I will never understand why employees agreed to pay all the bills of government to provide so many services for me. Thanks chumps.
#115 | POSTED BY BORED
Well, here's what happened:
During WWII the USA was going broke. In no small part because back then, all Americans, not just independent contractors, had to make quarterly income tax payments. There's a WWII cartoon with Donald Duck, talking about how if you don't pay your taxes every quarter, you're helping the Nazis. Long story short, Uncle Sam wanted his money, and he wanted it Now! Just like those J.P. Wentworth ads. So, FDR came up with a clever plan:
FDR made the businesses an offer they couldn't refuse: He gave them a whole year of not having to pay corporate taxes, in return for having their payroll departments start withholding income taxes from worker's paychecks, and sending it right away to Uncle Sam. Workers got second prize, which was, they now only have to file their income taxes once a year. I believe the year was 1943.
The business knew a good deal when they saw it, so they took it. The workers... they weren't consulted.
For decades, you could in fact have zero withholdings from your payroll, which did give you the chance to earn something with that money until taxes are due at the end of the year. I did that once by mistake, and ended up with a tax bill I couldn't afford on April 15. These days I'm not sure if that's even still an option to have zero withholdings on your W-2.
Anyway, that's how we arrived at a place where payroll taxes are withheld by our employer, and we only have to file annually instead of quarterly.