CHANGES IN PER DIEM TRAVEL ALLOWANCES FOR GOVERNMENT EMPLOYEES HEARING BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS HOUSE OF REPRESENTATIVES NINETY-THIRD CONGRESS SECOND SESSION ON H.R. 15903 AND RELATED BILLS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP76M00527R000700030004-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 86
• Document Creation Date: December 9, 2016
• Document Release Date: September 2, 2001
• Sequence Number: 4
• Publication Date: July 16, 1974
• Content Type: REPORT

CHANGES IN PER DIEM TRAVEL ALLOWANCES FOR z//sc
GOVERNMENT EMPLOYEES
HEARING
SUBCOMMITTEE OF THE
COMMITTEE ON
GOVERNMENT OPERATIONS
HOUSE OF REPRESENTATIVES
NINETY-THIRD CONGRESS
SECOND SESSION
ON
H.R. 15903 and Related Bills
TO REVISE CERTAIN PROVISIONS OF TITLE 5, UNITED
STATES CODE, RELATING TO PER DIEM AND MILEAGE
EXPENSES OF GOVERNMENT EMP'LOYEESy AND FOR
OTHER PURPOSES
Printed for the use of the Committee on Government Operations
U.S. GOVERNMENT PRINTING OFFICE
88-9110 WASHINGTON : 1974
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JACE: BROOKS, Texas
L. H. FOUNTAIN, North Carolina
ROBERT E. JONES, Alabama
JOHN E. MOSS, California
DANTE B. FASCELL, Florida
HENRY S. REUSS, Wisconsin
TORBERT H. MACDONALD, Massachusetts
WILLIAM S. MOORHEAD, Pennsylvania
WM. J. RANDALL, Missouri
BENJAMIN S. ROSENTHAL, New York
JIM WRIGHT, Texas
FERNAND J. ST GERMAIN, Rhode Island
JOHN C. CULVER, Iowa
FLOYD V. HICKS. Washington
DON FUQUA, Florida
JOHN CONYERS, JR., Michigan
BILL ALEXANDER, Arkansas
BELLA S. ABZUG, New York
HAROLD D. DONOHUE, Massachusetts
JAMES V. STANTON, Ohio
LEO J. RYAN, California
CARDISS COLLINS, Illinois
FRANK HORTON, New York
JOHN N. ERLENBORN, Illinois
JOHN W. WYDLER, New York
CLARENCE J. BROWN, Ohio
GUY VANDER JAGT, Michigan
GILBERT GUDE, Maryland
PAUL N. McCLOSKEY, JR., California
JOHN H. BUCHANAN, JR., Alabama
SAM STEIGER, Arizona
GARRY BROWN, Michigan
CHARLES THONE, Nebraska
RICHARD W. MALLARY, Vermont
STANFORD E. PARRIS, Virginia
RALPH S. REGULA, Ohio
ANDREW J. HINSHAW, California
ALAN STEELMAN, Texas
JOEL PRITCHARD, Washington
ROBERT P. HANRAHAN, Illinois
HERBERT ROBACE, Staff Director
ELMER W. HENDERSON, General Counsel
MILES Q. ROMNEY, Counsel-Administrator
DOUGLAS G. DAHLIN, Associate Counsel
J. P. CARLSON, Minority Counsel
WARREN B. BUBLER, Minority Professional Staff
JACK BROOKS, Texas, Chairman
ROBERT E. JONES, Alabama . JOHN H. BUCHANAN, JR., Alabama
JOHN C. CULVER, Iowa ROBERT P. HANRAHAN, Illinois
HAROLD D. DONOHUE, Massachusetts STANFORD E. PARRIS, Virginia
JAMES V. STANTON, Ohio ANDREW J. HINSHAW, California
CARDISS COLLINS, Illinola
EX OFFICIO
CHET HOLIFIELD, California FRANK HORTON, New York
WILLIAM M. JONES, Staff Director
WILLIAM H. COPENBA.VER, Counsel
0. DON STEPHENS, Research Analyst
LYNNE HIGGINBOTHAM, Clerk
KATHRYN J. Locos, Clerk
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CONTENTS
Page
Hearing held on July 16 1974____________________________________ 1
Texts of H.R. 15903 and' related bills________________________________ 2
Statement of-
Garrison, Dennis, executive vice president, American Federation of
Government Employees; accompanied by Carl K. Sadler, legislative 60
representative_____________
Geller, Irving I., general counsel, National Federation of Federal 66
Employees_____________
Gureau, Mary C., director of legislation, National Treasury Employees 68
Union------------------------------------------------------ 63
McCart, John A., operations director, Government Employes Coun-
cil, AFL-CIO -----------------------------------------------
_________ _
Zechman, Ronald, Acting Associate Administrator, General Services
Administration; accompanied by Robert Chandler, Director of the
Passenger Transportation Branch, Federal Supply Service; and 13
Edward Duignan, Assistant General Counsel____________________
Letters, statements, etc., submitted for the record by-
Garrison, Dennis, executive vice president, American Federation of
Government Employees: Statement of Clyde M. Webber, president, 61-62
AFGE -----------------------------------------------------
Irving I., general counsel, National Federation of Federal 68-68
Employees, statement--------------
Gureau, Mary C., director of legislation, National Treasury Employees 69-731
Union, statement--------------------------------------------
John A., operations director, Government Employes Coun-
----------------------- ---- - =-- 64-65
cil, APL-CIO, statement--------------------------------------
Parris Hon. Stanford E., a Representative in Congress from the State
_ _ 73-746
of "Virginia, statement _ _ _ _ _ _ _ _ _ _ _ _
Zechman, Ronald, Acting Associated Administrator, General Services
Administration :
GSA study on the cost of operating an automobile and aircraft_ 25-57
Information regarding percentage of gasoline costs for an auto-
mobile 24
------------------------------------------------
Letter, dated June 5, 1974, to Speaker Albert, from Deputy
Administrator Ink, re draft bill to revise certain provisions of 13-16
_ _ _ _ _ _ _ _ _
title 5 of the United States Code --------------------------
Most recent per diem costs of lodging and meals--------------- 20-23
Statement----------------------------------------------
APPENDIX
Other material relative to the hearing-------------------------------- 75
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CHANGES IN PER DIEM TRAVEL ALLOWANCES
FOR GOVERNMENT EMPLOYEES
HOUSE OF REPRESENTATIVES,
GOVERNMENT ACTIVITIES SUBCOMMITTEE
OF THE COMMITTEE ON GOVERNMENT OPERATIONS,
Washington, D.C.
The subcommittee met, after considering other business, at 2:30
p.m., in room 2203, Rayburn House Office Building, Hon. Cardiss
Collins presiding.
Present: Representatives Cardiss Collins, John H. Buchanan, Jr,,,
Robert P. Hanrahan, Stanford E. Parris, and Andrew J. Hinshaw.
Also present: William M. Jones, staff director; William H. Copen-
haver, counsel; Lynne Higginbotham, clerk; Kathryn Lokos, clerk;
and James McInerney, minority professional staff, Committee on
Government Operations.
Mrs. COLLINS. The next legislation we are taking up today has
generated a lot of interest. The subcommittee has pending several
proposals to increase the per diem and the mileage allowances for
Government employees traveling on official business. These proposals
vary considerably, but basically recommend that per diem be in-
creased from the present $25 a day to $30, $35, or $40 a day, and that
mileage be increased from the present 12 cents per mile to various
figures between 14 and 20 cents a mile.
Present per diem and mileage allowances were established in 1969,
and after 5 years of inflation, these are thought to be inadequate at
the present time. Chairman Brooks introduced a bill (H. R. 15903) to
establish a uniform rate of $35 per day with a provision up to $50 a
day under unusual circumstances, and to direct GSA to set uniform
mileage allowances up to a maximum of 18 cents per mile for auto-
mobiles, and 24 cents per mile for privately owned airplanes.
In addition, the legislation would clarify existing statutory pro-
visions dealing with travel allowances so that all persons traveling on
Government business are treated on a somewhat equal basis.
A number of witnesses have requested to present testimony on these
proposals. I would hope we can hear from all of them. I will start with
the GSA, the Government agency primarily responsible for the ad-
ministration of the travel allowance provisions.
[The bills, H.R. 15903, H.R. 15154, H.R. 14000, and H.R. 10539,
follow:]
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99D CONGRESS H. I It 15903
2D SESSION
JULY 15,1974
Mr. Bnoons introduced the following bill; which was referred to the Com-
inittee on Government Operations
A BILL
To revise certain provisions of title 5, United States Code,
relating to per diem and mileage expenses of Government
employees, and for other purposes.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That this Act may be cited as the "Travel Expense Amend-
4 ments Act of 1974".
5 SEC. 2. Section 5701 (2) of title 5, United States Code,
6 is amended to read as follows :
7 (2) "'Employee' means an individual employed in
8 or under an agency or other individual performing serv-
9 ices for the Government;"
10 SEC. 3. Section 5702 of title 5, United States Code, is
11 amended to read as follows :
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1 "? 5702. Per diem; employees traveling on official business
2 " (a) An employee while traveling on official business
3 away from his designated post of duty is entitled to a per
4 diem allowance for travel inside the continental United
5 States at a rate not to exceed $35. For travel outside the
6 continental United States, the per diem allowance shall be
7 established by the Administrator of General Services, or his
8 designee, for each locality where travel is to be performed.
9 For travel consuming less than a full day, such rates may
10 be allocated proportionately pursuant to regulations pre-
11 scribed under section 5707 of this title.
12 " (b) An employee who, while traveling on official
1.3 business away from his designated post of duty, becomes
14 incapacitated by illness or injury not due to his own mis-
15 conduct, is entitled to the per diem allowance until such
16 time as he can again travel and to appropriate transporta-
17 tion expenses, including return to his designated post of
18 duty.
19 "(c) Under regulations prescribed under section 5707
20 of this title, the Administrator of the General Services Ad-
21 ministration may prescribe conditions under which an
22 employee may be reimbursed for the actual and necessary
23 expenses for travel inside the continental United States, not
24 to exceed $50 for each day of travel, due to unusual cir-
25 cumstances of the travel assignment, including travel to an
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1 unusually high cost locality or geographic area designated in
2 such regulations.
3 " (d) This section does not apply to a Justice or judge,
4 except to the extent provided by section 456 of title 28.".
5 SEC. 4. Section 5703 of title 5, United States Code, is
6 hereby repealed.
7 SEC. 5. Section 5704 of title 5, United States Code, is
8 hereby amended to read as follows:
9 15704. Mileage and related allowances
10 " (a) Under regulations prescribed under section 5707
11 of this title, an employee who is engaged on official business
12 for the Government is entitled to not in excess of-
13 " (1) 9 cents a mile for the use of a privately owned
14 motorcycle; or
15 " (2) 18 cents a mile for the use of a privately
16 owned automobile; or
17 " (3) 24 cents a mile for the use of a privately
18 owned airplane;
19 instead of actual expenses of transportation when that mode
20 of transportation is authorized or approved as more advan-
21 tageous to the Government.
22 " (b) In addition to the mileage allowance authorized
23 under subsection (a) of this section, the employee may be
25 <
(1) parking fees;
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1 " (2) ferry fees;
2 " (3) bridge, road, and tunnel costs; and
3 " (4) airplane landing and tie-down fees.".
4 SEC. 6. Section 5707 of title 5, United States Code, is
5 hereby amended 'to read as- follows :
6 "? 5707. Regulations and reports
7 " (a) The Administrator of General Services shall pre-
8 scribe regulations necessary for the administration of this
9 subchapter.
10 " (b) The Administrator of General Services, in consul-
11 tation with the Comptroller General of the United States, the
12 Secretary of Transportation, the Secretary of Defense, and
13 representatives of organizations of employees of the Govern-
14 ment, shall conduct periodic studies of the cost of travel and
15 the operation of privately owned vehicles to employees while
16 engaged on official business, and shall report the results of
17 such studies to Congress at least once a year.".
18 SEC. 7. The seventh paragraph under the heading
19 "Administrative Provisions" in the Senate appropriation' in
20 the Legislative Branch Appropriation Act, 1957 (2 U.S.C.
21 68b), is amended by striking out "$25" and "$40" and
22 inserting in lieu thereof "$35" and "$50", respectively.
23 Suc. 8. Item 5707 contained in the analysis of sub-
24 chapter 1 of chapter 57 of title 5 is amended to read as
25 follows :
"5707. Regulations and reports.".
