Perhaps the real problem is that the IRS makes it such a massive PITA to be a contractor. You need to withhold your own taxes, pay nearly 30% of your money to the government, etc. Nobody likes that, and unsurprisingly, a lot of contractors fail to meet the requirements.
You know who really doesn't like it? The IRS. When most of the population is on W2 employment, the IRS has a constant revenue stream of payroll taxes and automatically withheld income taxes coming into its coffers every pay cycle. But with contractors, the IRS only gets that money once a year, and often times they're missing a piece of it.
Also – just putting this out there – a population of contractors would have much more power in a hypothetical "tax boycott" than a population of employees. I could imagine some social movement convincing all the contractors in the country to boycott the IRS and skip paying taxes one year. I doubt "the government" is anywhere near competent enough to conspire against this possibility, but the existential risk is there. Surely they would prefer that the peasants don't realize the power of collective tax resistance.