Reducing IRS staff could worsen federal budget deficits

Many Americans dislike the IRS, the federal agency responsible for tax collection. Recently, the Trump administration, with support from Elon Musk, has announced plans to cut a significant number of IRS jobs. Experts warn this could harm the nation's finances rather than help them. Reports suggest that up to 20% of the IRS's 100,000 workers may be laid off. While this might save money on salaries, experts argue that having fewer employees to chase unpaid taxes could increase the "tax gap." This gap represents the billions in taxes that Americans are supposed to pay but do not. Current estimates say this gap could reach as high as $700 billion each year. Research indicates that investing in tax enforcement yields a strong return. For every dollar spent, the government can see a return of five to twelve dollars in tax revenue, especially when focusing on the wealthiest Americans who often underreport their income. Unfortunately, the IRS has reduced audits on high earners in recent years, which has worsened the situation. The Biden administration had previously approved $80 billion to boost IRS staffing, hoping to raise an additional $850 billion over ten years. However, Congress has already taken back $20 billion of this funding. Calls for more extensive cuts to the IRS suggest a move toward not just downsizing but possibly abolishing the agency entirely. The future of tax collection methods remains uncertain, as discussions about replacing the IRS with a new agency focused on tariffs surface. These changes could have serious implications for government revenue and public services.