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> extrapolates the current pay period out into the full calendar year and then deducts taxes at that rate

For US Federal taxes, thats generally how its supposed to work - see [1], and for some exceptions [2].

> small gross increase [...] resulting in a net decrease in pay for that pay period

If a payroll system is doing that, its not for the reason you cite. US tax rates are such that an increase in gross pay always results in an increase in net pay, and that doesn't change when you divide gross and net by 24 (or however many pay periods you have each year).

[1]: https://www.irs.gov/publications/p15/ar02.html#en_US_2015_pu...

[2]: https://www.irs.gov/publications/p15a/ar02.html#en_US_2015_p...

What you're describing is tax-withholding. In this situation you would receive the extra tax withheld when you file your tax return, so you're not really having extra tax taken from you. You could also always claim more allowances on your W-4.

My understanding is that this is done so people get consistent monthly payments in the common case. Otherwise people who plan based on their monthly pay at the start of the year might end up in serious difficulty when it suddenly drops. If this results in your being underpaid for whatever reason, it will be corrected at the end of the financial year.