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93D CONGRESS
20 SE9sION
H. R. 15154
IN THE HOUSE OF REPRESENTATIVES
JUNE 3, 1974
Mr. WHITEIIURsT (for himself, Mr. DAVIS of South Carolina, Mr. GuDE, and
Mr. PAIOUS) introduced the following bill; which was referred to the
Committee on Government Operations
A BILL
To amend title 5, section 5704(a) (2), United States Code.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That title 5, section 5704 (a) (2) be amended as follows:
4 Strike out the number "12" and insert in lieu thereof the
5 number "17".
I
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93D CONGRESS S ?
2iD SESSION'
? 4000
ArRIL 4,1974
Mr. WVALDLE introduced the following bill; which was referred to the Com-
mittee on Government Operations
A BILL
To revise certain provisions of title 5, United States Code, re-
lating to per diem and mileage expenses of employees and
other individuals traveling on official business, and for other
purposes.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That (a) section 5702 (a) of title 5, United States Code,
4 relating to the per diem allowance of employees traveling on
5 official business within the continental United States, is
6 amended by deleting "$25" and inserting in place thereof
"$35".
8 (b) Section 5702 (c) (1) of title 5, United States Code,
9 relating to reimbursement for actual and necessary travel
I
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1 expenses of employees under unusual circumstances in ex-
2 cess of the maximum per diem allowance, is amended by
3 deleting "$40" and inserting in place thereof "$50".
4 (c) Section 5703 (c) (1) of title 5, United States Code,
5 relating to the per diem allowance of individuals serving
6 without pay or at $1 a year for travel inside the continental
7 United States, is amended by deleting "$25" and inserting
8 "$35" in place thereof.
9 (d) Section 5703 (d) (1) of title 5, United States Code,
10 relating to reimbursement for actual and necessary travel
11 expenses of individuals serving without pay or at $1 a year
12 under unusual circumstances in excess of the maximum per
13 diem allowance, is amended by deleting "$40" and inserting
14 in place thereof "$50".
15 (e) Section 5704 of title 5, United States Code, relating
16 to mileage and related allowances of employees and other
17 individuals performing services on official business inside or
18 outside the designated post of duty or place of service, is
19 amended to read as follows :
26 "? 5704. ' Mileage and related allowances
21 "(a)- For the purposes of prescribing and administering
22 the regulations 'authorized by section 5707 of this title, the
23 Comptroller General of the United. States shall conduct, be-
24 ginning on July 1 of each fiscal year, a cost study to deter-
25 mine the actual cost a mile to an employee or other individ-
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1 ual performing service for the Government, who is engaged
2 on official business inside or outside the designated post of
3 duty or place of service, for the use of a privately owned
4 motorcycle, automobile, or airplane and submit to the Pres-
5 ident or his designee, not later than the beginning of the third
6 month after such date, the results of such study. The Pres-
7 ident or his designee shall include the specific results of the
8 study of the Comptroller General in regulations governing
9 the authorized payment of the actual costs described above.
10 The Comptroller General shall continue his study of the
11 appropriate and current accurate determination -of such costs
12 and shall transmit his then current determinations at the
13 beginning of the third month after the presentation of the re-
14 stilts of each prior study. The President or his designee shall
15 revise, maintain, and administer, on a current basis, the reg-
16 ulations prescribed under section 5707 of this title governing
17 the reimbursement of such costs to the employee or individual
18 concerned.
19 "(b) An employee or individual described in subsection
20 (a) of this section shall not use a privately owned motor-
21 cycle, au'tomobile, or airplane under the circumstances de-
22 scribed in subsection (a) of this section unless specifically
23 'authorized in writing to do so in the travel authorization.
24 Such written authorization for the use of a privately owned
25 motorcycle, automobile, or airplane shall be made only in the
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interests of the efficient and effective conduot of official busi-
ness of the Government and only if the use of public trans-
portation by the employee or individual concerned would be
a personal hardship or against the public interest.".
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11
9733 CONS8101T S I
1sT SsasIo r
R. 14539
Se 'TEMBEtt 26,1973
N[r. Bitoyo LL of Virginia introduced the following bill; which was referred
to the Committee on Government Operations
A BILL
To increase the maximum per diem allowance for employees
of the Government traveling on official business, and for
other purposes.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That subchapter I of chapter 57 of title 5, United States
4 Code, is amended-
5 (1) in section 5702 (a) , by striking out "$25"
6 and inserting in lieu thereof. "$35" ;
7 (2) in section 5702 (c), by striking out 140"
8 and "$18" and inserting in lieu thereof "$55" and
9 "$33", respectively;
I
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(3) in section 5703 (c), by striking out "$25"
2 and inserting in lieu thereof "$35"; and
a (4) in section 5703 (d), by striking out "$40" and
4 "$18" and inserting in lieu thereof "$55" and "$33",
5 respectively.
6 SEC. 2. The seventh paragraph under the heading "Arr
7 MINISTRATIVE PROVISIONS" in the Senate section of the
8 Legislative Branch Appropriation Act, 1957 (2 U.S.G.
9 68b), is amended by striking out "$25" and "$40" and
10 inserting in lieu thereof "$35" and "$55", respectively.
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Mrs. COLLINS. Mr. Ronald Zechman, Acting Associate Adminis-
trator, is here to present GSA's statement.
Mr. Zechman, you may proceed.
STATEMENT OF RONALD ZECHMAN, ACTING ASSOCIATE ADMINIS-
TRATOR, GENERAL SERVICES ADMINISTRATION; ACCOMPANIED
BY ROBERT CHANDLER, DIRECTOR OF THE PASSENGER TRANS-
PORTATION BRANCH, FEDERAL SUPPLY SERVICE; AND EDWARD
DUIGNAN, ASSISTANT GENERAL COUNSEL
Mr. ZECHMAN. Madam Chairperson, I have with me to my left
Mr. Robert Chandler, Director of the Passenger Transportation of
the Federal Supply System; and on my left, Mr. Edward Duignan,
Assistant General Counsel of the GSA.
I appreciate the opportunity to appear before this subcommittee
today on behalf of Arthur F. Sampson, Administrator, GSA, to
discuss our draft bill covering per diem and mileage expenses, which
was referred to the House Government -Operations Committee on
June 6, 1974.
We strongly feel that present per diem and mileage allowances are
inadequate for most Federal travelers and therefore propose that
legislation be enacted to increase them. A copy of our draft bill to
this end is attached, for the record.
[The draft bill follows:]
GENERAL SERVICES ADMINISTRATION,
Washington, D.C., June 5, 197.4..
Hon. CARL ALBERT,
Speaker of the House of Representatives,
'Washington, D.C.
DEAR MR. SPEAKER: There is transmitted herewith for referral to the appro-
priate Committee a draft bill, "To increase the maximum per diem allowance
and the maximum statutory mileage allowance for the use of a privately owned
automobile or airplane for employees of the Federal Government while traveling
on official business, and for other purposes."
Executive Order 11609 of July 22, 1971, vested in the Administrator of General
Services the authority of the President to prescribe regulations under 5 U.S.C.
5707 without approval, ratification, or other action by the President. The current
Federal Travel Regulations, promulgated by the General Services Administration,
are those which became effective on May 1, 1973 (41 CFR 101-7).
Under -present law (5 U.S.C. 5702), an employee traveling on official business
away from his designated post of duty is entitled to a per diem allowance pre-
scribed by the agency concerned, subject to a maximum of $25 for travel inside
the continental United States. Under regulations prescribed under 5 U.S.C. 5707,
an agency head may prescribe conditions under which an employee may be
reimbursed for the actual and necessary expenses of travel, not to exceed an amount
named in the travel authorization, when the maximum per diem allowance
would be less than the actual and necessary expenses due to "the unusual circum-
stances of the travel assignment." In such cases, the amount named in the travel
authorization may not exceed $40 for each day in travel status inside the con-
tinental United States, or the maximum per diem allowance established for the
locality where the travel is performed plus $18 for each day in a travel status
outside the continental United States. 'The maximum figures of $25, $40, and $18
have been in effect since November 19, 1969, when they were increased to those
levels by Public Law 91-114 from the previous figures of $16, $30, and $10.
In view of rising costs associated with travel, especially in major metropolitan
areas, the General Services Administration initiated a study to determine the
adequacy of present travel allowances for Federal employees. The study involved
approximately 13,000 actual employee travel experiences representing 63,000
man-days of travel taken over a period of three months in 1973, and included
22 agencies of the executive branch. This reflects seven-tenths of one percent
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of the total number of man-days of travel. Results show that the present $25
per diem rate was inadequate for over 50 percent of the reported travel. This
was due, primarily, to the increased average costs of approximately 24 percent
in food and lodging expenses since 1969, the year of the last per diem increase.
The Consumer Price Index level reflects this fact. The study also disclosed that
actual subsistence expense allowances of up to $40 per day were authorized in
only three percent of the travel reported.
We, therefore, propose in our draft bill that the maximum statutory per diem
allowance be increased from $25 to $30; the maximum statutory actual sub-
sistence expenses in the continental United States be increased from $40 to $50
per day; and the permissible amount in addition to the maximum per diem
allowance established for the locality for travel outside the continental United
States be increased from $18 to $23 per day. Section 2 of our draft bill would
provide the same changes in the $25 and $40 limitations imposed upon the Senate
by the Legislative Branch Appropriation Act, 1957, as amended. In spite of these
increases, the allowances will not be sufficient to take care of those employees
traveling to major cities such as New York and San Francisco. Based on published
commercial lodging and meal expenses, it would require an average of $45 per
day for adequate lodgings with three average meals, including tips and taxes.
For that reason, it is proposed in our draft bill to permit the reimbursement of
actual and necessary expenses of a trip when they are much more than the maxi-
mum per diem allowance, due to a travel assignment to such major cities and
metropolitan areas. Under present law this reimbursement is permitted only
when the higher expenses are due to "unusual circumstances."
Based on a $30 statutory per diem rate, it is anticipated that there would be
approximately 10 major city areas at the present time where travel, expenses
would exceed the maximum per diem rate by 10 percent or more and would there-
fore be designated as a "major city locality." A maximum rate would be stated in
the governing regulations for each, major city area so designated, but in no case
will the rate established exceed the $50 statutory maximum actual expenses al-
lowance. It is further anticipated that the maximum locality rates would be re-
viewed at least annually and adjusted as appropriate, within the proposed ceiling
of $50 per day. These major city locality rates would be prescribed as maximums
only, and when actual subsistence expenses incurred in any one day are less than
the maximum authorized, the traveler will, of course, be reimbursed only for the
lesser amount.
We believe this major city locality rate method to be a means of meeting the
demonstrated needs of Federal employees who must travel on official business,
which is preferable to increasing the maximum per diem rate to a level sufficient to
meet theme particular circumstances of travel. It will relieve the situations which
are now causing most of the hardships experienced by Federal employee travelers,
while the proposed increase in the maximum per diem rate will adequately cover
the remainder.
Under our proposed draft bill, the maximum yearly cost impact based on a per
diem increase to $30 would be approximately $24 Million over the present rate
($25), plus an additional increase of approximately $10 million based on the
establishment of the major city locality rate method.
This bill also proposes to amend 5 U.S.C. 5704(a)(2), to increase the maximum
allowance for the use of a privately owned automobile from 12 cents to 18 cents
a mile, and for the use of a privately owned airplane from 12 cents to 24 cents a
mile, and to amend 5 U.S.C. 5704(b) to provide, in addition to the mileage allow-
ance prescribed under 5 U.S.C. 5704(a)(2), that employees who use a privately
owned airplane for official business may be reimbursed for landing and tiedown
fees.
The maximum figures of 12 cents for a privately owned automobile and air-
plane have been in effect since August 14, 1961, when they were increased to those
levels by Public Law 87-139 from the previous figure of 10 cents.
A recent study by GSA of automobile operating costs indicates that the cost
of operating a privately owned automobile as of April 1974 was 14.4 cents a mile.
Another study which we recently completed relates to costs associated with
operating a privately owned airplane. As determined in this study, the cost of
operating a privately owned, single engine, piston airplane, as of December 1973,
was approximately 20.6 cents per mile, exclusive of landing and tiedown fees.
Although our studies indicated operating costs of 14.4 cents per mile for pri-
vately owned automobiles and 20.6 cents per mile for privately owned airplanes,
we recommend that the statutory rates be set at 18 and 24 cents per mile, respec-
tively. This would allow us latitude in prescribing reimbursement rates within the
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statutory maximums that will equate to the current costs of operating these
conveyances.
Additionally, we recommend that 5 U.S.C. 5704(b) be amended to permit
reimbursement for landing and tiedown fees in addition to the mileage allowance
prescribed for privately owned airplanes. Although similar costs such as parking
fees, ferry fares, and highway tolls may be separately allowed under 5 U.S.C.
