Arthur S. Flemming, Secretary of Health, Education and Welfare of the United States v. Helmer F. Lindgren

Lindgren is a small Oregon chicken farmer. He was self-employed through 1952. He wasn’t particularly prosperous and, like millions of other Americans, wanted to share in the beneficences of social security payments. As the law stood in 1952, in his agricultural self-employment he couldn’t obtain the benefits. As of then, the objective was a salary of $300 per month for six quarters. With that, and having attained the age of 65, he would then be eligible for the maximum amount of social security, provided he did not thereafter earn over $75 per month, later raised to $100.

A lawyer found Lindgren an old unused corporation (cheaper than a new one), changed its name to Lindgren and Company, and issued the stock to Lindgren, his wife and a stepson. Immediately, Lindgren’s salary as president was fixed at $300 per month and the corporation then engaged in what had been Lindgren’s chicken business.

By the fall of 1954, Lindgren was ready for his benefits. So his salary was reduced to $75. (Later when the law permitted earnings of $100 per month, up went the salary to that amount.)

We must start with the point that had Lindgren’s business been prosperous enough to justify a salary of…