If I recall the thesis of Cass Sunstein's book Nudge correctly, it argues that people are irrational in predictable ways. It notes that if the default option is to buy into a pension system with one's employer most people will do so, but if they default goes the other way, most will not, and other such quirks of human behavior.
Would this apply to taxes? When there is automatic witholding, people don't notice how much money our government is taking from our paychecks. That's probably too strong. People certainly notice, but I suspect that it doesn't have the same impact as it would if the money were in hand first. The current system, I suspect, makes it easier to allow taxes to rise and government to grow. It thus lowers the threshold for deciding when a government progam is called for to solve a particular problem. If, however, we changed the system, and ended witholding, would that change things? Having to pay up every April 15th, rather than waiting for a refund every spring (as so many do, since they withold too much), might change the bias in our system?
Perhaps it would make no difference, but I suspect not. At the very least, it would make our system more transparent.