5704 (b) for the use of a privately owned automobile, there is no statutory authority
for separately allowing the expenses of landing or tiedown services when a privately
owned aircraft is authorized for use on official business. A change in the law to
allow separate reimbursement for these costs will insure a closer relationship
between expenses incurred and the amount of reimbursement and will standardize
the allowances as they relate to both automobiles and airplanes.
The estimated annual costs impact for each 1 cent per mile increase for privately
owned vehicles is $3.8 million and for privately owned airplanes is $11,000. If
the rates for reimbursement are set at 15 and 21 cents, the estimated annual
total cost impact would be $11.5 million more than today's inadequate allowance.
The draft bill will provide more equitable treatment for Federal employee
travelers and alleviate the inadequacies of present travel allowances. We urge its
prompt enactment.
The Office of Management and Budget has advised that there is no objection
to the submission of this draft bill to the Congress and that its enactment would
be consistent with the Administration's objectives.
Sincerely,
DWIGHT A. INK,
Deputy Administrator.
Enclosure.
A BILL To revise certain provisions of title 5, United States Code, relating toper diem and mileage expenses
of employees and other individuals traveling on official business, and for other purposes
Be it enacted by the Senate and House of Representatives of the United Staters of
America in Congress assembled, That subchapter I of chapter 57 of title 5 United
States Code, is amended as follows:
(1) In Section 5701 by striking out "and" at the end of paragraph (5), by
striking out the period at the end of paragraph (6) and inserting in lieu thereof
"; and", and by adding the following:
"(7) `major city locality' means a city or metropolitan area designated as
such by regulation prescribed under section 5707 of this title."
(2) In section 5702(a), by striking out "$25" and inserting in lieu thereof "$30";
(3) By changing the language of section 5702(c) to read as follows:
"(c) Under regulations prescribed under section 5707 of this title, the head of
the agency concerned may prescribe conditions under which an employee may be
reimbursed for the actual and necessary expenses of the trip, not to exceed an
amount named in the travel authorization, when the maximum per diem allow-
ance would be much less than these expenses due to-
"(1) the unusual circumstances of the travel assignment, in which case the
amount named in this travel authorization may not exceed-
"(a) $50 for each day in a travel status inside the continental United
States; or
"(b) the maximum per diem allowance plus $23 for each day in a
travel status outside the continental United States; or
"(2) a travel assignment to a city or metropolitan area designated by
regulations prescribed under section 5707 of this title as a `major city locality',
in which case the amount named in the travel authorization may not exceed
the amount stated in the regulation so designating the locality. In no case
may the amount stated in the regulation exceed $50 per day."
(4) In section 5703(c), by striking out "$25" and inserting in lieu thereof "$30".
(5) In section 5703(d), by striking out "$40" and "$18" and inserting in lieu
thereof "$50" and "$23", respectively.
(6) In section 5704(a) by:
(a) striking out "12 cents" and inserting in lieu thereof "18 cents" at the
beginning of paragraph (2) ;
(b) striking out the words "or airplane" at the end of paragraph (2) and
inserting after the semicolon the word "or"; and
(c) adding at the end thereof a new paragraph as follows:
"(3) 24 cents a mile for the use of a privately owned airplane;"
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16
(7) In Section 5704(b) by:
(a) striking out the word "and" after semicolon at the end of paragraph (2) ;
(b) striking out the period at the end of paragraph (3) and inserting in lieu
thereof , and , and
(c) adding at the end thereof a new paragraph as follows:
"(4) landing and tiedown fees."
SEC. 2. The seventh paragraph under the heading "Administrative Provisions"
in the Senate section of the Legislative Branch Appropriation Act, 1957 (70 Stat.
360, as amended, 2 U.S.C. 68b), is amended by striking out "$25" and "$40" and
inserting in lieu thereof "$30" and "$50", respectively.
Mr. ZECHMAN. Specifically, our draft bill proposes the following:
Raise per diem maximum from $25 to $30; raise actual subsistence
maximum within the United States from $40 to $50; raise the
maximum actual subsistence allowance for travel outside of the
continental United States from $18 to $23; set special locality rates
for major cities where the maximum per diem rate would be inadequate
to meet the average cost of lodgings and meals; set statutory maxi-
mums of 18 cents per mile for automobiles and 24 cents per mile for
airplanes. Landing and tiedown fees are also provided for in our draft
bill.
A unique feature of our bill is the establishment of a "major city
locality" rate. Based on a $30 statutory per diem rate, it is anticipated
that there would be approximately 10 major city areas at the present
time where travel expenses would exceed the maximum per diem rate
by 10 percent or more, and would therefore be designated by regulation
as a "major city locality."
A maximum rate would be stated in the governing regulations for
each major city area so designated. The major city locality rates would
be prescribed as maximums only; and when actual subsistence expenses
incurred in any 1 day are less than the maximum authorized, the trav-
eler will, of course, be reimbursed only for the lesser amount.
It is our opinion that the major city locality rate is a method of
meeting the demonstrated needs of Federal employees who must
travel on official business to higher cost areas, which is preferable to
increasing the maximum per diem rate to a level sufficient to meet
these particular circumstances of travel. It will relieve the situations
which are now causing most of the hardships experienced by Federal
employee travelers, while the proposed increase in the maximum per
diem rate to $30 will adequately cover the remainder.
We support the intent of the chairman's bill, H.R. 15903. We
would like to have the opportunity to review the details and some of
the terminology, and work with the members of the committee staff
prior to the markup of the bill.
This concludes my summary statement, Madam Chairperson.
Further details are provided in the complete statement which I
have provided for the record. I would be happy to respond to any
questions that you or other members of the subcommittee might have.
[Mr. Zechman's prepared statement follows:]
PREPARED STATEMENT OF RONALD E. ZECHMAN, ACTING ASSOCIATE ADMINIS-
TRATOR, GENERAL SERVICES ADMINISTRATION
Mr. Chairman and members of the subcommittee, I appreciate the opportunity
to appear before this subcommittee today on behalf of Arthur F. Sampson,
Administrator, GSA, to discuss our draft bill covering per diem and mileage ex-
penses, which was referred to the House Government Operations Committee on
June 6, 1974.
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We strongly feel that present per diem and mileage allowances are inadequate
for most Federal travelers and therefore propose that legislation be enacted to
increase them. A copy of our draft bill to this end is attached, for the record.
Specifically, our draft bill proposes the following:
Raise per diem maximum from $25 to $30.
Raise actual subsistence maximum from $40 to $50.
Raise per diem maximum for travel outside of the continental United
States from $18 to $23.
Set special locality rates for major cities where the maximum per diem
rate would be inadequate to meet the average cost of lodgings and meals.
Set statutory maximums of $.18 per mile for automobiles and $.24 per
mile for airplanes. Landing and tiedown fees are also provided for in our
draft bill.
Executive Order 11609 of July 22, 1971, vested in the Administrator of General
Services the authority of the President to proscribe. regulations under 5 U.S.C.
5707. The current Federal Travel Regulations, promugated by the General Serv-
ices Administration, are those which became effective on May 1, 1973 (41 CFR
101-7).
In view of rising costs associated With travel, especially in major metropolitan
areas, the General Services Administration initiated a study to determine the ade-
quacy of present travel allowances for Federal employees. The study involved ap-
proximately 13,000 actual employee travel experiences representing 63,000 man-
days of travel taken over a period of three months in 1973, and included 22
agencies of the executive branch. This reflects seven-tenths of one percent of the
total number of man-days of travel. Results show that the present $25 per diem
was inadequate for over 50 percent of the reported travel. This was due, primarily,
to the increased average costs of approximately 24 percent in food and lodging ex-
penses since 1969, the year of the last per diem increase. The Consumer Price
Index level further reflects this fact. The study also disclosed that actual sub-
sistence expense allowances of up to $40 per day were authorized in only three
percent of the travel reported.
We, therefore, propose in our draft bill that the maximum statutory per diem
allowance be increased from $25 to $30; the maximum statutory actual subsistence
expenses in the continental United States be increased from $40 to $50 per day;
and the permissible amount in addition to the maximum per diem allowance estab-
lished for the locality for travel outside the continental United States be increased
from $18 to $23 per day. Section 2 of our draft bill would provide the same changes
in the $25 and $40 limitations imposed upon the Senate by the Legislative Branch
Appropriation Act, 1957, as amended.
Although these increases will be adequate to cover the expenses of most travel,
the allowances will not be sufficient to take care of those employees traveling to
major cities such as New York and San Francisco. Based on published commercial
lodging and meal expenses, such localities require as much as $45 per day for ade-
quate lodgings with three average meals, including tips and taxes. For that reason,
it is proposed in our draft bill to permit the reimbursement of actual and necessary
expenses of a trip when they are much more than the maximum per diem allow-
ance, due to a travel assignment to such a major city. Under present law, reim-
bursement of this type is permitted only when the higher expenses are due to "un-
usual circumstances."
Based on a $30 statutory per diem rate, it is anticipated that there would be
approximately 10 major city areas at the present time where travel expenses would
exceed the maximum per diem rate by 10 percent or more and would therefore be
designated by regulations as a "major city locality." A maximum rate would be
stated in the governing regulations for each major city area so designated, but in no
case would the rate established exceed the $50 statutory maximum for actual
expenses allowance. It is further anticipated that the major city locality rates
would be reviewed at least annually and adjusted, as appropriate, within the pro-
posed ceiling of $50 per day. The major city locality rates would be prescribed as
maximums only; and, when actual subsistence expenses incurred in any one day
are less than the maximum authorized, the traveler will, of course, be reimbursed
only for the lesser amount.
It is our opinion that the major city locality rate is a method of meeting the
demonstrated needs of Federal employees who must travel on official business to
higher cost areas, which is preferable to increasing the maximum per diem rate
to a level sufficient to meet these particular circumstances of travel. It will relieve
the situations which are now causing most of the hardships experienced by Federal
employee travelers, while the proposed increase in the maximum per diem rate to
$30 will adequately cover the remainder.
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We estimate that under our draft bill, the maximum yearly cost impact based
on a per diem increase to $30 would be approximately $24 million over the present
rate ($25), plus an additional increase of approximately $10 million based on the
establishment of the major city locality rate method. We believe that the major
city locality rate method will provide more flexibility in setting equitable rates and
result in lower overall costs to the Government than would result if a higher across-
the-board per diem rate was established reflecting the higher costs in major cities.
A per diem rate equitable for major cities would be too high for most of the travel
performed. Indeed, our study indicates that an increase even to $35 in the flat
per diem rate would not be warranted for travel performed to other than major
city localities. We estimate that an across-the-board increase to $35 would have a
maximum cost impact of approximately $47 million over the present $25 rate.
Thus, calculations based on our sample indicate that our draft bill would result
in a lower cost of up to $13 million for travel of some 9.4 million man-days per
year than would an across-the-board increase of $35. While these figures are
based on payment of maximum per diem for all travel, which would not be the
actual case, it does serve to support our opinion that the proposed draft bill would
satisfy the traveler's needs, yet result in lower costs to the Government.
A recent study by GSA of automobile operating costs indicates that the average
cost of operating a privately owned automobile as of April 1974 was 14.4 cents a
mile.
Another study which we recently completed relates to costs associated with
operating a privately owned airplane. As determined in this study, the average
cost of operating a privately owned, single-engine, piston airplane, as of De-
cember 1973, was approximately 20.6 cents per mile, exclusive of landing and
tiedown fees.
Although our studies indicated operating costs of 14.4 cents per mile for pri-
vately owned automobiles and 20.6 cents per mile for privately owned airplanes,
we recommend that the statutory maximum rates be set at 18 and 24 cents per
mile, respectively. This would allow us latitude in prescribing reimbursement
rates within the statutory maximums that will equate to the current costs of
operating these conveyances.
Additionally, we recommend that 5 U.S.C. 5704(b) be amended to permit
reimbursement for landing and tiedown fees in addition to the mileage allowance
prescribed for privately owned airplanes. Although similar costs such as parking
fees, ferry fares, and highway tolls may be separately allowed under 5 U.S.C.
5704(b) for the use of a privately owned automobile, there is no statutory author-
ity for separately allowing the expenses of landing or tiedown services when a
privately owned aircraft is authorized for use on official business. A change in the
law to allow separate reimbursment for these costs will standardize the allowances
as they relate to both automobiles and airplanes.
