Apart! And reveals it to be
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| Do Employers Have to Pay The Tax?
The employer's "excise" tax is the only tax created by the Social Security Act for which some legitimacy z Actually, both taxes are unconstitutional "capitation" taxes. One being measured by wages received and the other measured by wages paid out. For an explanation as to why both capitation taxes are illegal, see Irwin Schiffs Why No One Can Have Taxable Income. might conceivably be claimed. This is because 1) the tax itself does not claim to be a tax on "income"; 2) the law clearly identifies the tax as an excise tax; 3) the Federal government can levy excise taxes without being restricted by the apportionment provisions the Constitution imposes on direct taxes; and 4) the Supreme Court has held (albeit incorrectly) that the tax is a valid excise. Despite these factors, however, there are a number of legal grounds for not paying the tax. Social Security Act is Admittedly Repugnant To The Constitution Since it is a fundamental principal of American jurisprudence that "anything repugnant to the Constitution is null and void" (Marbury vs. Madison 1 CR. 137), it can be argued that since the Social Security Act is admittedly unconstitutional (see pages 85-89) all taxes created under it are, therefore, null and void. Since Employers Are Not Taxed "For The General Welfare of The U.S.", The Tax is Admittedly Illegal As explained in Chapter 5, the government (in arguing Social Security's constitutionality before the Supreme Court) claimed that Social Security taxes were not designed to pay for Social Security benefits, but were "true taxes (their) purposes being simply to raise revenue," (page 81). The Supreme Court (in its 1938 decision) refused to rule on this question stating that it would "leave the question open". So if the question was left open in 1938, the question certainly has been closed by the government since it repeatedly admits that Social Security taxes, (and the numerous increases in them), are needed to pay for Social Security benefits, not "simply to raise revenue", (see Chapter 8) Law Does Not "Require" That The Tax be Paid But the most basic reason that employers do not have to pay this "excise" tax is that there is nothing in the law that establishes a "liability" for the tax or any requirement that it be paid! For example, IRS Code Section 5703(a) (Figure 16) clearly states that "The manufacturer or importer of tobacco products and cigarette papers and tubes shall be liable for the taxes imposed thereon by Section 5701". Section 5701 (Figure 17) is the Code Section that "imposed" the tax on tobacco products. In addition, Code Section 5703(b) (Figure 18) provides that, "The taxes imposed in Section 5701 shall be paid on the basis of a return". The same wording with respect to the creation of a tax "liability" (and a requirement that such taxes "be paid") appears in numerous other code sections with respect to other Federal taxes. For example, Section 4374 (Figure 19) clearly states that the tax imposed by Section 4371 (Figure 20) "shall be paid on a basis of a return". Since no section of the Internal Revenue Code establishes a "liability", or a requirement that the taxes imposed by Section 3111 "shall be paid", such taxes are, obviously, not required to be paid! FIGURE 16 Code Sec. 5703 Sec. 5703. Liability for tax and method of payment (a) Liability for tax. (1) Original liability. The manufacturer or importer of tobacco products and cigarette papers and tubes shall be liable for the taxes imposed thereon by section 5701. FIGURE 17 Code Sec. 5701 Sec. 5701. Rate of tax. (a) Cigars On cigars, manufactured in or imported into the United States, there shall be imposed the following taxes: (1) Small cigars. On cigars, weighing not more than 3 pounds per thousand, 75 cents per thousand; (2) Large cigars. On cigars weighing more than 3 pounds per thousand, a tax equal to 8Va percent of the wholesale price, but not more than $20 per thousand. Cigars not exempt from tax under this chapter which are removed but not intended for sale shall be taxed at the same rate as similar cigars removed for sale. (b) Cigarettes. On cigarettes, manufactured in or imported into the United States, there shall be imposed the following taxes: (1) Small cigarettes. On cigarettes, weighing not more than 3 pounds per thousand, $8 per thousand. (2) Large cigarettes. On cigarettes, weighing more than 3 pounds per thousand, $16.80 per thousand; except that, if more than 61/2 inches in length, they shall be taxable at the rate prescribed for cigarettes weighing not more than 3 pounds per thousand, counting each 23A inches, or fraction thereof, of the length of each as one cigarette. (c) Cigarette papers. On each book or set of cigarette papers containing more than 25 papers, manufactured in or imported into the United States, there shall be imposed a tax of V4 cent for each 50 papers or fractional part thereof; except that, if cigarette papers measure more than 6Vi inches in length, they shall be taxable at the rate prescribed, counting each 23/4 inches, or fraction thereof, of the length of each as one cigarette paper. (d) Cigarette tubes. On cigarette tubes, manufactured in or imported into the United States, there shall be imposed a tax of 1 cent for each 50 tubes or fractional part thereof, except that if cigarette tubes measure more than 61/2 inches in length, they shall be taxable at the rate prescribed, counting each 23/4 inches, or fraction thereof, of the length of each as one cigarette tube. (e) Imported tobacco products and cigarette papers and tubes. The taxes imposed by this section on tobacco products and cigarette papers and tubes imported into the United States shall be in addition to any import duties imposed on such articles, unless such import duties are imposed in lieu of internal revenue tax. FIGURE 18 Code Sec. 5703 (b) Method of payment of tax. (.1) In general. The taxes imposed by section 5701 shall be