, and any taxes and penalties heretofore imposed upon such persons shall be abated, credited, or refunded.

Mr. COPELAND. Mr. President, the Senator from Michigan [Mr. VANDENBERG] has offered an amendment of the same nature. I am not particular which amendment is adopted. Perhaps the language of his amendment is better than that of this

one.

The purpose of this amendment is to release employees of a municipality who are devoting their entire time to a public utility. I have in mind particularly the waterworks. In my city the employees of the city who operate the water plant are taxed, while the other employees of the city-policemen, firemen, and other employees-are not taxed. Of course, the question is whether or not these are municipal employees.

I had a colloquy with the Senator from Utah two or three years ago over the same matter, where penalties were involved, where assessments had been levied against these municipal employees, and penalties imposed upon them. As the result of the debate in the Senate, participated in by the Senator from Minnesota [Mr. SHIPSTEAD] and the Senator from Massachusetts, Mr. Butler, who was here then, these penalties were abated; but it is manifestly unfair to discriminate against an employee of a city because he is engaged in a municipal operation in connection with a public utility.

I present the amendment for the consideration of the Senate. Mr. VANDENBERG. Mr. President, the amendment presented by the Senator from New York accomplishes precisely the same result as the amendments that I have introduced and that are pending; and I am quite content to take the issue on the amendment as presented by the Senator from New York. The issue is a very real one in my State, particularly because of the large number of employees on the municipal street railway and in the municipal waterworks at Detroit.

Up to 1923 it was supposed that all municipal employees were exempt. After 1923, due to a ruling of the Internal Revenue Department, it was undertaken to be said that some municipal functions are governmental and some municipal functions are proprietary. Because some are supposed to be proprietary, under the dictum of the Internal Revenue Department, the employees of those departments are asked to pay a tax. The obvious inconsistency of it is evident at a fire, for instance. where the fireman who holds the hose, according to the Internal Revenue Department, is exempt from taxation, while the man who pumps the water into the hose has to pay a tax. The amendment of the Senator from New York will remove that discrimination.

Mr. DILL. Mr. President——
The PRESIDENT pro tempore.

Does the Senator from
Michigan yield to the Senator from Washington?
Mr. VANDENBERG. I am very glad to yield.
Mr. DILL. What about the employees of a municipal elec-
tric light and power system?

Mr. VANDENBERG. I understand that they are exempt at the present time.

Mr. DILL. Is not that a proprietary organization also? Mr. VANDENBERG. I should think so, if any are to be proprietary.

I might say to the Senator that one of my objections to this situation is that the Internal Revenue Department is undertaking to say to the cities of America what are or are not correct municipal functions. I think. in the name of home rule, that cities are entitled to decide for themselves what municipal functions they shall operate.

I am heartily in favor of the amendment. I think it is absolutely just. It involves practically no revenue to-day,

because most of these employees are in the lower brackets; but in the name of a fair release from discrimination, and in the name of municipal home rule, I think this amendment is entitled to be adopted.

Mr. COPELAND, Mr. HARRISON, and Mr. PHIPPS addressed the Chair. Does the Senator from

The PRESIDENT pro tempore. Michigan yield; and if so, to whom? Mr. VANDENBERG. I yield first to the Senator from New York.

Mr. COPELAND. I suggest that the Senator from Michigan offer his amendment now in place of mine. I am told that his amendment is in better form than mine, and brings the same issue before us. There is no pride of authorship in it, of

course.

Mr. VANDENBERG. Then I will offer mine as a substitute. The PRESIDENT pro tempore. The Senator from New York withdraws his amendment. The Senator from Michigan offers an amendment which will be stated.

Mr. VANDENBERG. There will have to be two amendments under my offer, because the matter has been drawn in that form by the experts of the Finance Committee.

I offer the amendment which I send to the desk. The PRESIDENT pro tempore. The amendment will be stated.

The LEGISLATIVE CLERK. On page 91, it is proposed to strike out lines 24 to 25 and lines 1 to 6 on page 92, inclusive, and in lieu thereof to insert the following:

(b) Officers and employees of States and Territories: Amounts received by officers or employees of any State or Territory, or political subdivision thereof, as compensation for personal services in such office or employment, except to the extent that such compensation is paid by the United States Government directly or indirectly. For the purposes of this subsection the terms "officers" and employees" shall include individuals employed by a corporation at least 95 per cent of the ownership or control of which is directly or indirectly, through voting power or otherwise, vested in a State, Territory, or political subdivision thereof.

