As a former business owner, I just want to clarify that employers have to match FICA (social security) and Medicare taxes paid by employees. These are flat percentages based on gross pay. Exemptions make no difference.

However, the employer takes out withholding (determined by employee exemptions) and pays that directly to the IRS on the employee’s behalf. Jacking up exemptions puts more money in the employee’s check and the employer pays less to the IRS. But, there’s no net cash advantage to the employer. The same amount of money is paid in total; it’s just been shifted from one bucket to another.

SO. Jacking up exemptions creates no cash advantage to the employer. But it does disadvantage the employee at tax time.

Therefore, the only reason a company would purposefully increase withholding exemptions would be to completely fuck their employees.