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This book will save you thousands of dollars


Explain why there is no such thing as a "Social Security" tax.

Provide you with all the legal statutes that establish why you are not required to pay such a "tax'.'

Explain the specific procedures necessary to drop out.

Provide the legal and historical documentation explaining how the government foisted this "bogus tax" on the American people.

Discover why Social Security must qualify as the greatest swindle of them all!

Freedom Books • 60 Connolly Parkway • Hamden, CT 06514


Irwin Schiff, author of the nationwide bestseller How Anyone Can Stop Paying Income Taxes, has done it again! His explosive expose'of Social Security—the biggest chain letter of them all — reveals in vivid detail all the underhanded practices employed by the Federal Government to foist this swindle on the American public. No less shocking is the outrageous ploy used by the Supreme Court to get this admittedly unconstitutional law on the books. His incredible insight into the workings of the Supreme Court is, alone, worth the price of the book.

THE SOCIAL SECURITY SWINDLE — HOW ANYONE CAN DROP OUT, is written in Schiffs now famous clear and breezy style and is not based solely on the author's opinion, but it is amply documented by over 50 excerpts from the law itself, numerous official exhibits and a thorough analysis of relevant court cases. What emerges is a powerful indictment of the Supreme Court and irrefutable proof that Social Security is a legal, economic, social and moral fraud.

Not satisfied with merely presenting the facts, Schiff also provides readers with all the necessary documents and step-by-step procedures so that all (employees, employers and self-employeds) can drop out of the Social Security scam.

Though an analysis of law, court cases and government documents would normally provide dull and uninteresting reading, Schiff s presentation leaves the reader reeling as he moves from one shocking revelation to another. It is hard to believe that 96 million Americans have pinned their financial future to a false hope, but the evidence is all here and cannot be refuted. For those unwilling to be led like sheep to the financial slaughter, Schiff offers a concrete alternative — DROP OUT NOW!

Freedom Law School

9582 Buttcmcrc Road Phelan, CA 92371

(760) 868-4271

Return to: Freedom Books P.O. Box 5303 Hamden, CT 06518

Irwin A. Schiff, untax expert, lecturer and America's most visible constitutionalist, is the author of several other non-fiction works about taxes and government waste. They include The Biggest Con: How The Government is Fleecing You, a book that deals with the destructive nature of the Federal government; The Kingdom ofMoltz, a comic satire on money and inflation; and How Anyone Can Stop Paying Income Taxes, the nation's best selling hard cover book on taxes and the definitive work on how the IRS extorts billions of dollars from unsuspecting Americans every year. He also writes and publishes The Schiff Report, a popular and influential publication, describing specific techniques to fight the IRS's illegal procedures.

He has appeared on such national television programs as CBS' "NIGHTWATCH", "THE DAVID SUSSKIND SHOW", "THE FINANCIAL NEWS NETWORK", "RUFF HOUSE", "CABLE NEWS", "TOM SNYDER", and guested TV shows in nearly every major U.S. city including San Francisco, Chicago, New York, Los Angeles, Seattle, Portland, Miami and Dallas. He has also been the repeat guest of many popular radio talk show hosts such as Ray Briem, Michael Jackson, Bob Grant, Joel Spivak, Ed Hartley, Patrick J. Timpone, Pat Whitley, John Signa, Joe Lombardo, Joel Rose and Sid Barlow.

Schiff, a resident of Hamden, Connecticut has two sons, Peter and Andy.

We hope you found the information in this book helpful. If you would like additional information on other areas of taxation, where citizens are being equally misled, you are invited to return the enclosed coupon. We will then be able to send you information on "The Schiff Report" and notify you of upcoming books, reports, and studies dealing with taxes at all levels of government.

Name_ Address_ City_State_Zip_


Social Security Swindle — How

Anyone Can Drop Out


jfreebom poote

Hamden, Connecticut

This book is designed to provide the author's findings and opinions based on research and analysis of the subject matter covered. This in­formation is not provided for purposes of rendering legal or other profes­sional services, which can only be provided by knowledgeable profession­als on a fee basis.

Further, there is always an element of risk in standing up for one's lawful rights in the face of an oppressive taxing authority backed by a biased judiciary.

Therefore, the author and publisher disclaim any responsibility for any liability or loss incurred as a consequence of the use and application, either directly or indirectly, of any advice or information presented herein.

Sections of the Internal Revenue Code reprinted by permission from the Tax and Professional Services Division, The Research Institute of Amer­ica, Inc. Copyright ® 1983.