The PRESIDENT pro tempore. Does the Senator from Michigan yield to the Senator from Mississippi?

Mr. VANDENBERG. I yield to the Senator from Mississippi. Mr. HARRISON. May I ask, in the time of the Senator from Michigan, if the Senator from Utah will not permit this amendment to be adopted, and let it go to conference? Mr. COUZENS. Mr. President, will my colleague yield? Mr. VANDENBERG. I yield to my colleague.

Mr. COUZENS. I do not like the inference of the Senator from Mississippi when he suggests that the amendment be allowed to go to conference.

Mr. HARRISON. I think the sentiment of the Senate is for this proposition. I believe it was in the Finance Committee, and I had hoped that, in order to expedite the passage of this measure, we might accept the amendment and let it go to conference.

Mr. LA FOLLETTE. I suggest to the junior Senator from Michigan that we test the matter out here by a vote in order that the conferees may be assured of the fact that a majority of the Senate are in favor of the amendment.

Mr. SHIPSTEAD. Mr. President, will the Senator yield?
Mr. VANDENBERG. I yield.

Mr. SHIPSTEAD. I would like to ask the Senator from Utah

a question. If I remember correctly, in 1924 we passed this kind of a provision exempting these employees.

If we are going to exempt one class of employees of a municipality, which we have done, I do not see why we should not exempt all of the employees, and if in the past we have taxed them, contrary to the theory we believe to be the right one, we should not try to collect that tax. As I understand it, they have gone on the theory up until recently that they were city employees, and have made no attempt to return their salaries to the collection officers of the United States on the theory that they were taxable. But recently it has been held, so the Senator from Michigan says, that they are taxable under the law. If we want to relieve that class of municipal employees, it seems to me we ought to relieve those who were taxed last year just the same as we relieve those who are going to be taxed next year.

Mr. SACKETT. Every argument that applies to this year applies to last year.

Mr. NORRIS. It seems to me they are just the same; and I do not object to it being retroactive. I do not think we ought to make fish out of one class and fowl of another. It seems to me that if if anyone working for a municipality can not under the law be taxed by the Federal Government on his income it should not make any difference in what capacity he is laboring. If I had my way, I would not relieve anybody, whether he were working for the Federal Government or a State or a municipality. I believe all ought to be taxed on their salaries alike. But it seems to be held that under our Constitution we can not tax State officers, and if we can not tax part of them I do not see how we can justly tax any of them.

Mr. REED of Pennsylvania. Mr. President, will the Senator from Michigan yield?

Mr. VANDENBERG. I yield to the Senator from Pennsylvania. Mr. REED of Pennsylvania. I am in full accord with the statement of the Senator from Nebraska that common justice requires us to tax everybody uniformly. There is no reason in justice why a man who operates a pump for a city should get off tax free while a man who operates a pump for the Senator or myself should have to pay a tax on his income. The trouble is that we bump into the Constitution, under which it has been held there are certain classes of employees of municipalities that we have not the constitutional power to tax. It seems to me that it is a misfortune that we have not, although I do not quarrel with the decision of the Supreme Court.

But why extend that misfortune one inch further than the Constitution compels us to go? It seems to me the moment we begin to add legislative prohibitions, begin to make legislative inequalities on top of those made by the Constitution itself, we are simply making the situation worse and unfair to that great mass of the citizens who can hide behind the Constitution and who have to bear the tax, and we are just making the bill that much more unjust than it is now.

Mr. VANDENBERG. On the other hand, we have certain municipal employees within our jurisdiction and we certainly are charged with the duty of being fair to all of them alike. Two wrongs can not make a right. If the Senator from Pennsylvania is disappointed that part of the employees are exempt, he should not disappoint the other part of the employees by being unfair to them.

Furthermore, I submit this thought to him: Most of the employees in the municipal department are interchangeable under civil service. They are at the mercy of the interchangeable feature of the civil service. Therefore, a man who is in the supply department, we will say, transferred there from the water department, is transferred from a tax exemption to a tax liability, and he is not responsible at all. He is in the same municipality, on the same standard of pay, and yet under different rules. I do not see how that can be defended on the basis of justice and equity.