The estimated annual cost impact for each one cent per mile increase for
privately owned vehicles is $3.8 million and for privately owned airplanes is
$11,000. If the rates for reimbursement are set at 15 and 21 cents, the estimated
annual total coat impact would be $11.5 million more than today's inadequate
allowance.
The Office of Management and Budget advises us that these increases in travel
costs will be largely absorbed by the individual agencies within their available
appropriations.
This concludes my prepared statement, Mr. Chairman. I will be happy to
respond to any questions you may have.
Mrs. COLLINS. Thank you, Mr. Zechman. You just mentioned
that you would be interested in working with the committee staff
before the markup of the bill. You do support the basic concept?
Mr. ZECHMAN. We do.
Mrs. COLLINS. Fine.
Mr.ZECHMAN. We support the basic concept. In scanning the bill,
we have some questions as to some of the terminology, but these are
things which could be resolved.
Mrs. COLLINS. Has GSA made a recent study of the cost of lodging
and meals in various areas around the country where Government
employees might be traveling?
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Mr. ZECHMAN. Yes, the study was initiated in the spring of 1973,
and completed in the fall of the year. A sampling technique was used
and covered just under 1 percent of the total Government travel.
The results of that study indicated that approximately 50 percent of
the Federal employees' travel expenses exceeded the $25 a day rate.
Mrs. COLLINS. That 1 percent would be roughly a study of 13,000
employees or so?
Mr. ZECHMAN. There were 63,000 man-days of travel and 13,000
trips representing 22 agencies, and it was taken over a 90-day period
in 1973.
Mrs. COLLINS. Allowances for over $25 were authorized in only
about 3 percent of the cases, is that correct?
Mr. ZECHMAN. Yes, for expenses due to unusual circumstances of
a travel assignment.
Mrs. COLLINS. Food and lodging expenses have increased approxi-
mately 24 percent since 1969?
Mr. ZECHMAN. Yes.
Mrs. COLLINS. Would it be beneficial to the Government to estab-
lish more uniformity in the administration of per diem allowances?
Mr. ZECHMAN. We definitely should have it.
Mrs. COLLINS. Do you feel it is desirable to have a provision which
allows for the proration of per diem allowances if traveling consumes
less than a full dayT?
Mr. ZECHMAN. Yes.
Mrs. COLLINS. In other words, for meals and lodging?
Mr. ZECHMAN. Yes, but by regulation.
Mrs. COLLINS. Both Chairman Brooks' bill and the GSA proposal
provide for the possibility of establishing higher rates in certain areas.
Would you explain how you would determine which areas should
enjoy that privilege and how you would determine the amount that
would be paid for travel in those areas?
Mr. ZECHMAN. Yes. Our study indicated there were several ways
that we could do this. The one that we used is the Runzheimer Meal
Lodging Cost Index. This is a management consulting firm out of
Rochester, Wis. It is used very heavily by the private sector. They
cover, I think, 100 cities, and they update 25 percent of the cities on a
quarterly basis. So once a year, all the cities are updated. And using
this as our basis, we found that there are 10 cities in the United States
that would exceed a $30 maximum per diem rate. In fact the latest
revision brings New York City very close to $50.
We could also use the Bureau of Labor Statistics. This is available
and is being used by industry.
Mrs. COLLINS. I have a list of cost of lodging and three meals at
100 cities in the United States, which you already mentioned, and
which I would like to put into the record at this time.
[The material follows:]
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MOST RECENT PER DIEM COSTS OF LODGING AND MEALS
Over One Million Population Type Cities
1.
Atlanta, Georgia
$28.60
2.
Baltimore, Maryland
29.35
3.
Boston, Massachusetts
36.45
4.
Buffalo, New York
26.90
5.
Chicago, Illinois
36.50
6.
Cincinnati, Ohio
28.30
7.
Cleveland, Ohio
30.05
B.
Dallas, Texas
30.55
9.
Denver, Colorado
28.05
10.
Detroit, Michigan
31.20
11.
Houston, Texas
30.05
12.
Kansas City, Missouri
27.55
13.
Los Angeles, California
33.90
14.
Miami, Florida
32.70
15.
Milwaukee, Wisconsin
25.60
16.
Minneapolis, Minnesota
32.80
17.
Newark, New Jersey
33.00
18.
New York, New York
48.50
19.
Philadelphia, Pennsylvania
33.40
20.
Pittsburgh, Pennsylvania
28.55
21.
St. Louis, Missouri
29.45
22.
San Diego, California
29.30
23.
San Francisco, California
37.70
24.
Seattle, Washington
29.85
25.
Washington, D. C.
40.05
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1.
Akron, Ohio
Albany, New York
3.
Birmingham, Alabama
4.
Bridgeport, Connecticut
5.
Columbus, Ohio
6.
Dayton, Ohio
7.
Hartford, Connecticut
8.
Honolulu, Hawaii
9.
Indianapolis, Indiana
10.
Jacksonville, Florida
11.
Louisville, Kentucky
12.
Memphis, Tennessee
13.
New Haven, Connecticut
14.
New Orleans, Louisiana
15.
Norfolk, Virginia
16.
Oklahoma City, Oklahoma
17.
Omaha, Nebraska
18.
Phoenix, Arizona
19.
Portland, Oregon
20.
Providence, Rhode Island
21.
Richmond, Virginia
22.
Rochester, New York
23.
Sacramento, California
24.
San Antonio, Texas
25.
San Jose, California
26.
Springfield, Massachusetts
From 500,000 to One Million Type Cities
$25.25
28.50
23.30
31.75
26.50
24.10
28.75
34.25
26.65
22.90
27.25
29.20
28.20
32.90
25.50
25.20
24.90
27.30
25.35
26.45
24.90
27.25
24.80
24.40
26.70
26.65
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27.
Syracuse, New York
28.
Tampa, Florida
29.
Worcester, Massachusetts
From 100,000 to 500,000 Type Cities
1.
Albuquerque, New Mexico
2.
Amarillo, Texas
3.
Asheville, North Carolina
4.
Atlantic City, New Jersey
5.
Austin, Texas
6.
Baton Rouge, Louisiana
7.
Charleston, South Carolina
8.
Charlotte, North Carolina
9.
Des Moines, Iowa
10.
El Paso, Texas
11.
Fort Wayne, Indiana
12.
Fresno, California
13.
Harrisburg, Pennsylvania
14.
Huntsville, Alabama
15.
Jackson, Mississippi
16.
Kalamazoo, Michigan
17.
Las Vegas, Nevada
18.
Lexington, Kentucky
19.
Little Rock, Arkansas
20.
Madison, Wisconsin
21.
Nashville, Tennessee
500,000 to 1 Million Population (continued)
$26.75
26.55
27.15
23.50
20.15
30.35
35.50
23.90
22.05
22.00
22.55
24.40
22.45
23.30
26.75
25.55
23.55
26.50
25.15
32.25
24.60
23.25
27.45
23.15
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10,000 to 500,000 Population continue
3.
Orlando, Florida
$25.25
Pittsfield, Massachusetts
29.70
Portland, Maine
27.30
Raleigh, North Carolina
24.80
Rockford, Illinois
21.60
Salt Lake City, Utah
27.35
a.
Santa Barbara, California
29.80
Spokane, Washington
27.05
1.
Springfield, Illinois
22.50
2.
Springfield, Missouri
19.60
3.
Toledo, Ohio
25.05
4.
Tucson, Arizona
26.20
15.
Wichita, Kansas
21.55
S6.
Wilmington, Delaware
24.30
17.
York, Pennsylvania
23.65
Jnder 100,000 Population Type Cities
1.
Albany, Georgia
20.40
2.
Anchorage, Alaska
35.70
3.
Boise, Idaho
23.20
4.
Burlington, Vermont
25.95
5.
Charleston, West Virginia
25.75
6.
Cheyenne, Wyoming
23.55
7.
Great Falls, Montana
23.10
8.
Manchester, New Hampshire
21.45
9.
Roanoke, Virginia
25.05
10.
Sioux Falls, South Dakota
23.00
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Mrs. COLLINS. With regard to mileage allowances, do you feel that
a maximum of 18 cents per mile will permit sufficient flexibility to
absorb any foreseeable increased costs?
Mr. ZECHMAN. Well, I would hope so. In the last year or so with
the energy crisis, we have seen a substantial increase in the price of
gasoline. Right now, I think our studies indicate that the cost of
operating a privately owned automobile is approximately 15 cents per
mile and currently we are authorized by statute to pay 12 cents.
So we have a problem here. Unless there is some unforeseen circum-
stance, I think that the 18 cents would be reasonable.
Mrs. COLLINS. What percentage of the per mile operating costs for
an automobile is attributable to expenditures for gasoline?
Mr. ZECHMAN. I am told it is approximately 15 percent of the total
cost.
Mrs. COLLINS. 15 percent?
Mr. ZECHMAN. I will substantiate that for the record.
[The information follows:]
According to a GSA study of mileage costs conducted in April 1974, gasoline
costs represented approximately 22 percent of the total costs for an automobile.
Mrs. COLLINS. Would you provide the subcommittee with copies of
the GSA study on the cost of operating an automobile and aircraft?
Mr. ZECHMAN. Yes.
[The information referred to follows:]
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COST OF OPERATING
AN AUTOL OBELE
GSA adjusts the DOT cost factors to exclude 2 cents per mile for garage, parking, and
tolls as these are reimbursed separately. The depreciation is adjusted to allow a more
realistic rate of 5 years instead of 10 years used by DOT. This results in an adjusted
rate per mile of 14. 4~ for GSA purposes.
FZSP 5/30/74
STANDARD
SIZE
COMPACT
SIZE
ORIGINAL VEHICLE MAINTENANCE, GAS & OIL GARAGE, INSURANCEI STATE & TOTAL
COST DEPRECIATED ACCESSORIES, (EXCLUDING PARKING, FEDERAL ~~)~+~
PARTS & TIRES TAXES) & TOLLS TAXES J
SUBCOMPACT
SIZE
U.S. DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
Office of Highway Planning
Highway Statistics Division
April 1974
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COST OF OPERATING AN AUTOMOBILE
(Mr. Liston is Chief of the Vehicles, Drivers, and Fuels Branch,
Highway Statistics Division of the Federal Highway Administra-
(ion. Mr. Sherrer is an Economist in the Vehicles, Drivers, and
Fuels Branch.)
Introduction
The 101 million automobiles registered in 1973
traveled more than I trillion miles and used over 76
billion gallons of gasoline. About 11 million of these
automobiles were purchased new during the year at
a cost of more than $27 billion. Many 'of the owners
of these new cars, who bought vehicles costing $2,500
or more, probably did not realize that they were
making the second most expensive purchase a person
makes during his life. In fact, most owners probably
are not aware of how much their cars cost to own and
operate. The purchase price is only the first in a
series of costs incurred in the automobile's approxi-
mate 10-year, 100,000-mile trip from the assembly
line to the junkyard. To examine this trip and the
vehicle costs, one geographic location, suburban
Baltimore, Maryland, was chosen as the study site.
The study data are for that location only; and are not
national averages.
As was the case in the 1972 study, three cars have
been chosen to compare the costs incurred, and to
show the various costs in relation to the highway-user
taxes paid. Earlier editions of this report' considered
costs for only one vehicle, a standard size "big 3"
four-door sedan operated from a home in the Balti-
more, Maryland, area. The current study is also
based in the Baltimore, Maryland, area in order to
retain comparison with data from prior reports.
The vehicles chosen for study are a standard size
"big 3" four-door sedan (table 1), an American-made
compact (table 2), and a subcompact (table 3). The
modern American subcompact cars have not been in
existence long enough so that accurate data can be
obtained on anticipated repairs and maintenance costs.
Therefore, assumptions had to be made concerning
' Studies were published in 1950, 1967, 1970, and 1972.
Copies of the 1972 study are available, but supplies of the
earlier editions have been exhausted.
some of these factors. All assumptions will be die-
cussed later.
During the 10-year study period, assuming current
rates, the standard-size car owner will pay $4,032 for
some 7,700 gallons of gasoline. He will pay $2,940 to
keep the vehicle maintained and in repair, $1,618 to
insure it, and $1,960 for garaging, parking, and tolls.
His State and Federal automotive tax bill, most of
which goes to support the roads he drives on, will
amount to $1,509-about 9.5 percent of total costs.
Many ownership and operation costs for the typical
compact and subcompact cars are not comparable to
those of the standard-size car because of the assumed
items of optional equipment on each car and their
effect on costs. However, the automotive tax portions
of the costs for each car should be comparable. These
taxes total $1,158 for the compact car, and $925 for
the subcompact car-9 percent and 8.3 percent re-
spectively of total costs.
