|SUMMARIZING THE POINTS COVERED IN CHAPTER 1
1. Social Security is rooted in Socialist doctrine.
2. Social Security (being a tax on producers for the benefit of non-producers) must decrease the number of producers while increasing the number of non-producers.
3. The inevitable result of 2 above is a continual lowering of the nation's standard of living.
Reproduced in Figure 1 is the Internal Revenue Code section that establishes the present, basic 5.4% rate for "Social Security". Figure 2 is the Code section that presumably establishes the supplemental 1.3% rate for "medicaid", which equals the current 6.7% "Social Security" tax withheld from wages.
Note that Chapter 21 of the Code is specifically entitled Federal Insurance Contributions Act while sections 3101(a) and 3101(b) are respectively captioned "Old Age, Survivors and Disability Insurance" and "Hospital Insurance". Read over both Code sections and see what impression you get. After reading them, did you conclude that they deal with taxes for "hospital insurance" and/ or "old age and disability insurance"? Read them again and see if either section deals with any such programs!
First of all, chapter titles and section headings do not constitute apart of the law, but the public would not know this when reading the Code. Both the Chapter Title and Code captions used here are deliberately designed to fool the public as to what the law actually is.
CHAPTER 21.—FEDERAL INSURANCE
CONTRIBUTIONS ACT N
A. Tax on employees. Chapter Title
B. Tax on employers.
C. General provisions.
Subchapter A.—Tax on Employees
3101. Rate of tax.
3102. Deduction of tax from wages.
Sec. 3101. Rate of tax. Section Heading
(a) Old-age, survivors, and disability insurance. *"~
In addition to other taxes, there is hereby imposed on the income of every individual a tax equal to the following percentages of the wages (as defined in section 3121(a)) received by him with respect to employment (as denned in section 3121(b))—
(1) with respect to wages received during the calendar years 1974 through 1977, the rate shall be 4.95 percent;
(2) with respect to wages received during the calendar year 1978, the rate shall be 5.05 percent;
(3) with respect to wages received during the calendar years 1979 and 1980, the rate shall be 5.08 percent;
(4) with respect to wages received during the calendar year 1981, the rate shall be 5.35 percent;
(5) with respect to wages received during the calendar years 1982 through 1984. the rate shall be 5.40 percent;
(6) with respect to wages received during the calendar years 1985 through 1989, the rate shall be 5.70 percent; and
(7) with respect to wages received after December 31, 1989, the rate shall be 6.20 percent.
Code Sec. 3101
Cb) Hospital insurance. ^
In addition to the tax imposed by the preceding subsection, there is hereby imposed on the income of
every individual a tax equal to the following percentages of the wages (as defined in section 3121(a)) received by him with respect to employment (as defined in section 3121(b))-
(1) with respect to wages received during the calendar years 1974 through 1977, the rate shall be 0.90 percent;
(2) with respect to wages received during the calendar year 1978, the rate shall be 1.00 percent;
(3) with respect to wages received during the calendar years 1979 and 1980, the rate shall be 1.05 percent;
(4) with respect to wages received during the calendar years 1981 through 1984. the rate shall be 1.30 percent;
(5) with respect to wages received during the calendar year 1985, the rate shall be 1.35 percent; and
(6) with respect to wages received after December 31, 1985, the rate shall be 1.45 percent.
For example, the Chapter title, "Federal Insurance Contributions Act", is, itself, a lie. As explained in Appendix A "Social Security" is not "insurance", and, in any case, it is supported by forced exactions - not voluntary "contributions".
The paragraph subheadings are also deliberately designed to carry out the misleading idea that somehow
the law deals with "contributions" for these "insurance" benefits, when this is not at all the case. You can prove this yourself by placing your finger over the caption headings and reading the law as written. You will discover that there is nothing in the law that even mentions old age, disability, survivors or hospital insurance benefits at all! So, if the law itself does not mention these subjects, how can the captions (which are not part of the law) refer to them?! Obviously the captions were designed to (mis)lead the public concerning what the law itself is all about. The fact is, if the law really contained the material suggested by those captions, "Social Security" would have been declared unconstitutional a long time ago!1
By reading the law (and forgetting the captions), you will quickly discover what has been going on — which is something entirely different from what the nation has been led to believe.