Mr. SMOOT. Mr. President

Mr. VANDENBERG. I yield to the Senator from Utah. Mr. SMOOT. There is a difference in this regard as to the salary of those two classes of people. It is true the Constitution prevents the taxation of employees of municipalities, States, and counties, but in this case, where there is an organization virtually owned and controlled and directed by the city, even though they do own only 95 per cent, the employees of the organization have their salaries fixed according to the wages fixed in every other similar class of work.

Mr. COUZENS. Oh, no; that is not so.

Mr. SMOOT. It was so testified here in 1926 and in 1924. Mr. COUZENS. I will say to the Senator that I know personally of definite cases where that is not so, and that is better than testimony.

Mr. SMOOT. All I say is that it was testimony presented to the committee. There was no question about it at the time. That was the difference between the two, and that being

the case there should be one exempt and the other should pay a tax. The man who receives the same identical wage upon the same basis is compelled to pay a tax. Why should he not be compelled to pay it?

Mr. COUZENS. Where the water department is wholly municipally owned, and not a private corporation owned by the city, the employees are taxable.

Mr. SACKETT. That is because they have a water company privately owned in effect. Mr. COUZENS. Oh, no.

Mr. SACKETT. But if the city should see fit to change that status and put those employees under the same provisions as the police and firemen, then they would be exempt.

Mr. SMOOT. And they would have to take the same salaries paid by the city.

Mr. SACKETT. And so they do to-day, when a corporation is fully owned by the city. It is just a matter of the city's convenience as to how they handle the water company, and we put the penalty upon the employee, because the city wants to change the status. I do not think it is a fair proposition. Mr. SMOOT. I do not care to discuss it any further. Mr. VANDENBERG. Let us submit it to a vote.

Mr. SMOOT. I certainly hope the Senate is not going to make a wrong retroactive provision covering a wrong.

Mr. VANDENBERG. The first vote is upon the principle of general exemption. Let us have a vote.

Mr. SIMMONS. Mr. President, I will go as far as anyone to carry out the principle of comity between the States and the Federal Government, but I think that comity should be extended only to such employees of the Federal Government and such employees of the State government and its subdivisions as are necessarily in charge of the ordinary functions of the Government and of the States. If the State should go into private business, such as building railroads, the employees are certainly not entitled to exemption. If the United States shall go into private business, I do not think the employees engaged in that business are entitled to exemption.

The matter of street railways is not a necessary part of the functions of city government. In that case the city enters into business for the purpose of making money or saving money. It is not a part of the necessary functions of a city government. Those employees certainly are not entitled to exemption. When we come to electric light companies, of course they are entitled to it because it is a part of the function of the city to supply the people with light. The same is true of waterworks. There can be no question about it, I think. But I understand this amendment is drawn so broad that the exemption would apply to any enterprise the city might undertake in the nature of street railways and things of that kind for the purpose of making money or saving money.

Mr. COUZENS. Mr. President, I would like to ask the Senator a question.

Mr. SIMMONS. I admit the line of demarcation is very difficult to draw, but the principle is clear to my mind. In order to entitle a Federal employee or a State employee or an employee of a subdivision of the State to exemption, it is necessary that he should be engaged in work that is ordinarily within the functions of the administration of the affairs committed to the charge of the city or State.

Mr. COUZENS. Mr. President, will the Senator yield?
Mr. SIMMONS. I yield.

Mr. COUZENS. The Senator knows there has been evolution. There was a time when even the lighting of streets was done by private interests at so much per lamp. That evolution has grown so that it is not only nearly every community that furnishes its own lighting for its streets, but nearly every community now furnishes its own water. In some cases it has developed to the point where the city furnishes its own transportation facilities.

Mr. SIMMONS. I think it is very questionable whether they are entitled to exemption, but I would be willing to draw the line broad and wide enough to allow that class of employees to be included. But when it comes to street railways I do not agree to that at all. We have had a decision of the supreme court in my State, where the State entered into the business of building and operating railroads. The court held that the State in that particular divested itself of its sovereignty and became subject to the general laws which apply to private citizens.

Mr. FLETCHER. The same thing was held in South Carolina in the liquor case, when the State went into the liquor business.

Mr. SIMMONS. If it is a case where the sovereign, whether State or Nation, has gone outside of the ordinary domain of the jurisdiction which is conferred upon it by its charter and engaged in private business enterprises, then the employees

stand upon the same footing with other private citizens and are not entitled to this exemption under the principle of parity. Mr. VANDENBERG, Mr. BARKLEY, and Mr. COUZENS addressed the Chair.

