ISSN 2330-717X

An End To Tax Withholding – OpEd

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Politicians have exploited the pandemic to override the rights of the people, cast themselves as heroes, expand government, and justify vast amounts of spending. Long before the pandemic, mechanisms to justify the government expansion were already in place. Consider, for example, the practice of tax withholding.

Before World War II, notes Robert Higgs (Crisis and Leviathan), those Americans who owed federal taxes paid the following year in quarterly installments. That changed as the government geared up for World War II. Milton Friedman, then an economist at the Treasury Department, came up with a system of withholding workers’ money from their paychecks, so the government got the worker’s money before the worker. That left the workers with their “take-home pay” when the worker had in fact earned all of it.

Friedman, who admitted being “one of the architects” of the Treasury’s proposal for a withholding system, claimed that the system “would have been introduced had I been involved or not.” Withholding was an essential element of the government’s wartime revenue grab.

“At the time,” concluded Friedman, “we concentrated single-mindedly on promoting the war effort. We gave next to no consideration to any longer-run consequences. It never occurred to me at the time that I was helping to develop machinery that would make possible a government that I would come to criticize severely as too large, too intrusive, too destructive of freedom. Yet, that was precisely what I was doing.”

The withholding was an emergency measure allegedly justified by the war effort. Government liked getting the workers’ money upfront, and 76 years after WWII ended, withholding remains in place. Tax withholding is the primary mechanism that has empowered the federal government vastly to expand the welfare state, with its fathomless waste and destructive fallout.

Like John Lennon, embattled Americans might imagine a nation without tax withholding. The money workers earn through their labor is “proper” to them, and no person or entity has any prior claim to it. With no withholding, workers would get their own money first, but the benefits are more extensive.

In the face of massive government waste, fraud, and abuse, such as the tsunami now going on, workers could band together to hold back their tax payments in protest. This true example of “power to the people,” would be certain to get the attention of the government, which holds other advantages under the current system.

WWII-style withholding also conscripts employers as tax collectors, and that gives the government leverage over independent companies. Under these conditions, it should come as no surprise that corporations willingly collaborate with government “diversity” goals—code for racial and ethnic quotas—and other dubious initiatives.

For example, in 2018, Facebook CEO Mark Zuckerberg testified that Facebook was collaborating with the Mueller investigation and had taken down a page at the request of the government. Zuckerberg did not reveal which politician or government official had demanded its removal, and when the removal had taken place. Facebook had also been hacked but Zuckerberg was most careful to guard confidentiality when collaborating with government investigators.

Long before the pandemic, the federal government was too large, too intrusive, and too destructive of freedom. Freedom is seldom lost all at once, and once lost, is difficult to recover. Putting a stop to tax withholding would end a longstanding injustice and shift more power to the people where it belongs.

This article was also published in American Thinker

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K. Lloyd Billingsley

K. Lloyd Billingsley is a Policy Fellow at the Independent Institute and a columnist at The Daily Caller.

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