Just Saying No to Social Security Taxes …
Politics / US Politics May 11, 2010 - 09:45 AM GMTBy: Nilus_Mattive
Lancaster — known throughout the U.S. as Pennsylvania Dutch Country — is about 40 minutes away from my house. And whenever I pass through the area, I’m reminded of what it means to be truly self-sufficient.
The region’s many Amish inhabitants grow their own food … help each other build their houses … and use horse and buggies instead of gas-addicted cars. Heck, they were “green” before the term became fashionable.
I frequently interact with Amish famers at our local markets, and they are always happy and courteous. Plus, their products are top-notch. My own house was built by Amish craftsman in the 1980s from a reclaimed barn and the workmanship is impeccable.
But until last week, even I didn’t realize just how far the Amish have taken their desire for self sufficiency, nor just how hard they had to fight for that right. I’m talking about the fact that the Amish do not typically participate in our nation’s Social Security system.
Today, I want to tell you about this interesting story that began just a couple hours farther west of my house in New Wilmington, PA …
At the Heart of the Matter: Is It a Tax or an Insurance Premium?
The Social Security Act — which marked the beginning of the system we know today — passed Congress in 1935. But for the first 20 years, it didn’t cover farmers. So it was only in the middle of the 1950s when the mostly rural Amish first confronted the prospect of paying into Social Security in any meaningful way.
As it was explained to them at the time, Social Security was a tax and it was the Internal Revenue Service’s job to collect this tax.
And if that were truly the case, the Amish would have had no problem paying up. In fact, to this day the Amish routinely pay property and income taxes just like everyone else.
But Social Security also very clearly contains the name “Old Age, Survivors, and Disability Insurance” … which meant those “tax” payments could really just be looked at as mandatory insurance premiums.
This implication posed a real problem for the Amish, who believe in taking care of themselves and their community members. In fact, to the Amish, insurance plans demonstrate a lack of faith in God’s plan.
So you can see why they weren’t keen on paying into — or collecting from — Social Security. (It’s worth noting that even now the Amish do not take advantage of government-sponsored programs such as unemployment insurance or welfare.)
That created a dilemma for the Amish: Either pick a fight with Uncle Sam or go against their religious beliefs.
Now the Amish aren’t known for picking fights so in the beginning, many Amish farmers just remitted the tax. And others who didn’t directly do so kept bank accounts through which the IRS could collect owed taxes via liens.
Of course, as time wore on, things festered. Clearly, there was no real difference between paying the IRS directly or indirectly. It was participation in the system either way … and that participation went against Amish religious beliefs.
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| Many Amish forgo not only cars but also the U.S. Social Security system … |
That’s why the Amish sent a petition to Washington with 14,000 names on it. Their primary message to Congress: They didn’t want to cause problems, but they didn’t want to go to Hell, either.
When that simple point went unanswered, some Amish farmers decided to close their bank accounts down … giving the IRS no easy way to collect money owed.
And ultimately, Uncle Sam had just one last measure available — seizing property.
Of course, it’s pretty hard to seize property from a group of people who don’t believe much in worldly possessions. Which is why the IRS had to settle for farm animals.
Giving a New Meaning to the Term “Milking the System” …
This is where a man named Valentine Byler, from western Pennsylvania, enters the picture. In 1959, he owed the IRS four years worth of taxes and interest — $308.96 all told.
Like many other Amish, Mr. Byler explained to the IRS precisely why he couldn’t make the payments.
Their response? According to The Amish News website, here’s the IRS press release from April 18, 1961:
“Since Mr. Byler had no bank account against which to levy for the tax due, it was decided as a last desperate measure to resort to seizure and sale of personal property.
“It was then determined that Mr. Byler had a total of six horses, so it was decided to seize three in order to satisfy the tax indebtedness. The three horses were sold May 1, 1961 at public auction for $460. Of this amount, $308.96 represented the tax due and $113.15 represented the expenses of the auction sale, including feed for the horses, leaving a surplus of $37.89 which was returned to the taxpayer.
“The Byler case, like all others in the same category, presents an unpleasant and difficult task for the Internal Revenue Service… We have no other choice under the law.”
That’s right. The IRS took half his darn horses.
Remember, these weren’t show horses or pets. They were Mr. Byler’s livelihood because he used them to plow his fields.