determined at the time of removal of the tobacco products and cigarette papers and tubes. Such taxes shall be paid on the basis of return. The Secretary shall, by regulations, prescribe the period or the event for which such, return shall be made and the information to be furnished on such return. Any postponement under this subsection of the payment of taxes determined at the time of removal shall be conditioned upon the filing of such additional bonds, and upon compliance with such requirements, as the Secretary may prescribe for the protection of the revenue. The Secretary may, by regulations, require payment of tax on the basis of a return prior to removal of the tobacco products and cigarette papers and tubes where a person defaults in the postponed payment of tax on the basis of a return under this subsection or regulations prescribed thereunder. All administrative and penalty provisions of this title, insofar as applicable, shall apply to any tax imposed by section 5701. FIGURE 19 Code Sec. 4374 Sec. 4374. Liability for tax. The tax imposed by this chapter shall be paid, on the basis of a return, by any person who makes, signs, issues, or sells any of the documents and instruments subject to the tax, or for whose use or benefit the same are made, signed, issued, or sold. The United States or any agency or instrumentality thereof shall not be liable for the tax. FIGURE 20 CHAPTER 34—POLICIES ISSUED BY FOREIGN INSURERS Sec. 4371. Imposition of tax. 4372. Definitions. 4373. Exemptions. 4374. Liability for tax. Sec. 4371. Imposition of tax. There is hereby imposed, on each policy of insurance, indemnity bond, annuity contract, or policy of reinsurance issued by any foreign insurer or reinsurer, a tax at the following rates: (1) Casualty insurance and indemnity bonds. 4 cents on each dollar, or fractional part thereof, of the premium paid on the policy of casualty insurance or the indemnity bond, if issued to or for, or in the name of, an insured as defined in section 4372(d); (2) Life insurance, sickness and accident policies, and annuity contracts. 1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of life, sickness, or accident insurance, or annuity contract, unless the insurer is subject to tax under section 819; and (3) Reinsurance. 1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of reinsurance covering any of the contracts taxable under paragraph (1) or (2). "Social Security" Taxes Paid By The Self-Employed Theoretically, self-employed individuals acquire Social Security coverage by paying "Social Security" taxes in the form of a "self-employment" tax. This was not included in the original Act but was added in 1954. The forced inclusion of self-employed individuals into Social Security exposes the whole phony "social" theory under which the program was promoted. People intelligent and disciplined enough to run their own business certainly don't need government bureaucrats (who do not have the ability and/or intelligence to do the same thing) to look after them. But, in any case, the so-called "self-employment Social Security tax" is another fraudulent Federal tax that no one is required to pay. Figure 21 is Section 1401 of the Internal Revenue Code which theoretically established such a "Social Security" tax. Note again the deception employed by the headings, since nowhere does the "law" in either Sections (a) or (b) provide for "Old-age, survivors, and disability insurance" or "Hospital insurance". Both sections merely provide for a tax on "self-employment income" and nothing morel In Section (a)(5) the income tax for the period 12/31/81 —1/1/85 is 8.05%; while in section (b)(4) the tax for the period 12/31/80 —1/1/85 is 1.30% bringing the total tax to 9.8% for 1983. (The tax has now been increased to 11.3% for 1984). What Is "Self-Employment Income"? Before "self-employment income" can be taxed, the government must tell us what it is. As explained earlier (see pages 31-35), the Code does not define "income" and, as expected, it doesn't define "self-employment income" either (though the Federal government very ingeniously seeks to create the illusion that it is defined). Since "self-employment income" is nowhere defined in the Code, the tax cannot exist and, on this basis alone, no one need pay such a "tax"! The Government's Ping-Pong "Definition" Section 1402(b) of the Code (see Figure 22) states that"... the term 'self-employment income' means the net earnings from self-employment, derived by an indi- FIGURE 21 CHAPTER 2.—TAX ON SELF-EMPLOYMENT INCOME Sec. ^ 1401. Rate of tax. 1402. Definitions. 1403. Miscellaneous provisions. t/ Sec. 1401. Rate of tax. (a) Old-age, survivors, and disability insurance. In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax as follows: (1) in the case of any taxable year beginning before January 1, 1978, the tax shall be equal to 7.0 percent of the amount of the self-employment income for such taxable year; (2) in the case of any taxable year beginning after December 31, 1977, and before January i, J979, the tax shall be equal to 7.10 percent of the amount of the self-employment income for such taxable year; (3) in the case of any taxable year beginning after December 31, 1978, and before January 1, 1981, the tax shall be equal to 7.05 percent of the amount of the self-employment income for such taxable year; (4) in the case of any taxable year beginning after December 31, 1980, and before January 1, 1982, the tax shall be equal to 8.00 percent of the amount of the self-employment income for such taxable year; (5) in the case of any taxable year beginning after December 31, 1981, and before January 1. 