Dr. Martin Hash Podcast

Employers are required to take income taxes out of employee's paychecks, an especially difficult burden on Small Business because of the accounting, plus the Small Business owner is held responsible if the tax is not paid, even though it's for someone else. Not only is this an inequitable nanny relationship, and a drag on hiring, since only people with significant incomes are going to owe taxes, there's no reason for it, except to sneak away regressive FICA taxes from poor people.

Consider that people who work outside of the standard employer-employee relationship, usually in a small business, deal with taxes another way, where the person who receives the money is held accountable instead. Anybody who's done any legitimate business on the side knows that a “1099” is the form the government is sent when people receive money working for themselves. These people are required to pay what they think will be their taxes ahead of time, called the Estimated tax, and if they don't, they're fined. Why aren't all income handled this way? It's an electronic age where almost all transactions are via computer, why does a one person have to be responsible for the taxes of another just because they give them a job? Making the employer responsible for an employee's taxes is yet another transfer of State responsibility onto business.