Wednesday, October 23, 2013
New York Times: Tax Withholding Still Controversial After 70 Years, by Bruce Bartlett:
In a previous post, I noted that this year was the 100th anniversary of the federal income tax, which came into permanent existence in 1913. This year is also the 70th anniversary of the institution of tax withholding. ... The Treasury Department said it believed that tax withholding was essential to make the wartime income tax work.
In a 2006 academic paper,
the economist Libor Dusek examined whether tax withholding increased
the size of government by looking at the staggered introduction of
withholding at the state level. He concluded that 9 percent of the
growth of state income taxes from the 1940s to the 1970s was because of
Nevertheless, it is highly unlikely that withholding will ever be
abolished. It is far more likely that it will be extended to other forms
of income, especially if the idea of a return-free tax system becomes
viable as Congress debates tax reform.