From the April 2000 Idaho Observer:
Courts saw through Social Security scam in 1937
Charles Ponzi was an Italian immigrant who, in December, 1919, convinced a dozen Bostonians that he could make them a 50 percent profit in 45 days by trading international postal coupons. In 45 days, Ponzi paid his people back $375 from a $250 investment as promised. Word spread quickly that Ponzi could make everybody rich and soon he had thousands of people throwing their money at him. Within six months the little Italian had collected over $10 million and was building a mansion and riding around in a chauffeured limousine. Ponzi's scheme fell apart when it was learned April 11, 1920, that he had spent three years in a Montreal prison for forgery.
Ponzi's scheme was simple: He used the money given to him by new investors to pay off his older investors. The plan, as duplicated later in the form of chain letters and dare to get rich schemes, worked beautifully as long as there were always enough new investors to pay off the old ones. When people lost confidence in Ponzi, the entire scheme fell apart and the newest investors were left empty handed.
Source: The Social Security Swindle by Irwin Schiff
by Don Harkins
The Social Security Act did not create a trust fund, it created another unconstitutional direct tax that is deducted from people's wages and the pockets of their employers without their consent. It also created a plethora of programs that take money from productive people so that it can be redistributed to ever-increasing numbers of nonproductive people.
On April 14, 1937, the Court of Appeals for the First Circuit in Boston, Mass., declared the Social Security Act to be unconstitutional on a variety of grounds, wrote Irwin Schiff in The Social Security Swindle -- How Anybody Can Drop Out.
In justifying the Social Security Act, Congress absurdly argued that the tax on employers and employees was an excise tax. In reference to the Constitution in a manner that is identical to the argument that federal income tax is a direct tax and, therefore, cannot legally be a tax on wages as it violates the apportionment clause of the Constitution, the Court ruled that Social Security is also a direct tax. The Court ruled rather obviously that, The rights to labor and to do ordinary business are natural, essential and inalienable, partaking of the nature both of personal liberty and of private property. But nowhere do we find that an excise tax has ever been imposed in this country on the natural right to employ labor in manufacturing, or in any trade or calling for profit.
In other words, Congress does not have the right to tax a man for working, nor does it have the right to tax a man for employing another man.
The Act was, and still is in violation of the law of the land because, the Court found, that it was not a tax for the general welfare of the United States as provided in Article I, Section VIII of the U.S. Constitution.
The Court stated that, A tax, in the general understanding of the term, and as used in the Constitution, signifies an exaction for the support of the government. The word has never been thought to connote the expropriation of money from one group for the benefit of another and that it .amounts, in effect, to taking the property of every employer for the benefit of a certain class of employees.
In recent decades we have seen that certain class of employees increase from the retirement class for which it was supposedly intended to include all manner of disabled and able-bodied persons who decline to work.
Nowhere is the federal government authorized to tax money from one segment of the public and give it to another, Schiff stated at a recent lecture in Spokane, Wash.
As if Congress needs more information from which to determine that Social Security is just another way to harvest the energies of the American people and has nothing to do with making their retirements more comfortable, the Court stated, The entire plan, viewed as a whole, is an attempt to do indirectly what Congress cannot do directly, and to assume national control over a subject clearly within the jurisdiction of the states.
It is easy to see how the government has been able to convince itself that what it accomplished with the Social Security Act can be justified under the Constitution. According to Schiff, the federal government argued that, the revenue sections of the Act were not in any way connected to the benefits sections.
Fortunately the Court, in its wisdom, derived its rulings by studying all 11 titles of the Act as a whole.
The following passages, had they been widely reported and their implications understood by the people of this country, would have put an end to the Social Security scam long before WWII.
The Constitution, in all its provisions, looks to an indestructible Union, composed of indestructible States. Every journey to a forbidden end begins with the first step; and the danger of such a step by the federal government in the direction of taking over the powers of the states is that the end of the journey may find the states so despoiled of their powers, or -- what may amount to the same thing -- so relieved of the responsibilities which possession of the powers necessarily enjoins, as to reduce them to little more than geographical subdivisions of the national domain. It is safe to say that if, when the Constitution was under consideration, had it been thought that any such danger lurked behind its plain words, it would never have been ratified.
The next passage turns out to be a prophesy on the part of Circuit Judges James M. Morton, Jr., and Scott Wilson who determined accurately that the Social Security Act was unconstitutional. That this amounts to coercion of the states and control by Congress of a matter clearly within the province of the states cannot be denied. If valid, it marks the end of responsible state government in any field in which the United States chooses to take control by the coercive use of taxation, it can equally take control of education and local health conditions by levying a heavy tax and remitting it in the states which conform to their educational system or their health laws to the dictates of the federal board.
It is plainly the duty of the courts to uphold and support the present Constitution until it has been changed in the legal way.
One last parting shot that is even more appropo today than it was when these men wrote it: In this sense, Congress has not an unlimited power of taxation; but it is limited to specific objects, -- the payment of the public debts, and providing for the common defense and general welfare. A tax, therefore, laid by Congress for neither of these objects would be unconstitutional, as an excess of its legislative authority.
The Supreme Court, an entity to which Boston T. Party referred as the dislocating shoulder that has released the federal government from its constitutional straightjacket, reversed the Appellate Court's decision and ruled that the Social Security Act was constitutional May 24, 1937.
A child can see that Social Security is a direct tax. A child can see that the income tax is a direct tax. A child can also see that those two unconstitutional taxes, as militantly enforced by our government, are bankrupting the hardworking middle class of this country to support the non-working lower class and thousands of government employees who administrate hundreds of other unconstitutional government agencies that enforce unconstitutional government policies.
This unconstitutional Ponzi scheme will work until more people are drawing off the system than are contributing to it or the people lose faith in the federal government and refuse to participate in a scam that the federal government has determined to be illegal.