Every year, the government pays millions of dollars in tax refunds, to return money taken out of hard working taxpayers' take-home pay. Automatic tax withholding and quarterly tax payments are crucial to the government's finances by ensuring cash flow, allowing payment for contractors, employees, and public benefits in a timely manner.
Though important to the functioning of government, automatic withholding is effectively an interest-free loan. If the government takes our money and then returns it six or eight months later, we should receive a reasonable interest payment, based on inflation, T-bill rates, or market rates for savings accounts. The government borrows money for free when we could invest it in the economy. Why should foreign lenders receive interest, but Americans do not?