The PRESIDENT pro tempore. Does the Senator from North Carolina yield; and if so, to whom?

Mr. SIMMONS. I yield first to the junior Senator from Michigan.

Mr. VANDENBERG. Does the Senator know of any municipal function more generally exercised in America to-day than that of municipal waterworks?

Mr. SIMMONS. I had just stated, if the Senator will pardon me, that it is very difficult to draw the line; but with the desire to do full justice in my mind to the State government I have been willing to make it broad enough to include lighting and waterworks, although I do not think that is absolutely one function of a city government.

Mr. BARKLEY. Mr. President, will the Senator yield?
Mr. SIMMONS. I yield.

Mr. BARKLEY. The Senator from North Carolina knows with what great respect I look upon any views he may express on any subject.

- Mr. SIMMONS. I thank the Senator.

Mr. BARKLEY. It is true that in many cities they have publicly owned and operated hospitals, which to some extent invade the domain of privately owned and operated hospitals.

Mr. SIMMONS. I would be liberal enough to take them in. Mr. BARKLEY. What distinction does the Senator draw between a publicly owned lighting plant, lighting the streets for its citizens, and on the other hand a publicly owned street railway system furnishing transportation for its citizens along the publicly owned streets?

Mr. SIMMONS. I do not think it is at all within the province of the city to enter into that business except for the purpose of making money.

Mr. SMOOT. In the Metcalf case in the Supreme Court, the court took the position absolutely that the employees were taxable.

Mr. SIMMONS. I want to be as liberal as it is possible to be, but if we begin to broaden this thing it will finally have to be extended to every possible activity of a city or town that it may want to enter into, or even a county or State. Whether it be the railroad business or what not, we would have to extend the exemption to the employees engaged in that operation.

The PRESIDENT pro tempore. Does the Senator from Utah maintain his objection to combining the two amendments of the Senator from Michigan?

Mr. SMOOT. I do.

Mr. VANDENBERG. Let us have the yeas and nays.
The yeas and nays were ordered.

Mr. COUZENS. Mr. President, I understood the Senator from Utah to state, I think, that water employees are now exempt.

Mr. SMOOT. I said municipal employees are exempt, and that is all the amendments are asking for.

Mr. COUZENS. But the waterworks employees are not exempt. The Senator should not make the broad statement that the municipal employees are exempt, because that is not a true statement. They are only partially exempt.

Mr. SMOOT. I will take the decision of the Supreme Court as to what an employee of the Government is. The court said it is where they are engaged in municipal-government functions. Mr. COPELAND. Mr. President, the Senator is referring to the case he mentioned two years ago, where a man was giving part time in the waterworks, and during only a few weeks of the year he was on the pay roll. He asked exemption, and, of course, the court said very properly that he was not entitled to exemption.

Mr. SMOOT. If the Senator has the decision he will find the rule is applicable in every case.

Mr. COPELAND. It was held that the man was not a municipal employee.

Mr. SMOOT. Certainly he was not.

Mr. COPELAND. Because he was only giving a few weeks' time to that particular duty. We had that matter argued out here two or three years ago. It does not relate in any way to the permanent employees who spend all their time at the works. It related only to a man who was doing many other jobs besides this particular one.

Mr. SMOOT. That was the case, but the Supreme Court went further than his case, and stated exactly what the situation is.

The PRESIDENT pro tempore. The question is on agreeing to the amendment proposed by the Senator from Michigan.

Mr. GEORGE. Mr. President, may we have the amendment stated?

The PRESIDENT pro tempore. The amendment will be read for the information of the Senate.

The CHIEF CLERK. On page 91, strike out lines 24 to 25 and lines 1 to 6 on page 92, inclusive, and in lieu thereof insert the following:

(b) Officers and employees of States and Territories: Amounts received by officers or employees of any State or Territory, or political subdivision thereof, as compensation for personal services in such office or employment, except to the extent that such compensation is paid by the United States Government directly or indirectly. For the purposes of this subsection the terms "officers" and "employees " shall include individuals employed by a corporation at least 95 per cent of the ownership or control of which is directly or indirectly, through voting power or otherwise, vested in a State, Territory, or political subdivision thereof.

