H.R. 1364 - Cost of Government Awareness Act (Tax Withholding)

       
Cost of Government Awareness Act of 2001 (Introduced in the House)

HR 1364 IH

107th CONGRESS

1st Session

H. R. 1364

To restore to taxpayers awareness of the true cost of government by eliminating the withholding of income taxes by employers and requiring individuals to pay income taxes in monthly installments, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

April 3, 2001

Mr. PAUL introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To restore to taxpayers awareness of the true cost of government by eliminating the withholding of income taxes by employers and requiring individuals to pay income taxes in monthly installments, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.
This Act may be cited as the `Cost of Government Awareness Act of 2001'.

SEC. 2. FINDINGS AND PURPOSE.

(a) FINDINGS- The Congress finds the following:

(1) Withholding of income taxes originally was imposed as a means of meeting financial burdens created by World War II; the Treasury Department believed taking tax payments directly from workers' paychecks would make it easier to fund government without objection from taxpayers.

(2) Income tax liabilities have increased exponentially since the imposition of withholding of income taxes. Withholding taxes now represent a very substantial portion of working taxpayers' paychecks.

(3) Withholding of income taxes is inherently deceptive, because taxpayers often are not aware of the total amount of Federal taxes they pay or what percentage of their income they pay in Federal taxes. Thus, withholding taxes hide the true cost of government from taxpayers, making tax increases more feasible.

(4) Many taxpayers overpay their Federal income taxes every year through withholding taxes. The tax refund they receive is their own money, presumptively taken by the Federal Government. Because taxpayers receive no interest on overpaid withholding taxes, the Federal Government benefits from an interest-free loan of taxpayer funds. Taxpayers would be far better served by saving or investing such money.

(5) Withholding taxes impose an unfair burden on American employers, who incur tremendous costs complying with the Federal withholding scheme. Private employers should not have to act as agents of the Federal Government by determining and collecting income tax liabilities of their individual employees.

(6) Withholding of income taxes effectively creates an unfair tax on amounts withheld. According to the Internal Revenue Service, the term `wages' excludes collected taxes within its definition. Yet the Service does not follow its own rule when it collects withholding taxes on a taxpayer's total paycheck.

(b) PURPOSE- The purpose of this Act is to restore to taxpayers an awareness of the cost of government, by abolishing the withholding of income taxes.

SEC. 3. REPEAL OF INCOME TAX WITHHOLDING.

(a) IN GENERAL- Chapter 24 of the Internal Revenue Code of 1986 (relating to withholding from wages) is amended by adding at the end the following new section:

SEC. 3407. TERMINATION.

No tax shall be imposed by this chapter on any amount paid after December 31, 2001.

(b) CLERICAL AMENDMENT- The table of sections for such chapter 24 is amended by adding at the end the following new item:

Sec. 3407. Termination.

SEC. 4. MONTHLY PAYMENTS OF ESTIMATED TAXES.

(a) IN GENERAL- Subsection (c) of section 6654 of the Internal Revenue Code of 1986 (relating to estimated income tax for individuals) is amended to read as follows:

(c) NUMBER OF REQUIRED INSTALLMENTS; DUE DATES- For purposes of this section--

(1) PAYABLE MONTHLY- There shall be 12 required installments for each taxable year, one for each calendar month.

(2) TIME FOR PAYMENT OF INSTALLMENTS- The due date for each required installment shall be the 15th day of the following month.'

(b) CONFORMING AMENDMENTS-

(1) Subparagraph (A) of section 6654(d)(1) of such Code is amended by striking `25 percent' and inserting `8.25 percent'.

(2) Clause (ii) of section 6654(d)(2)(C) of such Code is amended to read as follows:

(ii) APPLICABLE PERCENTAGE- The applicable percentage is--

(I) 7.5 percent for the 1st required installment, and

(II) for each installment thereafter during the taxable year, the sum of 7.5 percentage points and the applicable percentage for the prior installment.'

(3) Section 6654 of such Code is amended by striking subsection (j) and by redesignating subsections (k) and (l) as subsections (j) and (k), respectively.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2001.


 

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