First of all, the public believes that "Social Security" is a tax on "wages". But as you can see from the law, "Social Security" is really nothing more than another "income" tax! American wage earners have been paying two "income" taxes — one collected on the basis of a form 1040 (subject to deductions and exemptions) and another (a flat rate "income" tax automatically deducted from wages) not subject to such deductions or exemptions! Can the Federal government make some Americans subject to two "income" taxes while excluding others (such as retirees and government employees) from the same tax?? Surely not!
It is important to note that the "income" tax established in Code section 3101 is merely "collected as a percentage of wages", but the tax itself is clearly identi-
1 See page 81.
fled as an "income" tax and not a tax on wages! It is possible to have wages but not income, since "income" (as used in the 16th Amendment) is a legal concept separate and distinct from wages!2 As a matter of fact, the word "wages" is not even included in Code section 61 which attempts to define the components of "income" (Figure 8, page 33). The point is, though your employer may have evidence that you received "wages", he has no knowledge or evidence (unless you tell him) as to whether or not you have any "income". And the law imposes no obligation on employers to determine whether their employees have "income". The government could not impose such a burden on employers because it would amount to the government forcing employers to be detectives for them. In addition, the "income" tax imposed under section 3101 cannot be legally collected until it has been lawfully assessed by the government in accordance with section 6201 of the Internal Revenue Code as shown in Figure 3.
Government Required to Assess and Bill "Social Security" Taxes
Note that Code section 6201 requires that the Secretary of the Treasury make an assessment "of all taxes ... imposed by this title". Since section 3101 clearly imposes an "income" tax, then such taxes are required to be assessed in accordance with Section 6201. In addition, Section 6203 (Figure 4) states that the assessment shall be made by recording the "liability" of the taxpayer "in the office of the Secretary"; and that "upon request of the taxpayer the Secretary shall furnish the taxpayer with a copy of the record of the assessment". In addition, Section 6303 (Figure 5) states that
2 For a more complete analysis, see chapter 3.
Sec. 6201. Assessment authority.
(a) Authority of Secretary.
The Secretary is authorized and required to make the inquiries, determinations, and assessments of all taxes (including interest, additional amounts, additions to the tax, and assessable penalties) imposed by this title, or accruing under any former internal revenue law, which have not been duly paid by stamp at the time and in the manner provided by law. Such authority shall extend to and include the following:
(1) Taxes shown on return. The Secretary shall assess all taxes determined by the taxpayer or by the Secretary as to which returns or lists are made under this title.
Sec. 6203. Method of assessment.
The assessment shall be made by recording the liability of the taxpayer in the office of the Secretary in accordance with rules or regulations prescribed by the Secretary. Upon request of the taxpayer, the Secretary shall furnish the taxpayer a copy of the record of the assessment.
Sec. 6303. Notice and demand for tax.
(a) General rule.
Where it is not otherwise provided by this title, the Secretary shall, as soon as practicable, and within 60 days, after the making of an assessment of a tax pursuant to section 6203, give notice to each person liable for the unpaid tax, stating the amount and demanding payment thereof. Such notice shall be left at the dwelling or usual place of business of such person, or shall be sent by mail to such person's last known address.
after making the assessment the Secretary shall "... give notice to each person liable for the unpaid tax, stating the amount and demanding payment thereof." I, therefore, suggest that you send the letter shown in Figure 6 to the Secretary of the Treasury to determine whether Section 3101 "income" taxes have been properly assessed against you, since without such an assessment you obviously have no "liability" for such taxes!
Can Americans Have Two Types Of "Income"?
What "income" is actually subject to tax under Section 3101 anyway? Can employees have two different kinds of "income"? Obviously the "income" that Americans pay taxes on using a form 1040 is entirely different from the "income" that has served as a basis for the taxes that have been forceably extracted from paychecks pursuant to Section 3101.
When determining 1040 "income", employees are allowed numerous deductions and exemptions and may ultimately arrive at a taxable "income" substantially lower than their wages. Can employees legally have
Mr. Donald T. Regan, Secretary
Department of the Treasury
Main Treasury Building
15th Street & Pennsylvania Avenue, N. W.
Washington, D.C. 20220
Dear Mr. Secretary:
Section 6201 of the IRS Code states that you are "required to make the ... assessments of all taxes ... imposed by this title". Section 6203 further states that the assessment shall be made by "recording the liability of the taxpayer in the office of the Secretary" and "upon request of the taxpayer, the Secretary shall furnish the taxpayer with the record of the assessment".
