I don’t know why Elon Musk and his DOGE Bros have not thought of this. But the Federal Withholding Tax system should be scrapped. It is a relic of World War II when the Federal Government needed a constant source of income to keep up with the costs of the war. It forces employers to become “agents” of the Federal Government by requiring the employer to calculate, retain, report, and pay to the Federal Government a guesstimate of how much Federal Taxes an employee might owe.

The problem with this system is that a company’s accounting team do not have the in-depth information about each of their employees tax situations so that they can report and withhold this money accurately. For most employees this results in their over payment of Federal taxes, which the employee has to wait until April 15th each you to file for a tax refund.

The result is that the Federal Government has received extra income, which it can spend or collect interest on during the tax year, and the employee has received less income which they can spend or collect interest on during the tax year. The only winner in this system is the Federal Government who knows that it is receiving more money than it should during the tax year and, when taxpayers get a tax refund, the Federal Government also knows that it is going to “steal” the interest that it earned on these excess funds and not return any interest to the tax payer.

Getting rid of the Federal withholding system would allow employees to keep and bank or invest the money which is now being withheld from their paychecks every pay period. On April 15th the employee would file their Federal taxes and pay what they actually owe, and they would be able to keep the interest they earned on this tax money while it sat in their banks or investments.

Getting rid of the Federal withholding system would mean that the Federal Government would receive the bulk of its income in April of each year and it would have to be fiscally responsible to ensure that that money would last for the entire Federal budget year.