During the 24-year period, 1950-1974, the State
and Federal tax component of automobile costs has
varied less than 1.5 percentage points (10.9 percent
in 1950 to 9.5 percent in 1974). The taxes shown in
this report for the standard-size automobile are 9.5
percent of total costs, down from the 9.7 percent shown
in 1972. Many local jurisdictions tax motor vehicles
and their use in a manner similar to the State regis-
tration taxes and motor-fuel taxes. Also, several
States levy personal property taxes on motor vehicles.
None of these taxes were levied in the study area, but
any computations of the cost of owning and operating
an automobile in an area where such taxes exist
should include them.
The "Cost of Operating an Automobile" report has
been updated and published as changes in costs and
vehicle characteristics have warranted additional
study. The most recent prior edition was issued in
April 1972. The text, method, and coverage of the
current report borrows freely from former reports.
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Study Factors and Assumptions
A description of the vehicles included in the study,
the repairs, the repetitive maintenance operations,
replacement items, insurance, and other costs that
were included in the study and the values of factors
used to compute these costs are listed in the tabulation
titled, "Automobile Operating Costs-Bases for Esti.
mates." The costs and rates for suburban Baltimore,
shown in this table, can be compared easily with costs
and rates for other localities. Then, estimates of auto-
mobile operating costs for vehicles in those other
localities can be made using this study as a guide.
For example, the price of gasoline used in this study,
as shown in the "Bases for Estimates" table, was 52.1
cents per. gallon. If the price of gasoline in another
locality were 54.1 cents per gallon, persons living
there, and wishing to estimate their own automobile
operating costs, could adjust the gasoline. cost figure
in this study to reflect the 2 cents per gallon higher
price. Other costs and rates would have to be checked,
and any necessary adjustments made.
The vehicles considered here are from the same
manufacturers as those used in the 1972 study, but
there are base price differences between the cars for
each of the years.
In prior studies, the list or "sticker" price. of the
basic automobile plus optional equipment was consid-
ered to be the purchase price. In the current study
the purchase price of the car was considered to be the
"sticker" price of the vehicle including optional equip-
ment less the average discount allowed on that car,
as reported by a number of dealers. Consequently,
even though the list price of the 1974 model standard-
size car is several hundred dollars more than the price
of the comparable vehicle used in the 1972 study, the
purchase price shown for the 1974 model is less. The
amount of discount a dealer allows depends on the
size of dealership, his inventory situation, time of
year, and the ability of the buyer to negotiate a good
deal.
The costs shown in this report are not taken from
records of specific vehicles nor are the amopnts of
usage, fuel consumption rates, or any other factors
necessarily presented as averages. However, the ve-
hicle and operation cost factors probably are typical
for cars of these sizes in the study area. Nationwide
sales records of the 1974 model standard-size car, and
the compact show that 90 percent or more had power
steering, over 94 percent had automatic transmissions,
90 percent had radios, and 85 percent of the standard-
size cars had air conditioners. For the subcompacts
the number with power steering was negligible, 27
percent had air conditioning, 57 percent had automatic
transmissions, and 83 percent had radios. The factors
used here were selected on the basis of available
statistics, discussions with automobile industry per.
sonnel, and assistance from service managers of major
automobile dealers.
In order to estimate car operating costs, it was
necessary to make a series of assumptions concerning
tire and battery replacements, wheel alinements, light
bulbs, fan belts, brake linings and parts, lubrications,
and other repair and maintenance items. The need
for repairs was estimated from data gathered during
discussions of repair experience with car service per-
sonnel, and from the authors' knowledge. They in-
clude such items as starter repair, carburetor overhaul,
replacement of fuel pump, radiator hoses, muffler, tail
pipes, and shock absorbers, and what must seem to
the owner to be a pretty long list of other repairs.
Several of these repairs must be made more than once
during the life of the car. No costs were included for
repairs or replacements that would have been covered
by warranties. The mechanical features on the ve-
hicles in this study are similar to those in the prior
study, so changes in costs are due mainly to increases
in charges for parts and labor. Maintenance and
repair costs' reflect a 3-year increase in parts prices
over those used in the 1972 study. The 1972 study
was based on 1971 prices. In the current study the
costs for all repairs are based on 1974 prices.
The assumed vehicle life of 100,000 miles during a
10-year period has been questioned by some persons
as being too long, and others who believe it to be too
short. Vehicle survival data developed on popular
brand, standard-size cars show that half of those auto.
mobiles were still on the road at the end of 10 years.
This finding appears to be applicable to the compact
cars also, bpt there is still not enough evidence to
establish a survival rate for subcompacts. Odometer
readings were taken recently from subcompact cars
ranging from 1 to 3 years old, and the indicated miles
traveled are consistent with the mileage assumptions
for the standard-size and compact cars.
It has been assumed that each car was bought new,
without a trade-in, and that the purchaser did not
have to pay full sticker price. The intent is to trace
each vehicle and its costs through a 10-year life as
developed from odometer records of vehicles of these
kinds. Usually an automobile passes through two,
three, or more owners during its life, but we have not
included any change of ownership costs in our figures.
A person's demand for transportation tends to be
relatively stable from year to year, so it would be
unlikely that he would operate his only car successively
fewer miles each year. However, a 9-year old car is
typically operated fewer miles during the year than
a new one or a relatively new one. Therefore, it can
be assumed that the older car has become the second
or third car in a family, or for some other reason it is
operated at a much reduced rate.
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Not all cost items are listed in detail in the tables,
but sufficient information is included to assist those
who wish to make recomputations to fit other geo-
graphic areas, or other types of operation. The costs
are computed for suburban Baltimore, Maryland. If
the suburban costs had been computed for Boston,
New York, or San Francisco, they probably would
have been higher, and if they had been computed for
Jacksonville, Montgomery, or Fort Worth, they would
have been lower. Rural running costs in most parts
of the United States probably would not differ greatly,
but there could be noticeable differences in vehicle
registration fees, and in gasoline taxes because of the
variance in rates among States. The running costs
(gasoline, tires, oil, repairs, and maintenance, etc.)
for the vehicles in rural operation tend to be lower
than for comparable cars in suburban use. because
there are fewer traffic control devices, less congestion,
and the opportunity for accidents with other vehicles
is less frequent.
The costs that are most likely to change in the short
range, and are likely to need adjustments from one
geographic location to another are: gasoline price and
tax, registration fee, repair labor rate, insurance
premium, toll charges and parking charges. Also, the
remaining value of a car differs from region to region,
so the used car value guide should be consulted for
the owner's area in order to adjust the amount for
depreciation.
Automobile financing charges are not included in
the tables of costs shown in this report. However,
they can be computed easily for given automobile
sales prices and interest rates. A car buyer must pay
interest on money borrowed from a bank or other
financial institution or forego interest he-would have
earned if he elects to use his savings or other invest-
ments and pay for the car outright. On a 36-month
loan covering three-fourths of the purchase price, the
interest charge in suburban Baltimore at a 10-percent
annual rate, and its cost per mile for the 3-year period,
would be $517 or 1.3 cents per mile for the standard-
size car. It would be $356, or 0.9 cents per mile for
the compact, and $291 or 0.7 cents per mile for the
subcompact. On the other hand, if the purchase were
financed by a savings withdrawal rather than by
borrowing, and the amount withdrawn were paid back
in 36 equal monthly installments, the net interest lost
(at 5t/2 percent) in the account would be $286 or
0.7 cents per mile for the standard-size car, $197 or
0.5 cents per mile for the compact, and $161 or 0.4
cents per mile for the subcompact. There can be
important cost differences in alternative methods of
financing a new car purchase, and the merits of
different plans should be weighed carefully before a
particular one is selected.
The garaging cost is computed to be the value of
any arrangements made by the car owner for off.
street storage of the car at his residence. It may be
an attached or detached garage, a carport, or it may
be a paved parking apron or gravel surfaced space
beside his house. Parking costs include metered curb
parking, and costs of temporary storage in lots or
parking buildings away from the owner's residence.
In some areas of the United States tolls and garag-
ing would cost less than in 'the study area, but an
automobile owner traveling south, or west, or north
from Baltimore customarily would encounter major
toll routes. Also, he would spend more for garaging
and parking than residents of small towns or rural
areas. To go to New York City, 185 miles to the
north and return, he would pay $8.10 in tolls, not
counting the $1.20 Baltimore Tunnel fee. This is
substantially more than persons living in Atlanta,
New Orleans, or St. Louis would have to pay in mak-
ing similar length trips from their localities.
Oddly enough, many automobile owners do not
seem to be aware of many of their automobile costs.
It is only when a motorist is confronted with a sub.
stantial monetary outlay for new tires or for major
mechanical repairs that he shows much concern about
car expense. Much of the time he drives his car and
seems to conclude that his trips are costing him very
little. The average automobile is sold or traded three
or more times during its life, usually through new or
used car dealers. The need for repairs usually causes
owners to trade-in their cars, and the dealers serve as
the quality control judges of the used vehicle trade.
They wholesale the ones that require too much atten-
tion, and make the repairs on the remainder prior to
resale. But whether the automobile needing repairs
is owned by an individual or is being repaired by a
dealer for resale, the money spent eventually becomes
a part of the cost of owning and operating the car.
Battery and tire replacements, brake linings, radiator
repairs, body work, and numerous other replacements
and repairs are included in the used car reconditioning
programs of many dealers. The additional work that
is done under dealer warranties does not impose direct
out-of-pocket expenditures on the car owner. These
costs are submerged in each automobile's purchase
price, and no effort has been made to separate them.
Numerous factors such as individual driving habits,
climate, garage facilities, type of road used, purpose
for which the car is used, and sometimes luck can
affect service life and costs of operating a car. As
previously stated, the standard-size car appears to
have an average life of about 10 years, and the com-
pacts appear to be surviving at about the same rate.
The current American subcompacts have been on the
market nearly 4 years so their survival history is
beginning to develop. Odometer checks of a limited
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sample of these subcompacts show an average annual
mileage for the first 3 years of 13,000 miles. This
is consistent with the mileage of the larger vehicles.
Other vehicles that were generally of this size (the
early Falcons, Valiants, Corvairs, and Ramblers, as
well as many imports) appear to be on the highways
in sufficient numbers to warrant the following assump-
tions. For ease of comparison among vehicle sizes
and uses, all of the study vehicles have been assumed
to have a 10-year, 100,000-mile life. It has been
assumed that a normal travel pattern would be 14,500
miles in the first year, and a decreasing number of
miles each year thereafter until the vehicle is driven
only 5,700 miles in its 10th year. These assumptions
are reasonably consistent with available travel data.
Other Applications for Study Data
A person's choice of an automobile-standard size,
compact, or subcompact-is dependent on several
considerations. For the motorist who needs the space
provided in the standard-size car because of a large
family, carpool needs, or equipment that must be
carried, the economies and size advantages of the
compact and subcompact must be foregone. If he
finds that those needs are not compelling, the smaller
cars offer several advantages. Parking in curb space
is easier, some parking lots have lower rates for small
cars, repair costs are not as expensive, registration
fees in some States are lower, tires cost less, and saving
in gasoline cost over the life of the car will be enough
to pay a substantial amount toward the cost of a new
car. Comparing gasoline cost alone between the
standard-size car and the subcompact there can be a
saving during 100,000 miles of travel of about $1,600
by using the subcompact. This is two-thirds of the
new car cost for another subcompact. If a person
customarily buys a car every 3 years, the gasoline
cost savings by using a subcompact rather than a
standard-size car would be over $600, or about one-
fourth of the cost of a new subcompact. A compari-
son between the standard-size car and the compact-size
car does not provide as large a difference, but it is
worthwhile when you consider that compacts have
most of the advantages of the large cars, and at the
same time provide most of the advantages of the
subcompacts.
