I
107TH CONGRESS
1ST SESSION
H. R. 1364
To restore to taxpayers awareness of the true cost of government by elimi-
nating the withholding of income taxes by employers and requiring indi-
viduals 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 govern-
ment 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 Representa-
tives 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:
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. Pri-
vate employers should not have to act as agents of
the Federal Government by determining and col-
lecting income tax liabilities of their individual em-
ployees.
(6) Withholding of income taxes effectively cre-
ates 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 Rev-
enue 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 re-
quired installment, and
‘‘(II) for each installment there-
after during the taxable year, the sum
of 7.5 percentage points and the ap-
plicable percentage for the prior in-
stallment.’’
(3) Section 6654 of such Code is amended by
striking subsection (j) and by redesignating sub-
sections (k) and (l) as subsections (j) and (k), re-
spectively.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
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