The implications of the seizure were clearly lost on the IRS, with the Pittsburgh IRS Chief of Collections reportedly saying, “Plowing never occurred to me. I live in an apartment.”
Nor had Uncle Sam thought through the fact that auctioning the horses off in the largely Amish area would fall flat on its face.
In the end, yes, the government got its money … along with a lot more than it bargained for.
Media outlets all over the place picked up the story, and were largely supportive of Mr. Byler. Meanwhile, the Amish put additional pressure on Washington through meetings, letters, and threats of legal action.
By 1965, their point had been made. Because when the amendment to the Social Security Act establishing Medicare and Medicaid was passed that year, it contained a clause that exempted the Old Order Amish from paying into the system. In fact, it covered any religious sect that objected to the idea of insurance, as long as they had been established before December 31, 1950. All monies owed for the years leading up to this change were also forgiven.
Here’s the story of that amendment according to “The Riddle of Amish Culture” by Donald B. Kraybill:
“More than a dozen bills seeking to exempt the Amish from Social Security were sponsored by legislators from heavily populated Amish states in the early 1960s. A Social Security exemption was passed by Congress and signed into law by President Lyndon B. Johnson on 30 July 1965 as an appendage to the bill that established the national Medicare program. According to an Amish negotiator, Lancaster Bishop David Fisher told House Ways and Means Chairman Wilbur Mills that ‘we take care of our own people and if we start paying in, the next generation will collect and we don’t want no government handouts.’ Mills replied, ‘There’s nothing wrong with that.’ And, according to an observer, ‘Mills just hung an exemption rider on the Medicare bill and it sailed right through the Congress.’”
Of Course, the Story Doesn’t End There. Nor Are Relatively Small Religious Groups The Only Americans Who Don’t Pay Into Social Security …
It’s worth noting that another Social Security scuffle took place between the Amish and Washington in the early 1980s.
The battleground? Western Pennsylvania, yet again.
The crux of the matter: Whether Amish employers needed to pay into Social Security for their workers.
By the 1980s, some Amish found themselves operating more mainstream businesses such as furniture factories and construction outfits. That posed a problem on whether they were required to pay into Social Security for their employees, especially those who were also Amish.
A man named Ed Lee became the face of the issue. According to a Time magazine story from April 19, 1982:
“Ed Lee is one of 5,000 Amish in Lawrence County. He differs from his neighbors for reasons other than the fact that he is not a Byler or a Swatzentrooper or a Hofstader or the bearer of some other traditionally Amish name. Lee is different because he has done something that the Amish rarely do. He has ended up in court. His offense: refusing to pay Social Security taxes for 30 Amish men who worked for him over an eight-year period as carpenters, building houses. The Internal Revenue Service claimed that he owed the Government $27,000. Lee challenged the IRS ruling in federal district court in Pittsburgh. To prove his good intentions, he offered his farm as security in the event he lost. As it turned out, he won, but the IRS then appealed to the Supreme Court.”
After that story was published, the Supreme Court found in favor of the IRS, saying:
“A comprehensive national Social Security system providing for voluntary participation would be almost a contradiction in terms and difficult, if not impossible, to administer.”
But Lee kept up the fight — writing to President Reagan, gathering signatures, and pursuing other legal avenues. And again, the Amish ultimately prevailed. By the end of the decade, Amish employers were no longer required to pay into the system for their Amish employees.
Today, Amish families quickly fill out IRS form 4029 after their child is baptized. This document exempts them from the Social Security system entirely.
Of course, members of the Old Amish Order and other religious groups aren’t the only Americans who can opt of Social Security!
Some state and local government employee groups are also covered only by their own pension plans. My uncle, a retired Pennsylvania State Trooper, never participated in the system, for example.
Which begs some questions …
Would you opt out of the system if you were able to?
And since some very small segments of the population are able to opt of the system … why isn’t anyone philosophically opposed to government handouts able to do the same — regardless of their membership in a religious order established before 1950?
I know what the stock answer is. It’s the same one offered by the Supreme Court back in 1982. But clearly that didn’t stop the Amish from going on to win their right to self-sufficiency … nor did it even force every local and state government employee into participating in the system.
Food for thought, isn’t it? I’d certainly love to get your take over on my blog.
Best wishes,
Nilus
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