I 

111TH CONGRESS 

1ST SESSION H. R. 1919 

To amend the Internal Revenue Code of 1986 to repeal the withholding 

of income and social security taxes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 2, 2009 

Ms. FOXX (for herself, Mr. PAUL, Mr. BURTON of Indiana, Mr. FRANKS of 

Arizona, Mr. DUNCAN, Mr. GARRETT of New Jersey, Mr. BARTLETT, 

Mrs. MYRICK, Mrs. BLACKBURN, Mr. PENCE, Mr. KINGSTON, and Mr. 

WILSON of South Carolina) introduced the following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to repeal 

the withholding of income and social security taxes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Federal Withholding 

5 Tax Repeal Act of 2009’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) At the onset of the Civil War, Congress 

9 passed the Revenue Act of 1861, which imposed a 


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1 tax on personal incomes and to assure timely collec2 tion, taxes were ‘‘withheld at the source’’ by employ3 ers. 

4 (2) The need for Federal revenue declined 

5 sharply after the war and in 1872, the income tax 

6 was abolished and along with it, the Federal with7 holding mandate. 

8 (3) With passage of the 16th amendment to the 

9 Constitution, Congress swiftly passed legislation cre10 ating a Federal income tax, withheld before em11 ployee salaries were paid. 

12 (4) In response to growing taxpayer criticism of 

13 the withholding mandate, Treasury Secretary Wil14 liam G. McAdoo stated that ‘‘it would be very ad15 vantageous to . . . do away with the withholding of 

16 income tax at the source’’ because it would ‘‘elimi17 nate a great deal of criticism which has been di18 rected against the law’’; a statement reflecting the 

19 sentiment which ultimately led to the repeal of Fed20 eral withholding authority in 1917. 

21 (5) In the 1920s and 1930s, income taxes were 

22 due on March 15 following the end of the tax year 

23 and could be paid either in one lump sum on that 

24 date or in quarterly installments. 


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1 (6) With the onset of World War II, fearing 

2 that taxpayers might refuse to pay the higher tax 

3 rates and surcharges associated with funding the 

4 war effort, Federal officials, lawmakers, and political 

5 leaders such as President Franklin D. Roosevelt 

6 used the military crisis to draw on Americans’ sense 

7 of patriotism and resurrect the Federal withholding 

8 authority as a ‘‘temporary wartime measure’’. 

9 (7) The campaign to reinstitute a permanent 

10 system of withholding overcame public hostility with 

11 the passage of the Withholding Tax Act of 1943 

12 which incorporated suggestions proffered by Beards13 ley Ruml to eliminate individuals’ 1942 tax liabilities 

14 by counting amounts paid or withheld in 1943 as 

15 tax payments for that year. 

16 (8) Since that time, Congress has stubbornly 

17 refused to repeal the Federal withholdings mandate 

18 contained in the Withholding Tax Act. 

19 (9) In fiscal year 2007, the Internal Revenue 

20 Service refunded overpayments amounting to over 

21 $248,625,001,000 more than actual individual in22 come tax liabilities, effectively denying interest pay23 ments otherwise owed to taxpayers and amounting 

24 to a hidden tax. 


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1 (10) These overpayments are returned annually 

2 in the form of tax refunds to taxpayers who often 

3 confuse the payments as a reward. 

4 (11) According to an April 2007 report released 

5 by the Joint Economic Committee, millions of fami6 lies, many in the bottom fifth income percentile, 

7 have either zero tax liability or receive a net transfer 

8 from the Government due to the refundable portion 

9 of the Earned Income Tax Credit or the Child Tax 

10 Credit. Those without Federal tax liability would 

11 benefit the most from keeping their entire paycheck, 

12 rather than temporarily surrendering portions to the 

13 Government. 

14 (12) The absence of the Federal withholdings 

15 mandate leaves employers and employees free to ne16 gotiate alternative, private means of collecting and 

17 paying Federal income taxes, thereby allowing indi18 viduals to voluntarily earn interest on their 

19 withhholdings. 

20 (13) The Federal withholdings mandate allows 

21 the Federal Government to disguise tax increases 

22 and hampers Federal accountability and trans23 parency by requiring the assistance of an inter24 mediary tax collector. 


