Thoughts on Income Tax Withholding

Since Friday is payday for a large percentage of Americans, Tom Crowe's post titled Income Confiscation Day will probably hit home with a lot of us.

I heard that the Coors brewing company, when it was headed up by the founder, would pay all of its employees in cash. On payday everyone would line up at one window where the cashier would hand the employee their entire gross pay. Then each employee would step down to the next window where that cashier would take back the amount that employee owed the government in income taxes.

Incidentally, though he gets the general point correct, this wasn't exactly what Coors did. This tactic was used by other employers, and was surpressed as noted by the IRS, but what Coors did was give employees their gross pay for two months then take the full three months worth of withholding in the third month. Same point, different approach.

NOTE: Here and here are two sites that document this, as well as making other useful comments about problems with the withholding scheme. Both worth reading in full. (Search for the word Coors to find the discussion of the story noted above.)