I always assumed that the amount you withhold from a salary for federal income taxes does not change the amount you actually pay in taxes, but simply how much you get back or pay when you file your return.
However, thinking some more about it today, I see that my Wages on my W2 are roughly speaking my income minus what I withheld. Then this amount, plus deductions and exemptions, is used to compute my tax.
So this seems to mean that if I withhold more, I pay less taxes. But I never heard anyone mentioning such an important fact, and usually I only see recommendations about getting the withheld amount to be just right so that you get more money sooner and a smaller refund at return time. It would also seem to go against the main idea of taxation if I can pay quite less by simply paying more in advance. This leads me to believe that I am making a mistake somewhere. What am I missing here?