Randa Abdelfattah and Ramteen Arablui
๐ค SpeakerAppearances Over Time
Podcast Appearances
There are many people in Washington who knew that it might become increasingly difficult to collect the money.
the IRS wasn't staffed up enough to keep track of that many new taxpayers.
And so policymakers recognized early on that they're going to have to find some better way for these people to pay.
And so in 1943, they thought, hey, let's put withholding in place because then we'll get it before the taxpayer ever earns it.
Tax withholding.
You know what I'm talking about.
That one line on your paycheck that says federal income tax and how much was automatically taken out of it.
And the idea is that a little bit will be taken out of your paycheck every two weeks or every month or every week, whenever you get paid.
And then that will effectively pay your tax bill in pieces over the course of the year.
This is the way we pay our taxes now.
This was a win-win for the federal government because it did two things.
One, this simplified and streamlined tax payment system meant the government would actually get the money it needed.
And two, the IRS didn't have to be the one collecting everyone's money.
Instead, your boss was going to do it.
The federal government's sort of deputizing employers and saying, you're going to be our tax collectors.
So take that money out of the paycheck for your employee and then send it to us directly.
It was a drastic step in terms of government invasiveness.
If there hadn't been a war on, I'm guessing you would have seen far more opposition to withholding.
But the fact that there was, and everybody was pulling for victory, that made withholding much more palatable.
And a lot of people thought it would only be temporary anyway, that it would go away after the war.