The current practice of federal withholding gives the US government a loan on the backs of wage earners. Many times, low income earners get all of the federal withholding back when they file their tax returns. If the government is just going to give the money back, then why take it in the first place?
When implemented, wage earners would see an immediate 12.4% or more monthly cash flow increase!
The amount normally withheld would still be due when a person files their annual taxes but the earned income credit could offset the amount of FICA SS and FICA Medicare for low income earners.
This would also reduce the paperwork burden of small businesses who would no longer have to file monthly remittance of withheld taxes to the federal government.
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