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1 (14) Complying with the Federal withholdings 

2 mandate imposes costly burdens and legal liabilities 

3 on employers forced to act as de facto IRS agents, 

4 without compensation for lost time and resources. 

5 (15) Referring to the Federal withholding man6 date in his work Public Finance in Democratic Proc7 ess: Fiscal Institutions and Individual Choice, 1986 

8 Nobel Prize winning economist James Buchanan 

9 stated that ‘‘The individual who does not have pos10 session of income before paying it out cannot’’ sense 

11 ‘‘the real cost of public services in a manner com12 parable to that experienced in a genuine act of 

13 outpayment.’’. 

14 (16) In CATO Institute study, Charlotte 

15 Twight has noted that ‘‘[W]ithholding is the para16 mount administrative mechanism enabling the Fed17 eral Government to collect, without significant pro18 test, sufficient private resources to fund a vastly ex19 panded welfare state.’’ 

20 (17) The Federal tax withholding mandate was 

21 listed by Human Events in 2005 as the fourth 

22 ‘‘Most Harmful Government Program’’ and seventh 

23 ‘‘Worst Tax Law’’ in 2006. 

24 (18) The National Taxpayers Union notes that 

25 the incremental nature of withholding masks the 


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1 true cost of Federal income taxes, which would be 

2 much more apparent if individuals had to write 

3 monthly, quarterly, or annual checks to the Federal 

4 Government. 

5 SEC. 3. PURPOSE. 

6 The purposes of this Act are— 

7 (1) to increase transparency and accountability 

8 in the Federal tax system by providing the public 

9 with a more accurate account of— 

10 (A) the annual tax burden; and 

11 (B) the Federal budget deficit; 

12 (2) to decrease the overall tax burden and in13 crease the personal wealth of taxpayers by allowing 

14 for the personal collection of interest during the fis15 cal year on overpayments that are otherwise used by 

16 the Federal Government to partly avoid interest pay17 ments; 

18 (3) to decrease the burden on employers by 

19 freeing them from the task of collecting income tax 

20 withholdings from their employees; and 

21 (4) to end the deceptive practice of masking 

22 higher tax rates from taxpayers. 


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1 SEC. 4. REPEAL OF FEDERAL INCOME AND SOCIAL SECU2 RITY TAX WITHHOLDING MANDATE. 

3 (a) IN GENERAL.—The following sections of the In4 ternal Revenue Code of 1986 are hereby repealed: 

5 (1) Section 3102 (relating to deduction of social 

6 security tax from wages). 

7 (2) Section 3202 (relating to deduction of rail8 road retirement tax from compensation). 

9 (3) Chapter 24 (relating to income tax with10 holding). 

11 (b) REQUIREMENT OF ESTIMATED TAX PAYMENTS

12 FOR EMPLOYEE SOCIAL SECURITY TAXES.—Subsection 

13 (f) of section 6654 of such Code is amended by striking 

14 ‘‘minus’’ at the end of paragraph (2) and inserting ‘‘plus’’, 

15 by redesignating paragraph (3) as paragraph (4), and by 

16 inserting after paragraph (2) the following new paragraph: 

17 ‘‘(3) the taxes imposed by section 3101(a) and 

18 3201(a), minus’’. 

19 (c) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to amounts paid on or after the 

21 first January 1 occurring after 1 year after the date of 

22 the enactment of this Act. 

23 SEC. 5. CONTINUED VOLUNTARY TAX WITHHOLDING. 

24 (a) AUTHORITY OF THE IRS.—Nothing in this Act 

25 may be construed to limit the authority of the Internal 

26 Revenue Service to accept voluntary tax payments from 


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1 employers electing to continue collecting Federal income 

2 taxes from employees. 

3 (b) VOLUNTARY EMPLOYER PARTICIPATION.—Noth4 ing in this Act shall be construed to prevent voluntary em5 ployer sponsored withholding of Federal income taxes on 

6 behalf of employees. 

7 (c) VOLUNTARY EMPLOYEE PARTICIPATION.—Noth8 ing in this Act shall be construed— 

9 (1) to require any employee to participate in an 

10 employer Federal income tax withholding system, or 

11 (2) to prevent any election of an employee to 

12 opt in to an employer Federal income tax with13 holding system, with all terms and conditions for 

14 participation being negotiable between the employee 

15 and employer. 

Æ 


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