Settle Withholding by the Dollars, Not Control

11 Pages Posted: 25 Aug 2012

See all articles by Calvin H. Johnson

Calvin H. Johnson

University of Texas at Austin - School of Law

Date Written: 2012


Current law requires withholding tax from compensation paid to employees but not to independent contractors. The current law definition of independent contractor is vague and arbitrary, with the standard using a tort standard of control. Withholding improves the efficiency of interim reports and tax collection, and increases tax compliance. Refunds improve the taxpayer’s attitude toward his government. The proposal discussed in this article would replace the employee/independent-contractor test with a bright-line rule. Withholding would be required of any employer with more than two fulltime workers. Households expected to pay more than $2,000 a month for one employee would also be required to withhold.

The proposal is offered as a part of the Shelf Project, a collaboration of tax professionals to develop proposals to raise revenue without a VAT or a rate increase. Shelf Project proposals raise revenue while making the tax system more efficient and reducing deadweight loss.

Suggested Citation

Johnson, Calvin Harsha, Settle Withholding by the Dollars, Not Control (2012). Tax Notes, p. 949, August 20, 2012; The Shelf Project, Forthcoming; U of Texas Law, Law and Econ Research Paper No. 233. Available at SSRN: or

Calvin Harsha Johnson (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States
512-232-1306 (Phone)
512-232-2399 (Fax)

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