Copyright® 1984 by Irwin A. Schiff

All rights reserved. Printed in the United States of America. No part of this book may be used or reproduced in any manner whatsoever without the prior written permission of the publisher.

Library of Congress Catalog Card No. 83 -90489


84 85 86 87 10 9 8 7 6 5 4 3 2 1


Former Supreme Court Justices Pierce Butler and James C. McReynolds and former United States Circuit Judges James M. Morton, Jr. and Scott Wilson. By declaring Social Security unconstitutional in 1937, they demonstrated that they were members of a vanishing breed — Federal judges who under­stand and enforce the United States Constitution.

Books By Irwin A. Schiff

How Anyone Can Stop Paying Income Taxes

The Kingdom of Moltz

The Biggest Con: How The Government is Fleecing You


INTRODUCTION ....................................... H

1. Socialism Arrives in America ............................. 15

2. Surprise! Social Security — Just Another "Income

Tax" .................................................. 23

3. How To Stop Employers From Withholding "Social

Security" Taxes........................................ 39

4. Employers and Self—Employeds— How They, Too,

Can Drop Out ......................................... 47

5. The Supreme Court — Playing Games With The Law....... 65

6. How Social Security Was Sold To The Public — Would

They Buy It Today? .................................... 99

7. An Analysis of Government Studies: Proof That

Government Cannot Be Trusted.........................109

8. Of Taxes And Trust Funds................................163

9. The System Encourages Rampant Abuse...................173

10. Why Dropping Out Of Social Security Is In The

National Interest ......................................191

Appendix A: Chapter 4 The Biggest Con-How The Government Is Fleecing You ............................209

Appendix B: Pages 302-304, The Biggest Con...............233

Appendix C: Sample Lawsuit .............................239

Appendix D: Private Sector "Experts" .....................243

Legal Cases Cited........................................251

Reading List.............................................253


In October, 1934, after serving approximately 10 years in jail, a little Italian immigrant named Charles Ponzi was deported to Italy after pulling off one of the greatest swindles America had ever witnessed.

In December, 1919, Ponzi convinced about a dozen people that he could make them a 50% profit in 45 days by trading in international postal coupons.

At the end of the first 45 days his first batch of "investors" lined up to claim their profits. Sure enough, Ponzi was as good as his word and paid his investors $375.00 for the $250.00 initially given him. As Ponzi expected, most of his investors handed the money right back to him so he could reinvest it for them and then they fanned out into the community, spreading the news that Ponzi could make everyone rich.

The news spread quickly. Within a month thousands of people, money in hand, lined up in front of Ponzi's School Street office. He even hired 3 women to serve franks and coffee to those who had to wait. By

April of 1920 he was taking in $250,000 a day, had 16 clerks just taking in money and nearly as many guard­ing it.

In less than 6 months Ponzi collected over $10 million and his name was known from coast to coast. He refurbished his office and gave his company the im­pressive title, "SECURITIES EXCHANGE COM­PANY". He purchased a 20 acre estate near Boston and spent $500,000 redecorating it. He supposedly spent $100,000 just stocking the wine cellar! He purchased large tracts of land and large interests in banks and investment companies.

A chauffeur and footman, outfitted in plum colored livery, squired him around the city in a custom built limousine. Everywhere he went he was beseiged by well-wishers who cheered him and implored him to take their money.

Ponzi's scheme collapsed when a spiteful former friend notified Boston police that Ponzi had served 3 years in a Montreal jail for forgery. This was confirmed by the Montreal police on April 11, 1920 when they supplied Boston authorities with a mug shot of Ponzi.

What Ponzi had done, of course, was simple...he used the money given him by new "investors" to pay off older "investors". As long as more money came in than had to be paid out, the scheme worked (in all such scams money will keep coming in as long as enough people believe that they, too, will make what others are re­ported to have made). He was even able to skim off considerable amounts for himself to create and main­tain a lavish personal and business life-style.

What promoters of such swindles hope to do, of course, is to vanish with enough loot before the last round of victims realize they have been taken. Early "winners" are necessary in order for the scam to work.

Such swindles, however, depend on an ever expanding army of new participants relative to those who drop out. When the tide turns, the scam inevitably collapses. The losses sustained by all those left holding the bag at the end finance the gains realized by earlier partici­pants and the "profit" that the promoters skimmed off.