Mr. GEORGE. Mr. President, I am not able to support this amendment, because I think the proposal to exempt from taxation the income of officers and employees of a corporation at least 95 per cent of the stock of which is owned or controlled by a municipality involves a principle that we ought never to recognize. I see, however, much force in the general position taken by the Senator from Michigan [Mr. VANDENBERG]. I do not disagree with what the Senator from North Carolina [Mr. SIMMONS] has said. Of course, the amendment is the result of court decisions, and it is recognized as established that, under our system, the General Government can not tax the local gov ernments.

Mr. SIMMONS. Mr. President, will the Senator from Georgia pardon an interruption?

Mr. GEORGE. Yes.

Mr. SIMMONS. I call the attention of the Senator to this provision of the amendment.

em

For the purposes of this subsection the terms "officers" and ployees" shall include individuals employed by a corporation at least 95 per cent of the ownership or control of which is directly or indirectly, through voting power or otherwise, vested in a State, Territory, or political subdivision thereof.

It includes any enterprise they may go into.

Mr. GEORGE. I said that I could never support the amendment with that provision in it, but what I am trying to say is that it is not at all necessary, in view of court decisions, in the framing of a tax act to undertake to run fine distinctions between strictly governmental functions and nongovernmental functions.

There are many exceptions in this proposed tax act and in all tax acts. We arbitrarily exempt from taxation certain amounts and authorize certain exemptions in favor of particular classes. To undertake a fine distinction based upon the decisions of the courts, holding that so long as a political subdivision of a State is performing a strictly governmental function the incomes of its officers and employees are not subject to the Federal income tax, but that its officers and employees engaged in nongovernmental activities are subject to the tax, is to run into trouble and, as I think, work an injustice, as the Senator from Michigan has pointed out. There is no equity in imposing a tax upon one class of municipal employees and at the same time exempting the income received by another class of municipal employees. So it seems to me that it would be very much better in writing the tax act to say that employees of a State, county, or municipality should not be subject to the tax upon income derived solely from the State, county, or municipality for personal service. I would be willing to vote for that kind of amendment, as it is a more reasonable distinc tion if we are going to make any distinction; and under the Constitution, of course, we must make some distinction in favor of the employee engaged exclusively in the performance of a function of government in a legal sense.

Mr. SMOOT. I should be perfectly willing to accept an amendment of that kind.

Mr. COPELAND. Mr. President, let me ask the Senator from Georgia if my original amendment does not cover what he has in mind. That amendment reads:

For the purposes of this act officers and employees of any Stante or political subdivision shall not be discriminated against because their full-time service is given to a publicly owned and operated water supply system, street railway, or other public utility, and any taxes and penalties heretofore imposed upon such persons shall be abated, credited,

or refunded.

Mr. GEORGE. Without opportunity to study the amend■ nent, I would not say whether it would meet the views that I have tried to express. I would much rather insert in the tax act

an exemption of such employees of municipalities as are engaged in strictly municipal business, though some of it may not be governmental in a strict technical sense, than to undertake to draw the distinction between municipal employees.

Mr. COPELAND. Let me say to the Senator from Georgia that we thought two or three years ago that we had reached an understanding on that matter. That is the reason why I am anxious that we should be very specific at this time, because otherwise we shall find that the taxing department will go ahead, as they have since 1925, and tax these employees. am particularly interested in the water companies. They have been taxing water-company employees; there has been no relief such as we anticipated would be given by the action we took at that time.

I

Mr. SIMMONS. Mr. President, does the Senator mean that he wants now specifically to exempt employees employed in electric-lighting plants and waterworks?

Mr. COPELAND. Yes, sir.

Mr. SIMMONS. Does the Senator wish to stop there?

Mr. COPELAND. So far as I am personally concerned, my interest has not gone beyond that; but both Senators from Michigan are anxious to have the principle extended.

Mr. SIMMONS. I think that is in the twilight zone; but in the interest of the municipality, in the interest of the employee, and in the interest of harmony between the Federal Government and the State governments, I would be willing to treat waterworks and lighting plants as a part of the function of government in connection with city administration. I would be willing to go that far, but I would not go any farther. Mr. VANDENBERG. Mr. President, will the Senator from Georgia yield to me for a moment?

Mr. GEORGE. I yield.

Mr. VANDENBERG. Mr. President, I wish the amendment might be adopted and go to conference to be perfected there if there is any such provision in it that is as dangerous as the Senator indicates. If we can establish the principle on the roll call, and then let the conference committee perfect it, that will be perfectly satisfactory to the author of the amendment. Mr. SMOOT. The Senator refers to the first amendment? Mr. VANDENBERG. To the first amendment. Mr. SMOOT. I have no objection to that.

