I have repeatedly written about the legal sham that is Social Security and the collusion of our politicians in continuing the deception. Members of both major political parties are extremely adept in convincing the American people and their willing dupes in the media that Social Security is a legitimate retirement program. The American Public has been told that payroll deductions from their wages are "contributions" matched by their employer and pooled in a special "trust fund."
Factually, there is no SS "retirement trust fund." These so-called "contributions" are actually an additional flat rate income tax that is deposited in the federal government's general fund. In reality, Social Security is nothing but a tax scheme used as a welfare program disguised as a retirement program.
Immediately after going into effect in 1935, the Social Security Act was correctly challenged as unconstitutional. In 1937, in Helvering v. Davis (301 US 619), the Supreme Court revealed the truth about Social Security.
First, employees are not making a contribution into any retirement program much less their own, but are actually paying a "special income tax" which is deducted from their wages and paid to the federal government by their employer. That tax is an indirect or excise tax imposed on the employee for the "privilege" of being employed by an employer.
Secondly, employers are not making matching contributions into any specific retirement program for their employees, but are actually paying an excise tax for the privilege of having individuals in their employ.
Thirdly, there is no retirement trust fund. The Court stated:"the proceeds of both taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way." Since these particular income taxes are not earmarked in any way, there are no (and may not be) individual retirement accounts. Both taxes are general fund income taxes which are used to pay the general expenditures of the federal government. Simply put, Congress can, has, and does spend these so-called "retirement contributions" to pay for military appropriations, foreign aid, salaries of federal employees, welfare, etc.
In 1960, in Flemming v. Nestor (363 US 603), the Supreme Court provided further insight into the nature of the Social Security program. The Court stated that "...eligibility for benefits...[does] not in any true sense depend on contribution through the payment of taxes." Since the Social Security program is a form of welfare, an individual who has not paid a penny in Social Security taxes can receive various benefits under the program. The nation (we) spends BILLIONS annually on illegal immigrants and non-taxpayers for their welfare programs.
The Court has also ruled that individuals paying Social Security taxes do not acquire any property or contractual rights as they would in an insurance or annuity plan. In addition, the Court stated: "Congress included in the original act, and has since retained, a claim expressly reserving to it "the right to alter, amend, or repeal any provision' of the Act."
Social Security, contrary to continuing representations by politicians of both majors but principally Democrats, is nothing but a tax and welfare scheme masquerading as a retirement program. Payroll deductions are not "retirement contributions" therefore we are not guaranteed receipt of any benefits. They merely qualify the individual for consideration in a federal charity program that can be abolished at any time and is regularly modified by Congress. In fact, if you woke-up tomorrow morning and heard that Social Security had been abolished you would not have any legal claim for any of the promised benefits.
In their proposals to save Social Security, some politicians have stated that the program will not face a funding problem until the year 2015 or beyond depending on the source. What they are really saying is that when this occurs, the amount of welfare paid by the federal government from the general fund will, for the first time, exceed the amount of tax dollars collected under the guise of retirement contributions.
Despite the fairy tales emanating from Washington, Social Security is a cash cow that generates tens of billions of general fund dollars for Congress to spend each year. In 1999 for example, Republican Senate Majority Leader Hot to Trot Trent Lott stated that the projected federal budget surplus was $110 billion, all resulting from Social Security taxes. Thus, Social Security taxes in 1999 generated approximately $110 billion in "surplus" dollars for Congress to spend however it saw fit.
In my opinion, the real reason most politicians, principally Democrats, do no want to privatize Social Security is that the ability to tax and spend is the ultimate source of power. And power is the name of the game. As stated by Alexander Hamilton "a power over a man's subsistence amounts to a power over his will."
If Congress was truly as concerned about the retirement of seniors as they claim in their pleas to save Social Security, they would phase out this fraudulent tax and welfare scheme and allow the American people to create their own retirement program. Any amount of the taxes paid in that might be allocated to individuals specific accounts would hold some guarantee that the individual would eventually receive some return plus interest on their own monies. Not only would this stimulate the economy and create jobs, but it would also be the honorable thing to do.
I am reminded of the Mark Twain remark that "there is no native American criminal class except Congress." My thanks to Robert Gleenslade and the Sierra Times for some of the above material.
PL Booth
Blue Eye, MO
December 16, 2002
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