Chain letters and pyramid schemes are variations of the Ponzi scam and rely, more or less, on the same principle. Americans have now been victimized by the greatest Ponzi swindle of them all - SOCIAL SECUR­ITY! It really isn't any different from the scheme de­vised by Ponzi some 60 years ago - it's only bigger. It would not be inappropriate for the Social Security Administration to commission a large statue of Ponzi to adorn its main lobby in Baltimore, Maryland!

The only difference between Social Security and Ponzi's scheme is that Social Security is much larger (involving a whole country) and was implemented by force. At least Ponzi didn't put a gun to anyone's head and force them to give him their money. And, like all Ponzi-type schemes, Social Security did allow some winners in the beginning; but, in the end, it, too, must collapse, leaving disappointment and heartache in its wake. Three or four generations of Americans will simply lose what two or three other generations might have gained and what was skimmed off by the plan's promoters — the Washington Bureaucracy.

The political con artisits who pulled off and partici­pated in this swindle must be punished. It is to this end that this book is also dedicated.


Socialism Arrives in America

Social Security, a program that sprang from the womb of socialism is nothing more than a grotesque economic and social abortion. Like Socialism itself, it owes its very existence to public ignorance and gullibil­ity. Both are swindles on every level — economic, so­cial, moral and legal. The government has consistently misrepresented every aspect of Social Security to the public so Americans have absolutely no conception of an item in the Federal budget that accounts for 30% of the government's expenditures. The implication of this is staggering: better than 99% of Americans do not know anything about a program that consumes as much in taxes as does defense spending!

Social Security is an economic fraud. It is not sup­ported by even one sound economic principle; but, rather, is rooted in the pie-in-the-sky concepts of social­ism and the chain letter. As such, it has constantly lowered the nation's standard of living.

It is a fraud on the social level since it actually breeds, aggravates and intensifies all of society's social problems (i.e. creating a less self-reliant population, promoting crime, juvenile delinquency, dependency and unemployment). In effect, Social Security creates and breeds social insecurity, the exact opposite of its

grandiose, presumptuous, self-serving and misleading title. In addition, the government has totally misrepre­sented its legal and financial character. What the pub­lic has been fed is a complete fairy tale—totally at odds with the real financial and legal nature of the program. However, when we face the fraudulent and illegal char­acter of Social Security, we are brought face to face with what must be the fraudulent character of the Federal judiciary. Without the help of a fraudulent judiciary, the government could never have foisted such an illegal program on the public.

Social Security's early advocates and promoters merely adopted the simplistic (but politically salable) economic nostrums of socialism, a common characteris­tic of much of what was passed off as "New Deal", "Fair Deal", "Great Society" and "New Frontier" programs. Variations of basic socialist doctrine were successfully peddled to the American public under the guise of "liberalism" and the "welfare state", a supposedly be­nevolent form of free enterprise. In reality, though, the "welfare state" is nothing but socialism disguised and peddled to the public under a more acceptable label.

Politicians generally, of course, love to believe the social and economic philosophies espoused by left-wing intellectuals,1 since such philosophy fits right in with campaign rhetoric. Politicians love to promise the pub­lic that they (the politicians) can wipe out poverty, raise

1 Actually a contradiction of terms since no real intellectual could possibly accept the absurd and unworkable theories of socialism. Those who embrace such theories are not really intellectuals; they are usually social and economic theoreticians (either being too lazy to work or lacking in the ability to create real goods) who, for obvious psychological reasons, reject the economic theory that rewards hard work, creativity and risk taking in favor of one that compensates non-producers and economic cowards (which they invariably are) out of all proportion to their economic and social worth.

living standards, lower rents and interest rates, reduce unemployment, save jobs, "make war on poverty", etc. They promise to do all of this without increasing taxes or requiring anyone to work harder or longer. Unfortu­nately, all too many are gullible enough to believe this that politicians, who themselves produce nothing, can increase society's real wealth with laws and econo­mic mirrors. Government all too often fills the need of those who must cling to a belief in Santa Glaus.

But our nation's sorry crop of politicians don't raise society's standard of living—they lower it. All they do is pass laws that confiscate the wealth of some (in the guise of taxation) for the benefit of others, in exchange for votes. In the process, these politicians do earn con­siderable sums (and fringe benefits) for themselves ... which is why they go into politics in the first place.2

The majority of successful politicians are usually lawyers. Can you think of any segment of society less productive than lawyers?3 In the final analysis it can be said that government today largely consists of a bunch of lawyers passing largely unnecessary laws which (though interfering with society's real producers) do generate a lot of lucrative legal work and influence

1 It has also been my observation that the least productive mem­bers of society go into politics. Picture an individual who is hard working, creative, inventive with a lot of integrity. Ask yourself, "Does such a person go into politics?" Of course not! There might be some exceptions to this, but not many.

