Anesthetizing Effect Of Tax Withholding: Let’s End It

What’s your monthly mortgage or rent payment? What’s your monthly car payment? What’s your monthly payment for your student loan, cell phone or cable TV? Most of us have a pretty good idea of these monthly payments, because we typically write checks every month, or pay online. Now, what’s your monthly or quarterly tax liability for federal income taxes?

Most of us have no idea, because most us never write a monthly or quarterly check for income taxes. If you have an adjustable mortgage and your monthly payment adjusts upward, you would be fully aware of the increase in your monthly housing expense. But if your monthly or quarterly tax liability increases, you’d probably have no idea that your tax burden has changed. That insulation from feeling the full impact of our increases in our personal tax burden is probably one of the reasons that government has grown so dramatically over the last 50 years.

Solution? End the practice of employers’ withholding taxes from our paychecks, as Charles Murray suggests in today’s Wall Street Journal:

The finishing touch is to make sure that people understand how much they are paying, which is presently obscured by withholding at the workplace. End withholding, and require everybody to do what millions of Americans already do: write checks for estimated taxes four times a year.

Tax withholding has a wonderfully Tax withholding has a wonderfully anesthetizing effect on people whose only income is a paycheck, leaving many of them actually feeling grateful for their tax refund check every year, not noticing how much the government has taken from them. on people whose only income is a paycheck, leaving many of them actually feeling grateful for their tax refund check every year, not noticing how much the government has taken from them.

MP: Another advantage of ending withholding is that it would remove the significant financial burden on employers who are currently forced to act as tax collectors for the government.

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