Another question that motorists frequently ask is,
"When should I trade-in my car?" There is no
answer that fits everyone, because monetary consid-
eration is only a part of the problem. Vehicle style,
size, interior decor, mechanical features, availability
of money, and many other things may be important
to the car owner in making his decision of which
vehicle to buy, and when to buy again. However,
most people probably are concerned mainly with the
money difference when they ask the question. The
"annual trader" drives a current model car all of the
time, but depreciation for his standard-size automobile
over a 10-year period costs him about $10,460 (10
times the first year depreciation). The "two-year
trader" pays about $8,465 in depreciation (5 times
the depreciation for the first 2 years). This is a
savings of $1,995 from the annual trader's costs, and
he can save even more by becoming a "three:-year
trader," However, after the first year he faces a series
of outlays for tire replacement, repairs, and incidentals
that begin to offset his savings in depreciation. The
obvious flaw in trying to use these tables to determine
when to "trade-in" a car is that a person's annual
auto usage tends to be constant from year to year, and
does not follow the pattern shown for the life of a
car. If he customarily drives 14,500 miles per year,
it is unlikely that he would drive fewer miles the
second year and still fewer the third year. Therefore,
by the end of the third year he will have driven
43,500 miles (3X14,500 miles) instead of the 19,000
miles obtained by accumulating the mileage shown
for the first 3 years on table 1. By the end of the
fourth year he will have traveled 58,000 miles while
table 1 shows this to be the mileage on a 5-year old
car. Therefore, it appears that the mileage traveled
can be as important to a car's condition and remaining
value as the car's chronologicyl age. But, rising total
miles traveled as the only determinant of a car's
condition can be misleading. Some long trips can put
a lot of "easy" mileage on a car, while many short
trips to the store and around the neighborhood, with
a lot of stop-and-go driving, can put fewer, but "very
wearing" miles on a car.
The total vehicle cost per mile is lower for the
high-mileage drivers, because depreciation in the early
years of a car's life is determined more by age than
by miles, and because some of the annual or non-
recurring charges, such, as garaging and insurance,
do not increase in proportion to mileage. A low-
mileage driver sustains about the same depreciation,
insurance, and garaging costs, but they are distributed
over fewer miles and result in a higher cost per mile.
,Most insurance companies charge lower rates for
private and recreational uses of vehicles, and higher
rates for vehicles used directly for work or in relation
to business. In addition, many companies apply a
surcharge for high-mileage drivers in both categories.
To some degree, the purpose for which a car is used,
and the circumstances of its use will dictate the vehicle
cost pattern. Once an owner determines his vehicle-
use pattern, he may be able to relate his costs to those
shown in this report and* decide when it will be most
advantageous to him to trade his car. The high-
mileage driver may find some repairs and tire replace-
ments moved to earlier years than those shown in this
study. Of course, comfort, dependability and appear.
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ance are important to most car owners, and weigh
heavily in the automobile purchasing decision.
Reimbursement by an employer of the costs for an
employee's use of his car for business purposes is a
fairly common occurrence today. The question upper.
most in the mind of each of the parties is, "How much
should the reimbursement be?" If an employee uses
his automobile only occasionally and incidentally for
business purposes, an amount necessary to cover out-
of-pocket costs, tire wear, and general wear on the
vehicle should be sufficient. At today's prices 7 to 9
cents per mile should be enough. If the extent or
type of use affects his insurance rate, or if it subjects
the automobile to unusual loads or operating condi-
tions, the reimbursement should be adjusted upward
accordingly. Tolls and parking or storage costs in.
curred in the course of such use should be paid sepa-
rately and in full, regardless of per-mile reimburse.
ment. If an employee's job is dependent on his
obtaining and using his car in his employer's behalf,
reimbursement on the basis of the employee's overall
costs per mile seems fair. If, in addition, the em.
ployee's frequency of car purchases, the type of auto-
mobile bought, or other factors of ownership or upkeep
are substantially affected by the employer's require-
ments, the reimbursement should he sufficient to cover
all outlays that exceed what the employee would
normally spend for his own nonbusiness automobile
transportation. For complete information concerning
reimbursement for private automobile use, there are
business travel advisory services that can be consulted.
These are commercial advisory services that have
made studies of costs for specific vehicles and groups
of vehicles under various conditions of use.
Discussion of Costs
When an automobile is operated 100,000 miles
there are 400,000 miles of tire wear. For the vehicles
in this report it was assumed that fiberglass bias.
belted tires would be used. Therefore, the automobiles
would each wear out the original 5 tires and require
11 additional replacements, which would include 7
regular tires and 4 snow tires. If the automobiles
are driven with reasonable care, and the wheels are
kept properly alined, this number of tires should be
adequate for the standard-size car. The compact and
subcompact should turn 100,000 miles and have usable
tread left on the tires.
If the standard-size automobile were purchased with
radial tires having a 40,000 mile tread-wear guarantee,
it is likely that only 5 tire replacements would be
necessary. The cost of replacement fiberglass tires
would be $386 while the replacement radials would
cost $350. The saving of $36 would be enhanced by
additional savings in gasoline, since the gasoline con-
sumption rate is improved by about 5 percent when
radial tires are used.
Depreciation is the greatest single cost of owning
and operating a standard-size automobile, and the
second highest cost for the compact and subcompact.
In the great majority of cases the age of a car is more
important than its mileage in determining its resale
or trade-in value. Such factors as brand popularity,
body style, size, and to some degree, color, are also
considered in determining value. For the standard-
size car, by far the greatest dollar depreciation in its
value occurs in its first few years, while for the smaller
care the depreciation is more evenly distributed over
their years of use. Since newer cars are driven more
miles than older cars, the depreciation on a per-mile
basis is held down the first few years. For example,
consider depreciation for the standard-size car in this
report. If the car were bought new for $4,251 and
sold or traded at the end of the first year, when it
had been driven 14,500 miles, depreciation would be
$1,046. This depreciation cost divided by the 14,500
miles driven the first year amounts to 7.2 cents per
mile. By the end of the second year, when the car
has been driven 27,500 miles, depreciation would total
$1,693, which divided by the 27,500 miles would
compute to 6.2 cents per mile. Year by year as the
car gets older depreciation decreases, but the outlay
for maintenance and repairs rises. As time passes it
becomes increasingly difficult and expensive to keep
a car in satisfactory operating condition.
Modern highways with limited access, such as the
Interstate System, make possible long trips at sustained
speeds. To do this safely requires 'a well maintained
car. Although added safety features are being in-
corporated in the highways and the new vehicles are
being equipped with lap and shoulder belts, impact
resistant bumpers, side guard beams in the doors, etc.,
there also must be a policy of continuous, high-
standard maintenance of the vehicles to help make
highway travel safe. A charge of $12 an hour or
more for shop labor is not unusual, and this is a
major factor in the 2.9 cents per mile cost for repairs
and maintenance for the standard-size automobile.
The encouragement of the public to buy compact and
subcompact cars is based on substantially better gaso-
line mileage and the relative simplicity of the vehicles.
For those persons who might like to do some of their
own minor repairs and maintenance, the smaller cars
afford that opportunity. Replacement of spark plugs,
windshield wiper blades, fan belts, radiator hoses, etc.,
are simple and there are indeed savings to be realized.
When trained mechanics do these jobs, vehicle owners
must pay professional wages. Although there are in-
creasing numbers of "at home" mechanics, repair
garage experience shows that the public generally is
not ready to assume this responsibility.
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The gasoline expense is the highest cost for the
compact and subcompact, and second only to deprecia-
tion for the standard-size car. Until gasoline shortages
began to occur in 1973, the price of gasoline had
changed very little for 20 or more years. However,
the gasoline price has risen more than 14 cents per
gallon in the study area since early 1972, with prac-
tically all of the increase occurring in the few months
of late 1973 and early 1974. There was a 2-cent
State gasoline tax increase in mid-1972, so the remain.
ing 12 cents of the increase is all price, and is a 32
percent rise.
Automobiles are continuously exposed to the possi.
bility of damage, whether on the highway or parked.
The large numbers of vehicles on the roads and streets,
and the relatively uncontrolled traffic in shopping
center parking lots make cars highly susceptible to
accident involvement. Controlled crash tests on cars
produced through 1973 showed that they were not able
to escape unmarked from any sort of collision. Auto.
motive designs had been developed with little or no
regard for safety, and some even contributed unneces-
sarily to automotive damage with the attendant higher
repair costs and higher insurance. One insurance
company executive commented that until the volume
of accidents is cut, or until cars are built so they are
cheaper to repair, there is not much that can be done
about rates. The 1974 models were manufactured
with energy absorbing bumpers that were designed to
protect against impacts up to 5 miles per hour without
damage to the vehicles. As a result, several major
insurance company spokesmen have stated that up to
a 20-percent discount in collision insurance premiums
can be expected on these vehicles.
The insurance coverage includes $50,000 combined
public liability, full comprehensive fire and theft, un-
insured motorist, and personal injury protection with
first-party medical and wage benefits of $2,500. The
latter is no fault insurance and is now compulsory in
Maryland. Also included is $100 deductible collision
insurance, which is dropped after the first 5 years.
If an owner is "at fault" in an accident during the
first 5 years, the first $100 damage to his automobile
is out-of-pocket cost to him, but from the sixth through
the tenth years he must pay the entire cost for repair-
ing his automobile. Accidents could, therefore, in-
crease the cost of owning and operating a vehicle
above the amounts shown in the accompanying tables.
The quality of roads-grades, surfaces, and curves-
has been improved substantially in recent years. The
Interstate Highway System is approaching completion,
with 84 percent open to traffic, another 7 percent under
construction, and 7 percent with engineering or right-
of-way work in progress. These roads are more than
living up to the expectations for them. Highway
authorities point out that the newer highways of the
Interstate System design provide opportunity for sus-
tained safe speeds and comfort for the motorists.
Accident records show that the Interstate System acci.
dent rate is about half that of the remainder of the
primary highways in the United States. Savings in
accident costs from the Interstate System alone are
counted in billions of dollars.
The development of local shopping centers, suburban
residential areas, and employment centers, as well as
the dispersal of recreational opportunities has made
transportation very important in the American life
pattern. Where public transportation is not well de-
veloped, the automobile must be used. Sales records
of new vehicles show increased purchases of compact
and subcompact cars in preference to the larger
models, In many cases this is a reaction to the gaso-
line shortages that have plagued parts of the United
States during the last few months. It is interesting
to note, however, that a high percentage of the smaller
than standard-size cars being purchased have air con-
ditioners, automatic transmissions, power steering and
other optional equipment. There appears to be no
shortage of money to buy cars, and people still want
to travel. The lack of adequate roads can cause car
running costs to rise. When traffic is not free flowing,
there is greater fuel consumption, higher fuel cost,
more pollutants are released into the air, there is
greater opportunity for accidents, and there is much
higher per-mile wear on engine parts, brakes, tires,
etc. Also, poorly maintained roads may develop pot
holes, broken slabs, obliterated traffic lines, damaged
or missing signs, etc. Any or all of these could con-
tribute to damage to a motor vehicle and the safety of
those riding in it. So the problem is to maintain an
adequate highway system that will save money on
operating aqd maintenance costs. However, putting
highway costs into proper perspective is difficult at
times.
Highway-user taxes are the major source of revenues
for highway building and maintenance. In paying
them the motorist is, in a very real sense, paying for
the roads he is using. For some motorists it will come
as a surprise that for the standard-size car only 9.5
cents of their vehicle owning and operating dollar
goes to pay for the roads. For the smaller cars it is
even less.
Financing highway construction and maintenance
has become increasingly difficult over the years, be-
cause automotive taxes are generally applied as unit
charges. The gasoline tax at a certain number of
cents per gallon, and the registration fee: at a flat
rate per vehicle, are not sensitive to price changes.
As the cost of labor and products used for highway
construction and maintenance rise. the gasoline tax
and registration fees do not yield comparably higher
revenues. Therefore, except for the possibility of
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added revenues caused by greater use of gasoline and
more vehicles being registered, highway construction
and maintenance must be accomplished with tax
money that is continuously losing value. Relief occurs
only when States raise their tax rates to try to offset
inflated costs. Sensitivity to changes in costs would
be possible if these taxes were applied on the value
of the product, like sales taxes.
During the first year of operation the three study
cars would have daily owning and operating costs of
$6.65 (standard size), $4.30 (compact), and $3.52
(subcompact). In the second year daily costs would
drop by $1.70 for the standard-size car to $4.95; by
38 cents to $3.92 for the compact; and by 33 cents
to $3.19 for the subcompact. The daily costs continue
to drop, and the differences in these costs between car
sizes narrow as the years pass. By the time each of
the cars has accumulated nearly 60.000 Illills, t ;?
daily costs are relatively close. They remain il..mr
during the next 25,000 miles of travel, so the ec.:nca
advantage of having a small car during that per;.,i
would not be great. Other factors that might in:!,
ence the choice of a vehicle during this time mcht
be the availability of gasoline, miles per Fall,n c!-
tained, parking convenience, maneuverability in Iraf
fie, the ability to transport large numbers of farmer
or bulky materials, and environmental connidrrato,...
The bases for estimating the operating costs fur
each of the study automobiles follow, in mod;fined
tabular form, in order to emphasize the factors that
differ and those that are the same for the three ve-
hicles. The annual costs and per-mile costs shown in
tables 1, 2; and 3 are self-explanatory.
