It's more about screwing workers. Not paying benefits to workers and social security etc saves companies money, that's why big evil companies want to avoid paying it.
How is an employer holding that money back and giving it to the government, instead of paying it to the worker directly, any different than paying the whole thing to the worker, and the worker making the payments to the government out of what they receive?
How is it any different from paying it to a contracting agency that hass full time employees, and the contracting agency holding that money back and giving it to the government, instead of paying it to the worker directly?
Sure, some govt agencies are in search of tax revenues, and we should not waste our money, but one day your will be old, one day you will need govt health insurance. Unless you are a very fortunate 1%. 99% change you won't be one of them :-)
Over 23% of the U.S. workforce, including former congressmen, presidents, mail carriers, and military personnel, will receive some form of government pension which covers these things already. The rest of us are expected to have to pay for either ACA or medigap insurance ourselfs -- for which we can receive a tax credit, but we only get that if we paid taxes in that fiscal year, and it only comes back to us as a tax refund. Otherwise, the money is just "gone"; for example, if we are retired.
My mom worked her whole life (and had health insurance), then in her 50s she had some health issues, got really sick, and lost her health insurance. And she died. My family had some money to help her pay for her medical bills, but if she wasn't so fortunate, should she just have had no place to live, no money for food?
That's an important part of where the taxes go to pay for.
You seem to have the stupid idea that contractors are not responsible for paying their taxes, or that they will get away with not paying them, and that this will kill people like your mom, because the federal government isn't already running at a deficit, and is loathe to go into debt to pay benefits.
At the very worst, enforcement becomes a bigger job; and while states don't like it, it will mean more jobs for enforcement personnel, including auditors, and more jobs for CPAs and for tax preparers, and so on. So it will result in a net creation of jobs by making tax collection a more manual process.
From my point of view (jobs creation, disruption of a taxi industry who won't do pickups in the Inner Sunset in San Francisco, even if you schedule your trip to the airport days ahead of time), Uber contractors are a win all the way around.
And yeah, if it starts becoming a big issue, I'm going to follow up on the "incorporation as a private contracting agency franchise" idea myself. I've already had some emails from a couple of interested VCs.