Charlotte Twight has done an outstanding job of chronicling the history of US Federal Income Tax Withholding here: http://www.cato.org/pubs/journal/cj14n3-1.html .
Read that article, then, you decide; is it time to do away with Federal Income Tax Withholding?
My answer should be painfully obvious to anyone who has read this blog.
The primary purpose of withholding is to mask the amount of taxes individuals must pay. It is one thing to see the gross amount on your paycheck and only be able to deposit the net into your checking account; it’s quite another experience to write a check from your checking account at the end of the year. In the first example, you just got paid and you’re glad the government let you keep some of your earnings. Most Americans don’t even consider their gross as what they earn, if you ask them how much they make, they’ll tell you their net! In the second example, you’ve kept all your earnings for the entire year. Your bank account has money left over at the end of the month; you “owned” that money in your mind; it was there for you to spend if you so choose; but you didn’t. Now you must “spend” that money on the Social Welfare Programs the Federal Government has developed for "you". You now must write a check for, in most middle income families, tens of thousands of dollars.
It’s not hard to see why the Federal Government (State’s as well) would want a withholding system. They sell it on the grounds of convenience; why should you be burdened with writing a huge check each year?. It’s much better for you to give them your money each month, let them keep it all year at zero interest, then, if they determine they took too much, they “might” send it back to you. California, for example, has in the recent past, issued IOU’s to tax payers who “over paid” their taxes due to in accurate withholding by the government! Do you really want to be forced to “invest” your money in a venture that is quite likely to go bankrupt in the next few years?
The Federal Government is, currently, over 13 TRILLION dollars in debt; and adding to that debt at a rate of 1.2 TRILLION per year; they must borrow 41 cents out of every dollar they spend. How long, do you suppose, will it be before the Fed’s must begin issuing IOU’s?
The time has come America for revolution! And the weapon of choice will be your ability to keep what you earn!