ITEM
STA171AR0 SIZE AUTOMOBILE
COMPACT SIZE AUTOMOBILE
SUBCOMPACT SIZE AUIGMOBII.I
Automobile
1974 model 4-door sedan
1974 model 2-door sedan
1974 model 2-door sedan --~
oeecripcion
Equipped w11h: V-8 engine, auto-
Equipped with: 6 cylinder engine.
Equipped with: Standard equ ipa rnt
matte tra smission, power steering
automatic tran sm., Ian, power
plus radio, wheel c era, and Cods
ov
and brakes air cond1t0oning, tinted
steering, radio, vinyl top, wheel
Porch... price
protective molding.
e later radio, clock, white-cal'. ti sae,
covers, and body protective molding.
$2,410.
o rs, and body protective
wheel cVe
Purchase price . $2,910.
molding. Purchase price - $4,251.
Repair, and
Includes routine maintenance such as lubrication,, repacking wheel bearing,, flushing cooling system, and aiming
Maintenance
he ad,_ ps; replacement of minor part, such a spark plug,, fan belts, radiator hoes, distributor cap, fuel filter.
and pollution control equipmen mir repairs such .s brake jobs, water pump, carburetor overhau L, and universal
1*
Jatnco; and major repairs such as .
omplete 'valve }ob.' Costs were calculated using 1974 Part, price, and a $12
i
hour labor rata.
Pe
Replacement
Purchase of 7 new regular tires end 4 new snow tires during the lives of the cars was assumed.
Tires
Accessoties
Purchase of floc mats the first Year, eat covers the sixth y,& and etecellaneaus items totaling ;2.20 per
year w s umedt
Gasoline
Consumpclon r of 12.92 miles pet
Consumption rate of 15.91 mi Les per
Consumption rate of 21.43 miles per
gallon and a gasoline price mf 52.1
2.
gallon and a gasoline price of 52.1
gallon and a gasoline price of 52.1
ants per gallon including __
axes
cents per gallon including taxes
ants per gallon including cues r
used,
are used.
a used.
011
Consumpciec v Deuced with
as sumptt on w oclsted nick
con,unption a ssociaced etch
asoline c umpcion at a rate of 1
g
gasoline umptlon et a rate of 1
c
gasoline t isaptfon ei a of
a
gallon of oil ter a cry 159 gallon,
oil for a cry 150 gallons
gallon of
g olio na
gallon afoll for a cry 135
of gasoline. A price of ;1.00 at
of gasoline. A prf a of ;1.00 per
of gasoline. A price of $1.00 per
quart was used.
quart was .sad.
quart vas used.
Insurance
000 combined public liability (;15,000/;30,000 bodily injury, and ;5,000 property damage).
Coverage Inc Lede, $50
,
;2,500 personal injury protection. uninsured motorist c rage, and full emnprehensive c erase for the 10-year
period. Deduccib le collision insurance w coed for the first 5 years ($100 deductib Le).
Garaging,
Includes monthly charges of $11.00 for garage rental or indirect cost of the owns ~s garaging facility; plus
Parking,
rage of ;57.00 per your, and toll average of $7.00 per year. both et which were assigned In
parking fee v
and Tells
o
proportion tannual [ravel.
Tex ea
includes Federal excise taxes on tirea (10 cents per poundlubricating otl (6 cents per gallon), and gasoline
(4 cents per gallon); plus the Maryland tax on ge so line (9 cents per gallon). titling tax (4 percent of retail
price), and regiatracion fee (520.00 for 3,700 pounds or leas .hipping weight, or ;30.00 for vehicles aver
3,700 pounds).
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00
FIRST YEAR
SECOND YEAR
THIRD YEAR
FOURTH YEAR
FIFTH YEAR
(14,500 epee)
(13,000 miles)
(11,500 mile.)
(10,000 mile:)
(9,900 mile.)
1068
PER OOST
TOTAL
COST
PER
TOT,,
COST
PER
COST
TOTAL
COST
PER
CO
ST
NILE
coST
NILE
COST
NI [
COST
RILE
COST
MI
LE
Coat: EILluding Tega?1
Oepr.aico~va~y>~ouoc___^~cJ C61y_N__?EccE-s-~d?...
= 0 C 0 Gpp 00 ~'KO? T A B A'p y 0 0? C J L ~ y Co
d O> E~
ac?1 as ~'aE$aaL'~4-~E` avova`13:o ?,~o `?.-'cilw of
ca1'c~_oa~Ew~i~~m'oooooowx1?'O i'~=o?-o? LLY.rIV IONN
00000]0] V VCW W W6,7~C9=xxSSS2--IJ~C^.C Z[Ydd~~v)h NCq N~+~'S
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H.R. 15903, in providing for $35 per diem and not to exceed $50 in unusual
circumstances and in high cost localities, parallels NTEU's position on per diem
allowances.
We believe that the maximum amount for mileage payments of 180 per mile for
use of a privately owned automobile will necessitate approaching the Congress
again next year to seek an increase in this factor. We believe the mileage rate
should be stated as a minimum, suggesting 15? per mile, rather than a maximum.
The history of GSA action in this matter indicates the agency tends toward the
penurious rather than the generous and they are not likely to change.
We also believe the specific factors on which the mileage rate is based should be
enumerated in the law. Under the present Act, GSA is extremely vague In identi-
fying the basis for the mileage determination.
We agree that representatives of employee organizations should be Involved in
the conduct of studies of the cost of operating privately owned vehicles. We believe
the report of findings should be made every silt months rather than once a year. It
is not clear that GSA should adjust the rates based on the reports. Merely report-
ing to the Congress Is no guarantee that the proper adjustment in mileage rates
will be made. We believe the language of the bill needs to be more specific on this
point.
payment We feel the ctualim leagencosttba based on continuous rather Sthan periodic studies, The
situation has been changing almost daily in recent months, especially relative to
costs for gasoline and oil. Federal employees should not be required, as they are at
present, to subsidize the'Federal government in order to carry out their duties
properly, merely because GSA fails to act.
We appreciate the opportunity to make these comments on H.R. 15903.
Mrs. COLLINS. Any questions? We appreciate the testimony of all
of you.
As I say, all of your submitted statements will be made a part of
the record.
It is my understanding that Mr. Parris wants to put a statement in
the record, and that will be accepted without objection.
[Mr. Parris' prepared statement follows:]
PREPARED STATEMENT OF HON. STANFORD E. PARRIS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF VIRGINIA
Mr. Chairman, it is a distinct pleasure to have this opportunity to present a
brief statement on behalf of an increase in the maximum statutory per diem allow-
ance and mileage allowance for federal employees.
As you know by virtue of the proximity of the Eighth Congressional District of
Virginia to the bistrict of Columbia, I have the privilege of representing thousands
of federal civil servants. On numerous occasions, these people have brought to my
attention the near-impossibility of subsisting in most areas of the United States
and abroad when traveling for "Uncle Sam", under the present statutory per
diem allowance.
Currently, if civil servants travel to a city or locality where they simply cannot
find decent meals and lodging within the statutory allowance, they have no
alternative other than to finance any excess costs incurred out of their own pockets.
I have known many federal employees travelling on official business who have
met with this problem, even though they have made a concerted effort to locate
lodging that will permit them to remain within their per diem allowance.
Furthermore, rising gasoline prices have made the present statutory maximum
of 120 per mile totally unrealistic for the operation of a privately-owned automo-
bile. Emission controls require the use of more gasoline per mile. You will recall
that a recent study by GSA indicated that as of April, 1974, the average auto-
mobile operating cost was 14.40 per mile. In view of the continuing inflationary
spiral since April, I would think it a fair statement to assume that this GSA
estimate can only have increased.
Let me point out in discussing this situation that we in the Congress have done
a great deal to fuel inflation through excessive government spending. This is a
problem that we as a body are wrestling with, and although we have found no
overall solutions, I do believe that real progress in the area of fiscal responsibility
has been achieved through recently enacted legislation.
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Certainly an increase in the per diem and mileage allowances will cost the
federal government some money. However, in my estimation, it is more inflationary
to mandate the use of a portion of the civil servant's salary to finance official U.S.
government business than to permit that portion to be used to ease the pinch in
the cost of maintaining a home and family.
Let me also point out that it is extremely difficult for the federal government to
compete. with the salaries and expense accounts of executive positions in private
enterprise. We need to exert every effort to attract into the Civil Service the
gifted young men and women of America who are making their career decisions,
and to encourage present key federal employees to remain with the Civil Service
in the future. Increasing the per diem and mileage allowances to realistic levels is
one of the areas in which we can accomplish this.
Mr. Chairman, thank you for the opportunity to state my position on this
matter. I would hope that this Committee will, in the near future, favorably
report a bill which will provide a-reasonable increase in the statutory maximum
mileage and per diem allowances for federal employees.
Mrs. COLLINS. Therecord will be open for 1 week for the submission
of other statements. The meeting is adjourned.
[Whereupon, at 3:20 p.m., the hearing was adjourned.]
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APPENDIX
OTHER MATERIAL RELATIVE TO THE HEARING
Technical
Information
ngbn- Q30
~4~.~~,,.1lit`~iinh~?~fiil~? o~~fl~{~~nlu?~ llf;1~~~, ~l.~~e~'!:il`.
Internal Revenue Service
Washington, DC 20224
Tel. [phone]
An increase of three cents per mile in the standard mileage rate for
the first 15,000 miles and one cent per mile, for each additional mile of
business use of automobiles was announced today by the Internal Revenue
Service. This raises the standard mileage rate to 15 cents on the first
15,000 miles and 10 cents on each additional mile.
The rate for use of an automobile for charitable, medical and allowable
moving expense purposes is also increased by one cent per mile and will
now be seven cents per mile.
The IRS also announced an $8 increase, raising to $44 the amount of
reimbursements, or per diem allowances, for ordinary ahd necessary expenses
of employees traveling away from home, for substantiation purposes.
All the above increases are effective for taxable years beginning
after December 31, 1973.
The Revenue Ruling and the three Revenue Procedures which follow
will be published in Internal Revenue Bulletin 1974-36, dated 9/9/74, as
Revenue Ruling 74-433, Revenue Procedure 74-23, Revenue Procedure 74-24,
and Revenue Procedure 74-25.
PART I
SECTION 274.--DISALLOVIANCE OF CERTAIN ENTERTAINMEDIT, ETC., EXPENSES
26 CFR 1.274-5: Substantiation requirements.
(Also Section 162; 1.162-17.)
The purpose of this Revenue Ruling is to update Rev. Rul. 71-412,
1971-2 C.B. 170, as modified by Rev. Rul. 72-508, 1972-2 C.B. 200, to
provide subsistence and travel figures that most nearly represent
present reasonable limits in light of current costs.
Under section 274(d) of the Internal Revenue Code of 19514 and
section 1.2714-5 of the Income Tax Regulations,' rules are provided for
the substantiation of business expenditures for travel, entertainment,
and gifts. The Commissioner of Internal Revenue, under the authority
granted by section 1.2714-5(f) of the regulations, may prescribe rules
governing reimbursement arrangements, or per diem allowances, for
ordinary and necessary expenses of an employee traveling away from
home (exclusive of transportation costs to and from destination) and
mileage allowances for similar transportation expenses. Such arrange-
ments or allowances which are in accordance with reasonable business
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practices, may be regarded (1) as equivalent to substantiation
by adequate records or other sufficient evidence of the amount
of such traveling expenses for purposes of section 1.27li-5(e),
and (2) as satisfying the requirements of an adequate accounting
to an employer with respect to such amounts for purposes of
section 1.2714-5(e).
If, in the case of expenses for travel away from home
(exclusive of costs of transportation to and from destination),
an employer reimburses his employees for subsistence or provides
his employees with a per diem allowance in lieu of subsistence
in an amount which does not exceed the greater of (1) w L44 per
day or (2) the maximum per diem rate authorized to be paid by
the Federal Government in the locality in which the travel is
performed, such reimbursements and allowances shall be deemed
substantiated within the meaning of section 1.27L4-5(c) of the
regulations if (1) the employer reasonably limits payment of
such travel expenses to those which are ordinary and necessary
in the conduct of his trade or business and (2) the elements of
time, place, and business purpose of travel are substan tiated in
accordance with aragrrphs (b)(2) and (c) (other than subdivision
(iii)(a) thereof) of section 1.27E-5?