1985. the tax shall be equal to 8.05 percent of the amount of the self-employment income for such taxable year; (6) in the case of any taxable year beginning after December 31, 1984, and before January 1, 1990, the tax shall be equal to 8.55 percent of the amount of the self-employment income for such taxable year; and (7) in the case of any taxable year beginning after December 31, 1989, the tax shall be equal to 9.30 percent of the amount of the self-employment income for such taxable year. FIGURE 21 (continued) (b) Hospital insurance. *"" In addition to the tax imposed by the preceding subsection, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax as follows: (1) in the case of any taxable year beginning after December 31, 1973, and before January 1, 1978, the tax shall be equal to 0.90 percent of the amount of the self-employment income for such taxable year; (2) in the case of any taxable year beginning after December 31, 1977, and before January 1, 1979, the tax shall be equal to 1.00 percent of the amount of the self-employment income for such taxable year, (3) in the case of any taxable year beginning after December 31, 1978, and before January 1, 1981, the tax shall be equal to l.OS percent of the amount of the self-employment income for such taxable year; (4) in the case of any taxable year beginning after December 31, 1980, and before January 1, 1985, the tax shall be equal to 1.30 percent of the amount of the self-employment income for such taxable yeari (5) in the case of any taxable year beginning after December 31, 1984, and before January 1, 1986, the tax shall be equal to 1.35 percent of the amount of the self-employment income for such taxable year; and (6) in the case of any taxable year beginning after December 31, 1985, the tax shall be equal to 1.45 percent of the amount of the self-employment income for such taxable year. (c) Relief from taxes in cases covered by certain inter* national agreements. During any period in which there is in effect an agreement entered into pursuant to section 233 of the Social Security Act with any foreign country, the self-employment income of an individual shall be exempt from the taxes imposed by this section to the extent that such self-employment income is subject under such agreement to taxes or contributions for similar purposes under the social security system of such foreign country. FIGURE 22 Code Sec. 1402 (b) Self-employment Income. The term "self-employment income" means the net earnings from self-employment derived by an individual (other than a nonresident alien individual) during any taxable year; except that such term shall not include— vidual ... during any taxable year...". So the "self-employment income tax" is, in reality, a "net earnings" tax. In other words, if "self-employment income" means "net earnings from self-employment" (and the tax is levied on "net earnings from self-employment"), then why isn't the tax called a "net earnings" tax instead of an "income" tax? The reason will be clear shortly, but it it apparent that we now have to find out the meaning of "net earnings" in order to know what is taxable as "self-employment income". Figure 23 is Section 1402(a) of the code which presumably defines "net earnings from self-employment". We should be able to discover the meaning of "net earnings" from this Section; but, alas, we now find here that "net earnings" means "gross income" less allowable deductions — or, in other words, "net earnings" means "net income" and "net income" means "net earnings" and we are right back where we started! What those rascals did was, in essence, to define a "big dog" as a "little horse" and a "little horse" as a "big dog". But they did it in such a confusing and complicated manner that no one understood what was going on. And who would squeal anyway — the lawyers and accountants who make money from the deception? FIGURE 23 Code Sec. 1402 Sec. 1402. Definitions. (a) Net earnings from self-employment. The term "net earnings from self-employment" means the gross income derived by an individual from any trade or business carried on by such individual, less the deductions allowed by this subtitle which are attributable to such trade or business, plus his distributive share (whether or not distributed) of income or loss described in section 702(a)(8) from any trade or business carried on by a partnership of which he is a member; except that in computing such gross income and deductions and such distributive share of partnership ordinary income or loss— Proof that the IRS Code is a total fraud (and those who wrote it knew it!) can be deduced from this "ping-pong" definition between "net income" and "net earnings". Why were two definitions required? Why not one? The answer to this question reveals the whole illegal nature of Federal "income" taxes. The government could not constitutionally tax "earnings" since the 16th Amendment authorizes a tax on "income", not "earnings".3 The tax therefore, had to be couched in terms of an "income" tax, (as explained on pages 87-88). But the Internal Revenue Code, as already explained, does not (and cannot) define "income" so the Federal government had to contrive a definition for "self-employment income" (employing the term "earnings" to do it) in the same manner it contrived a definition for ' But only if levied as an excise tax and not as a direct tax as is presently the case. See Why No One Can Have Taxable Income by Irwin SchifF. "taxable income". So it proceeded to define "income" as "earnings" and then "earnings" as "income" (a distinction without a difference!) and the nation was none the wiser. At least we can admire the Federal Mafia's creativity! (Which is precisely what the Federal establishment really is. For proof see The Schiff Report, issues 1-6.) "Can Self-Employment Income" Be Different From "Taxable Income"? Again, as I have already pointed out, the 16th Amendment only provides for a tax on "income" and not a tax on "self-employment" income (if different from "income" itself). So "self-employment income" legally has to mean the same thing as "taxable income" per Section 63 (Figure 10, page 34) or it is unconstitutional on its very face. The government, however, would have the public believe that it can define and tax "income" two different ways — one way under Section 63 and another way under Section 1401 — which it cannot legally do! |