America has had a flat tax for over seventy years. We refer to it as the Social Security System. While many prefer to think of it a socialized retirement plan, it is not. It has always been a flat tax.

President Roosevelt understood that any attempt to enforce a pension or insurance program upon the American people would be unconstitutional, but he did understand that the federal government was empowered to tax. At the time of his presidency, America was a poor country with a large population of indigent elders. .

Instead of addressing the problem at hand, a large number of indigent retired elderly that needed assistance, the President instead went about instituting a massive program to transfer resources from workers to all retired workers, regardless of need. While this has been historically looked upon as a social program, it was also part of Rossevelt’s grand plan to rescue Capitalism from its Great Depression death throes. The Social Security plan was crafted as an ingenious method of diverting worker’s own funds to pay for their own retirements, which took the load off industry to pay a wage generous enough to accomplish this.

Because of the probable unconstitutionality of any federal benefit or insurance program, the administration created the Social Security program using the framework of a tax and distribute method. The important titles in the legislation, which defined the collection and distribution of funds, were separated as Titles II and VIII. The actual revenue collection procedures were filed under the Internal Revenue Code. It was and remains to this day, despite a greatly increased rate, a flat income tax wage on working people which is transfered by the federal government to retirement aged workers.

Even so, it barely squeaked by the Supreme Court justices. It is obvious they understood Roosevelt’s true intentions, but were hesitant to strike down the social legislation due to the President’s threat of packing the court with his own handpicked judges. Roosevelt was threatening to impose a rule that would allow presidents to appoint new justices when an existing justice reached the age of 70 and refused to retire. This would give him the immediate power to appoint six justices, greatly tilting the court in his favor. Many decisions of the time we made by the court with this possibility in mind.

A very important part of the Social Security legislation is Section 1104. “The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress”. In other words, Congress has complete control over the program.

Since its inception, the collection of revenue for the Social Security system has been a flat tax levied on the gross income of all wage earners with a complimentary flat tax of equal rate levied on the worker’s employer. Not only is it a flat tax, but it is a regressive type of tax. Collection of the tax has always ceased at a certain income level. Presently, this amount is $106,000. Because of this, the lower income worker is taxed at a greater rate than the upper end earners. One can earn a few hundred dollars a month and still be subject to withdrawal for Social Security.

The tax is collected like any other income tax, right off the wage earner’s check. The government then distributes the amount needed to pay those presently collecting payments according to current laws. Through the years, Congress has used its power over the system to redefine who collects, how much they collect and at what age they collect. As defined by section 1104, this is completely under the jurisdiction of the Congress. It has also been proven time and again in the highest court that this collection of tax and redistribution to the taxpayer is not in any way the property of the taxpayer. If this were the case, the entire system would be unconstitutional, since it could then be interpreted as a pension plan. All proceeds from the collection of Social Securty taxes are the property of the US government.

There is a surplus amount that is collected each year that is above and beyond the funds needed to meet the present payment obligations. It is placed in the Social Security Surplus Fund, which was redefined along with the SS tax rates during the Reagan administration. In recent years this amount has been in excess of 2 trillion dollars.

The surplus funds have all been used to purchase special treasury securities. Like all income taxes, the surplus fund is used to fund the Federal Government in any way Congress sees fit. This transfer is not accounted for against the Federal Debt.

Since it is impossible to pay the surplus amount back to the taxpayer without tax collections or borrowing in the same amount, this expensing of the Social Security Fund can only be replenished by future income taxes or a higher SS tax rate. The special security status does not allow the securities to be sold on the world market. In other words, the Social Security surplus amount does not exist in any form other than the paper it is written on.

Social Security obviously benefits those who receive payments, but it is not and never has been a benefit program. It is a legally mandated transfer of funds from those presently working to those who have retired. Benefit or pension plans are provided by employers as a means of competing for worker’s. A benefit or pension is a alternative form of a wage or salary, not a tax.