This is to advise you that I would like to be furnished a copy of the record of my tax assessment (pursuant to Sections 6201 and 6203) for any "income" taxes for which I may be liable for under Sections 3101(a) and (b) of the Internal Revenue Code. Please furnish me with my current 1984 assessment and a copy of the assessment for the years 1983, 1982, 1981, 1980, etc. I also note that Section 6303 of the IRS Code states that the Secretary shall "within 60 days after the making of an assessment pursuant to Section 6203, give notice to each person liable for the unpaid tax, stating the amount and demanding payment thereof". This is to inform you that I am notifying my employer that until such time as I receive from you a copy of my record of assessment for the current year, and proof that I have been "made liable" for Section 3101 "income" taxes pursuant to Sections 6201, 6203 and 6303, he is to immediately stop the withholding of all such
"income" taxes from my wages.
Very truly yours,
two different kinds of taxable "income"? One being taxable one way under section 3101 and another kind being taxable another way on a form 1040?3 Does the 16th Amendment provide for two different kinds of "income" that are taxable pursuant to that Amendment?
Internal Revenue Code Does Not Define "Income"
Figure 7 is an excerpt from the case of U.S. vs. Bollard in which the Appellate court clearly recognized that"... the general term 'income' is not defined in the Internal Revenue Code." Well, if the general term "income" is not defined in the Internal Revenue Code, how can anyone be sure that they have any "income" that is taxable? You will notice that the court inBallard states that Section 61 of the Code defines "gross income". I have reproduced Code Section 61 (Figure 8) and you will see that the Court is wrong on this point — Code Section 61 does not define "gross income" at all. Code Section 61 attempts to define "gross income" but uses the word "income" in the definition and (as any eighth grader should know) a word cannot be defined by using the word itself in the definition! In other words, Code Section 61 cannot define "gross income" unless the word "income" is also defined.4 But even overlooking this piece of chicanery, Section 61 (Figure 8) admittedly only defines "gross income". In the same manner, Code Section 62 (Figure 9) defines "adjusted gross income",
1 Regular income taxes on a form 1040 are "imposed" in Section 1 of the Internal Revenue Code. It states that "... there is hereby imposed on... taxable income.. .a tax determined in accordance with the following tables..."
4 For a more complete analysis, see Why No One Can Have Taxable Income by Irwin Schiff, to be published in 1984.
U.S. v. Ballard, 535 F 2nd 499
535 FEDERAL REPORTER, 2d SERIES
The general term "income" is not defined in the Internal Revenue Code. Section 61 of the Code, 26 U.S.C. § 61, defines "gross income" to mean
all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, and similar items;
(2) Gross income derived from business; • •*•••
(5) Rents [.]
while Code Section 63 (Figure 10) allegedly defines "taxable income".
For the reason already stated, neither Code Section 62 nor 63 actually defines "adjusted" or "taxable" income either. But, admittedly, no section of the Code even attempts to define the naked word "income" and it is naked "income" that is allegedly taxed in Code Sec-
Sec. 61. Gross Income defined.
(a) General definition.
Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(8) Alimony and separate maintenance payments;
(10) Income from life insurance and endowment contracts;
(12) Income from discharge of indebtedness;
(13) Distributive share of partnership gross income;
(14) Income in respect of a decedent; and
(15) Income from an interest in an estate or trust.
* Note that Section (a) does not include either "wages" or "salaries" as a component of "Gross Income." This omission was not accidental. The government, however, has suceeded in tricking the public into believing that "wages" and "salaries" are "similar items" to "compensation for services", "fees", and "commissions." They are not. A corporation, for example, can receive "compensation for services" as well as "fees" and "commissions," but it cannot receive "wages" or a salary. So wages and salaries are not similar to the items listed in (a) (1) and thus they can not be legally included in "gross income" or any other kind of "income".
Sec. 63. Taxable income defined.
For purposes of this subtitle, in the case of a corporation, the term "taxable income" means gross income minus the deductions allowed by this chapter.
For purposes of this subtitle, in the case of an individual, the term "taxable income" means adjusted gross income—
(1) reduced by the sum of—
(A) the excess itemized deductions,
(B) the deductions for personal exemptions provided by section 151, and
(C) the direct charitable deduction, and
(2) increased (in the case of an individual for whom an unused zero bracket amount computation is provided by subsection (e)) by the unused zero bracket amount (if any).