[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1364 Introduced in House (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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