The district director will determine whether an employer
reasonably limits the payment of expenses for travel away from
home to such expenses as are ordinary and necess-ary in the conduct
of trade or business by, (1) in the case of reimbursements for
actual subsistence expenses, determining whether the employer
maintains adequate internal audit controls, such as requiring an
employee's expense account yo be verified and approved by a
responsible person other than the employee incurring the expense,
and (2) in the case of per diem allowances in lieu of subsistence,
determining whether the employer's travel allowance practices are
based on reasonably accurate estimates of travel costs, including
recognition of cost variances encountered in different localities.
If the amount of traveling expenses away from home is deemed
substantiated for purposes of section 1.271-5(c) of the regulations,
the adequate accounting; requirements of section 1.27Li-~((-,) shall
be deemed satisfied.
As used in this Revenue Ruling the term "subsistence" includes,
but is not limited to, reasonable travel expenses for meals and
lodgin; , laundr;f, cleaning; and pressing of clothing, and fees and
tips for services, such as for waiters and ba -; ;a ;erne n. The tern
"subsistence" does not include taxicab fares or the cost? of Lnieyrrrn;
or telephone calls.
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In any case where a fixed mileage allowance not exceeding
15 cents per mile is 'used by an employer in payment of an employee's
ordinary and necessary expenses of transportation while traveling
away from home and the elements of time, place, and business purncsc
of the travel are subs tenliaLed in accordance with paragraphs (b)(2)
and (c) (other than subdivision (iii)(a) thereof) of section 1.27,1-5
of the regulations, then such an allowance shall be doomed as satisfying,
with respect to such travel vsounts, the substantiation requirements
of section 1.2711-5(c) and the adequate accounting requirements of
section 1.274-5(e). However, an employer may grant an additional
allowance for parking fees and tolls attributable to the traveling
and transportation expenses as separate items. Also, where an emplolcr
grants an allowance to an employee for ordinary and necessary trans-
portation expenses not involving travel away from home, such an
arrangement shall be considered to be an accounting to the employer
within the meaning of section 1.162-17(b) of the regulations.
If an employee, under a travel expense arrangement or allowance
practice discussed above, receives an amount from his employer in
excess of his deductible business expenses (which do not include
personal, living, or family expenses or travel expenses disallowed by
section 274(c) of the Code), he must report such excess amount in
gross income.
The provisions of this Revenue Ruling relating to reimbursement
arrangements or per diem allowances will not apply in any case where
an employer and an employee are related within the meaning of
section 267(b) of the Code, but for this purpose the percentage of
ownership interest referred to in section 267(b)(2) shall be 10 percent.
If a subsistence reimbursement arrangement or a per diem allowance
in lieu of subsistence exceeds the greater of ? 44 per day or the
maximum per diem rate authorized to be paid by the Federal Gover_nent
in the locality in which the travel is performed, or if a mileage
allowance exceeds 15 cents per mile, the presence of unusual
circumstances which account for the variation may, nevertheless,
constitute grounds for considering the arrangement or allowance as
equivalent to substantiation and an adequate accounting; to an employer
of amount of travel expense for purposes of sections 1.162-17 and
1.274-5 of the regulations. In such a case the employer should direct
a request to the Commissioner of Internal Revenue, Attention: Income
Tax Division, Washington, D. C. 20224, setting' forth in detail
information with respect to such arrangement or allowance and the
reason for his belief that special circurn.tances justify the cane
treatment as that accorded arranggements or allowances falling within
the scope of this Revenue Ruling. The burden will be upon the erployer
in all ouch cases tr octablish to the satisfaction of the Cor:.nic:',ioncr
the reasonableness of the arrangements or allowances paid under iiio
special circumstances involved.
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With respect to returns filed for taxable years beginning after
December 31, 1973, this Revenue Ruling supersedes Rev. Rul. 71-1412,
as modified by Rev. Rul. 72-506, which relates to periods ending after
December 31, 1970.
PART V.--ADMINISTRATIVE, PROCEDURAL, AND MISCELLANEOUS PATTERS.
26 CFR 601.105: Examinations of returns and claims for refund, credit
or abatement; determination of correct tax liability.
(Also Part I, Sections 162, 163, 1614, 2714, 1016; 1.162-17, 1.163-1,
1.164-1, 1.27L4-5, and 1.1016-3.)
Rev. Proc. 744-23
Section 1. Purpose.
The purpose of this Revenue Procedure' is to provide for an increased
standard mileage rate and procedures to be followed by employees or self-
employed individuals who claim deductions for the costs of operating
passenger automobiles (including vehicles such as pickup or panel trtiucks)
for business purposes under the simplified method of computing deductible
costs of operating passenger automobiles for taxable years beginning
after December 31, 1973.
Sec. 2. Background.
Section 162(a) of the Internal Revenue Code of 1954 provides that
there shall be allowed as a deduction all the ordinary and neccs:..ary
expenses paid or incurred during the taxable year in carrying on any
trade or business. Under that provision, an employee or a self-er.ijloyed
individual may deduct the cost of operating a passenger automobile owned
by him to the extent that it is used in a trade or business. Any
portion of the operating cost which is attributable to personal use,
rather than use for a business purpose, is not deductible. Rev. Proc.
70-25, 1970-2 C.E. 506, established certain procedures to be followed
by the Internal Revenue Service in examining income tax returns filed
for taxable years beginning after December 31, 1969, by employeec or
self-employed individuals who. claim deductions for the costs of
operating passenger automobiles for business purposes. Under those
procedures, a simplified method of computing deductible costs of
operating passenger automobiles was accepted.
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Subject, to the conditions and limitations set forth below, with
respect to returns filed for taxable years beginning after December
31, 1973, deductions will be accepted if. computed at a standard
mileage rate of (a) fifteen cents per mile for the first 15,000 miles
of use each year for business purposes and (b) ten cents per mile
for use for business purposes in excess of 1.5,000 miles per year.
Computation under this method is optional on a yearly basis.
.01 A deduction computed under this method shall be in lieu of
all operating and fixed costs of the automobile allocable Lo business
purposes. Such items as gasoline (including all taxes thereon), oil,
repairs, license tags, insurance, and depreciation are included in
operating and fixed costs. Iloz:wever, parking fees and tolls attributable
to use for business purposes may be deducted as separate items.
Gasoline taxes allocable to use for nonbusiness purposes (and allowable
under section 161, of the Code) may be deducted in addition to the
deduction ccm_,ated under this method. The rate prescribed heroin does
not affect a deduction for interest relating to the automobile which is
allowable under section 163 nor deductions for State and local taxes
(other than those included in the cost of gasoline) otherwise allowable
under section 164.
.02 The use of the simplified method is limited to a self-employed
individual or an employee who operates only one automobile at a time
for business purposes. Where a person alternates in using different
automobiles on different occasions for business purposes, the standard
mileage rate applies to the total business mileage of such automobiles,
as if they were one, to arrive at a deduction. Similarly, if an
individual replaces his automobile during the year, the total business
mileage for the year of both dutomobiles must be used, as if they were
one, in applying the standard mileage rate.
.03 This method is not acceptable for computing the deductible
costs of (A) vehicles used for hire, such as taxicabs, or (B) two or
more automobiles used sinaltaneously,such as in fleet operations.
.014 In any year in which the simplified method has been used,
straight-line deprcciation will to considered to have been allowed.
The allowable depreciation will act to reduce the basis of the
automobile in determining adjusted basis as required by section 1016(a)
of the Code.
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.05 This simplified method is not available for use where
depreciation has been claimed in the past on an automobile by use
of a depreciation method other than straight-line, or where
additional first-year depreciation has been claimed.
.06 The optional method provided?by this Revenue Procedure will
be accepted in examining the return of an employee irrespective of
whether he received a reimbursement or allowance for such business
automobile expenses from his employer, provided that such reimbursement
or allowance is reflected in his return. For the reporting requirements
of employees, see sections 1.162-17 and 1.274-5(e) of the Income Tax
Regulations.
.07 For this method of computing automobile cost to be acceptable
.a self-employed individual or. employee is required" to establish his
business mileage (A) for local transportation, in accordance with
section 1.162-17(d) of the regulations, and (B) for other travel, in
accordance with section 1.274-5. The provisions of such regulations
relating to substantiation of the amount of an expenditure are
inapplicable to deductions computed under this Revenue Procedure.
With respect to returns filed for taxable years beginning after
December 31, 1973, this Revenue Procedure supersedes Rev. Proc. 70-25,
which relates to periods after December 31, 1969.
26 CFR 601.602: Forms and instructions.
(Also Part I, Sections 170,213; 1.170A-1, 1.213-1.)
In line with the adoption of an increase in the standard mileage
rate for computing the allowable deduction for the cost of transportation
by automobile under section 162 of the Internal Revenue Code of 1954
(See Revenue Procedure 714-23 ) it is deemed appropriate to increase
the standard mileage rate for computing the cost of operating an
automobile for transportation in connection ; iith rendering gratuitous
services to a charitable organization under section 170, and for trans-
portation for medical care under section 213, with respect to returns
filed for taxable years beginning after December 31, 1973.
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Certain items relating to the use of an automobile may not be
taken into account in computing the amount paid for transportation
with respect to the rendering of gratuitous services to charitable
organizations or with respect to medical care, for example,
depreciation. See Rev. Rut. 58-279, 19 8-1 C.B. 145, and Maurice S.
Gordon, 37 T.C. 986 (1962). Accordingly, an individual may not use
the same standard mileage rate as is permitted by Rev. Proc. 7L-23
for an automobile used in a trade or business. Therefore, for taxable
years beginning after December 31, 1973, it has been determined that
seven cents a mile is a reasonable rate which may be used to compute,
the cost of operating an automobile whore such transportation exrpenses
are deductible as a charitable contribution under section 170 of the
Code or as a medical expense under section 213. However, parking fees
and tolls attributable to such transportation may be deducted as
separate items.
The use of this rate shall be in lieu of any amounts otherwise
allowable under sections 170 and 213 of the Code by reason of the use
of a taxpayer's automobile for transportation. However, the rate
prescribed herein does not affect deductions for any expenses relating
to the automobile which are allowable under section 163 (interest) or
section 164 (taxes other than those included in the cost of gasoline).
Similarly, since depreciation may not be taken into account in
determining the deduction for contributions or medical expenses no
adjustment to the basis of the automobile is required because of the
use of this rate.
The standard mileage rate prescribed herein will be accepted by
the Internal Revenue Service as being representative of the cost of
operating an automobile for purposes of sections 170 and 213 of the
Code regardless of the method used to compute depreciation for
business use of the automobile, and regardless of the number of
automobiles that the taxpayer may have in operation. Use of this
standard mileage rate, however, is not mandatory and where a taxpayer's
allowable nonreimbursed transportation expenses for charitable and
medical purposes exceed this rate, the taxpayer may deduct such actual
expenses.
With respect to return filed for taxable years beginning
after December 31, 1973, this Revenue Procedure supersedes
Rev. Proc. 70-24, 1970-2, C.B. 505, which relates to periods after
December 31, 1969.
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PART V.--ADMINISTRATIVE, PROCEDURAL, AND 1 SCELLANEOUS F.XPLTISES.
26 CFR 601.602: Forms and instructions.
(Also Part I, Section 217; 1.217-2.)
Rev. Proc. 74_25
To relieve individuals from the necessity of maintaining certain
detailed travel expense records, the Internal Revenue Service will
accept the use of the simplified method act forth herein for determining
deductible costs of operating a passenger automobile for moving expenses
allowable under section 217 of the Internal Revenue Code of 19511 with
respect to returns filed for taxable years beginning after December 31,
1973.
Subject to the conditions and limitations set forth in section 217
of the Code, an employee or a self-employed individual may choose to
compute the deductible costs of operating his passenger automobile
in connection with the commencement of work at a new principal place
of work by use of a standard mileage rate of seven cents per mile.
The use of this rate shall be in lieu of any amounts otherwise
allowable under section 217 of the Code'by reason of the use of a
taxpayer's automobile for such travel. However, parking fees and tolls
attributable to such travel may be deducted as separate items. The
rate prescribed herein does not affect a deduction for any expenses
relating to the automobile which are allowable under section 163
(interest) or section 164 (taxes other than those included in the cost
of gasoline). Since depreciation may not be taken into account in
determining the deduction 'for moving expenses, no adjustment to the
basis of the automobile is required because of the use of this rate.
With respect to returns filed for taxable years beginning after
December 31, 1973, this Revenue Procedure supersedes Rev. Proc. 71-2,
1971-1 C.B. 659, which relates to periods after December 31, 1969.
Approved For Release 2001/09/07 : CIA-RDP76M00527R000700030004-7