81 am not saying that society does not need some good lawyers, especially where criminal law and Constitutional rights are con­cerned. But it is my experience that most lawyers are incompe­tent and overpriced, with a good deal of their work being largely unnecessary. In addition, 75% of the world's lawyers practice in America ... this, alone, proves my point. Incidentally, America has 20 times as many lawyers per capita as Japan, which alone explains Japan's increasing ability to out-produce the U.S. in the area of consumer products.

peddling for them and their cronies in the bar association.4

America's founding fathers, fully aware of the type of tyranny that governments are capable of, created a Constitution and a Bill of Rights to limit the power of government so as to prevent such tyrannies from tak­ing place. Federal judges were appointed for life to keep them (theoretically) honest and independent so they would conscientiously enforce this Constitution and the rights secured under it to the public. The Federal judici­ary, however, being a part of the Federal government itself, disregarded this trust and continually used its position to illegally expand the power and influence of the Federal government while under-mining indi­vidual rights and state sovereignty.6

Social Security

Must Lower the Nation's Standard of Living

It is a fundamental economic law that any society will get less of what it taxes and more of what it subsi­dizes. This principle is so basic that it qualifies as a truism. Let me explain how it works. If a government,

4 Since licensed lawyers are "officers of the court" all lawyers are automatically a part of the judicial branch of government. Thus, all licensed lawyers who serve in any legislature or executive capacity are automatically a part of two branches of government (legislative and judicial or executive and judicial) at the same time. Such a situation violates the "separation of powers" doc­trine. Citizens in every state should seek to bar licensed lawyers from the other two branches of government unless they surrender their bar licenses. Otherwise, not only does such a situation violate the "separation of powers" doctrine, it violates the Consti­tutional provision outlawing the establishment of a "nobility". Ordinary Americans who are not lawyers are denied access to the judicial branch of government and can only serve in two branches of government while lawyers can serve in all three - and two of them at the same time! This constitutes a form of "nobility" that is barred by the Constitution.

for example, placed a tax of $100.00 per year on "play­ing tennis", fewer people would play tennis. To some, playing tennis would not be worth $100.00 per year. If the "tennis playing" tax were raised to $200.00 per year, society would get fewer tennis players still. If the tax on "tennis playing" was increased further we would obviously get even fewer tennis players. And, if the tax were raised high enough, we could conceivably wipe out tennis playing altogether!6 Social Security (which you will soon learn is simply another "income" tax) is a tax on productivity since only those who are productive (i.e. working) are taxed. So, if government taxes "productiv­ity", society must (in conformity with economic law) get less of it.

The collateral principle, that a society "will get more of what it subsidizes", is also a truism. For exam­ple, if our government stated that it would pay an annual subsidy of $100.00 to anyone who played tennis, some people would now play tennis for the $100.00 subsidy. The nation would suddenly find it had more tennis players. If the government raised the "tennis" subsidy to $200.00 per year, we would obviously get more tennis players still. And, if the government raised the subsidy high enough, everybody in the country who could make it to a tennis court would be playing tennis!

Since all Social Security "benefits" are tied to "not working" or working less, Social Security payments amount to a government subsidy for "not working" and,

5 The 10th Amendment was specifically designed to protect and secure individual rights and state sovereignty. It states, "...those powers not delegated to the United States by the Constitution nor prohibited to it by the States, are reserved to the States respec­tively or to the people."

' Or, as was succinctly put by Chief Justice John Marshall, "The power to tax involves the power to destroy." (McCulloch v. Mary­land, 4 Wheat. 316 (1819)

in turn, America gets a lot more "non-workers" because of it. Since Social Security amounts to a tax on "produc­tivity" and a subsidy for "non-productivity", the exist­ence of such a program delivers a two-fold blow to the nation's economy. The nation gets fewer producers and more non-producers, which has to lower the nation's standard of living and quality of life.

The government succeeded in selling such an idio­tic plan to the nation because thousands of Federal politicians and bureaucrats have been thoroughly mis­stating and misrepresenting Social Security to the public.

It has also received a lot of help over the years from supposed "experts" who have been feeding the public a lot of nonsense concerning Social Security. Examples of such nonsense are included in Appendix D.

So let's cut through all the nonsense, find out what Social Security really is, and discover how anyone can drop out.

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