The PRESIDENT pro tempore. The question is on agreeing to the amendment proposed by the Senator from Michigan, and on that question the yeas and nays have been ordered.

Mr. KING. Mr. President, I am opposed to the amendments offered by the Senators from Michigan and New York. I think that the correct exposition of this question has been made by the Senator from North Carolina [Mr. SIMMONS] and by the Senator from Georgia [Mr. GEORGE]. I invite the attention of Senators to the possible precedent that may be established if the Federal Government allows too great exemptions and deductions in behalf of persons who may be connected indirectly with State or municipal governments. If we exempt from taxation the incomes of persons employed in business enterprises owned or controlled by States and their political subdivisions, and the Federal Government should enter upon the operation of railroads, as it may, the operation of ships, as it has done, and engages in general business undertakings that come within the category of private endeavor, the States may be denied the right to collect income taxes from the thousands of persons employed in such enterprises upon the theory that they are agents of the Federal Government and so immune from State taxation.

Many Federal employees receive large salaries from the Shipping Board and from other governmental agencies and corporations engaged in business concerns of a nongovernmental character. States imposing income taxes, as they have a right to, may encounter obstacles to the collection of the same if the Federal Government frees all persons from income taxes who receive compensation from States and municipalities engaged in activities of a private or nongovernmental character. If we establish the principle that the United States will not tax the employees of cities or their agencies and corporations who are engaged in purely private business, running railroads and profit-making plants, then when the States attempt to tax Federal employees engaged in a multitude of proprietary or nongovernmental activities we will find our action here paraded as a precedent, which will come home to vex us and to impair the power of the States to derive revenue from those who should pay.

I favor granting this exemption to those employees who are engaged in purely governmental activities but not those who serve the States or municipalities who are carrying out business activities. If we shall exempt from taxation under the income tax those who are engaged in purely governmental functions for municipalities and the States, we will exempt, of course,

Mr. BRATTON. I have a general pair with the junior Senator from Indiana [Mr. ROBINSON]. I do not know how he would vote if present. Therefore, I withhold my vote.

Mr. WALSH of Montana (after having voted in the affirmative). I have a pair with the Senator from Vermont [Mr. DALE]. I transfer that pair to the Senator from Missouri [Mr. REED], and will allow my vote to stand.

Mr. WHEELER (after having voted in the affirmative). I have a general pair on this question with the Senator from Idaho [Mr. GOODING]. I transfer that pair to the Senator from Arizona [Mr. ASHURST], and will let my vote stand.

Mr. WATSON (after having voted in the negative). I am paired with the Senator from South Carolina [Mr. SMITH]. I transfer that pair to the Senator from Maine [Mr. GOULD], and will permit my vote to stand.

Mr. JONES. I have been requested to announce the following general pairs:

The Senator from Delaware [Mr. DU PONT] with the Senator from Florida [Mr. TRAMMELL];

The Senator from North Dakota [Mr. FRAZIER] with the Senator from South Carolina [Mr. BLEASE]; and

The Senator from New Hampshire [Mr. KEYES] with the Senator from New Jersey [Mr. EDWARDS].

The result was announced-yeas 40, nays 30, as follows:

So Mr. VANDENBERG'S amendment was agreed to. Mr. VANDENBERG. May we have a vote now on the other amendment?

The VICE PRESIDENT. The question is on the second amendment of the Senator from Michigan.

Mr. GEORGE. May the amendment be stated?

Mr. SMOOT. So that the Senate may understand it, I will state that this amendment simply makes retroactive the amendment which has just been adopted.

Mr. GEORGE. On that question I wish to be heard. The VICE PRESIDENT. The Senator from Georgia. Mr. GEORGE. Mr. President, I stated to the Senate that if one provision of the amendment just adopted were stricken out I could very well vote for it, not upon the ground that these employees are necessarily entitled to exemption, but upon the ground that it is difficult to draw the distinction between I desire, howgovernmental and nongovernmental functions, ever, to direct the attention of the Senate to the amendment as adopted, because it has a bearing on the pending amend

ment.

The amendment provides for the exemption of the salaries or incomes of officers and employees of any State or Territory or political subdivision thereof, and then declares:

For the purposes of this subsection the terms "officers" and "employees" shall include individuals employed by a corporation at