Withholding from Whom?

The new 20% withholding tax developed a sudden and unexpected hitch. Many a little businessman now discovered that when his employes balked at smaller paychecks (TIME, July 26), he had to pay the tax himself or find new workers.

If an employer absorbs the tax, this amounts to a wage raise for the worker, and as a raise it must have the War Labor Board’s approval to be legal. Employers of fewer than eight workers are exempt from WLB rules. Little businessmen in the Manhattan area alone, reported the New York Times, have been forced to absorb taxes that will run to millions of dollars a year. In effect, thousands of workers are thus on a strike against paying taxes to their Government.