The Real World

The college student proudly flourished, then inspected his paycheck. What’s “Federal W/H” and why did they take it out of my paycheck, he asked rather loudly.

Son, that stands for Federal withholding taxes. You are now paying for civilization. (Oliver Wendell Holmes famously said: “Taxation is the price we pay for civilization.”)

The modern withholding tax system started in World War II. Why? There are three principal reasons: 1) not everyone has the discipline to set the dough aside to pay the entire balance on April 15th, so you pay as you go. 2) the Treasury gets the money sooner, so it saves interest, more accurately, it doesn’t pay you interest. 3) from a psychological standpoint withholding doesn’t have the same sting as writing a check, so the cost of government seems less. The last isn’t just my opinion, it's the U.S. Treasury's:

Another important feature of the income tax that changed was the return to income tax withholding [in 1943] as had been done during the Civil War. This greatly eased the collection of the tax for both the taxpayer and the Bureau of Internal Revenue. However, it also greatly reduced the taxpayer's awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future.

Welcome to the real world.