The Iraqi government wants Iraqi employees, of the U.S. military in Iraq, to have income taxes deducted from their pay. Seems reasonable enough, although this practice is only a few generations old in the West. But in Iraq, this request has revealed some unpleasant realities of Iraqi life. For one thing, most Iraqi government employees, and hardly any non-government employees, have taxes deducted from their pay. It's never been done before, and the practice is very unpopular in Iraq. For most Iraqis, the government doesn't really do much for them, so they see little reason to pay taxes. So most Iraqis do not pay taxes. Iraqis believes that the oil revenue should be all the government needs, and that government leaders steal most of that anyway.
But there's another issue. The several thousand Iraqis who work as interpreters for U.S. forces do not want the government to know who they are. In the last six years, 300 of these Iraqi interpreters have been killed by terrorists or, less frequently, criminals out of rob, or kidnap for ransom, the affluent (by Iraqi standards) interpreters (who get paid twice as much each month, about a thousand dollars, than mid-level government officials). These high salaries, and the efficiency of the U.S. operation (which makes it easy for the Americans to deduct the taxes and pass it on to the government), are why the Iraqis are insisting that it be done (while no similar effort is being made for Iraqi government organizations, or businesses, to collect these taxes.)
Caught in the middle, the U.S. says it will collect the taxes, but will not pass on to the Iraqi government (at least not for the moment) any information that will identify Iraqis as interpreters. Eventually, proof of tax payment may be needed by some of these interpreters, to qualify for some pension, or other, government benefit. But right now, few Iraqis believe that their government will ever become that efficient. But most Iraqis do agree that providing the government with the names and addresses of current interpreters will make it easy for terrorists to bribe (or threaten) a government official to get that information, and turn it into a list for death squads out to kill interpreters.