Elon Musk’s decision to take a chainsaw to the Internal Revenue Service is fast-tracking the agency for a steep decline in revenue.
Abrupt, DOGE-directed staff cuts at the agency have sparked fears that U.S. tax revenue could plummet by 10 percent, or $500 billion, this spring, reported The Washington Post.
Last year, the Internal Revenue Services collected $5.1 trillion, with $825 billion going to the Defense Department. Such a massive loss would hobble government services or increase the national deficit.
“The idea of doing that in one year, it’s hard to grapple with how meaningful of a shift that represents,” Natasha Sarin, president of the Yale Budget Lab and a senior Biden administration tax official, told the Post.
Some of DOGE’s loftiest goals for the tax collection agency include a mass layoff of some 20,000 agency employees, many of whom work directly in processing taxes and investigating tax fraud. But the Trump administration has been less than serious with regard to the impact of the cuts: in February, Donald Trump suggested that the tax specialists could find new work as armed border agents.
So far, DOGE has fired more than 11,000 IRS employees and lost two agency commissioners, both of whom stepped down since Trump was inaugurated. That’s forced the agency to quickly reimagine how it allocates its resources: in order to keep its core functions operating, the agency has dropped investigations into high-valued corporations and taxpayers, several IRS staffers involved in the matter told the Post.
That stands in stark contrast to the Biden administration’s agenda for the IRS, which aimed to beef up the agency with more than 80,000 new hires. That was under the helm of IRS Commissioner Danny Werfel, who promised to make mincemeat out of the ultra-wealthy and their tax cheats.
The transition hasn’t been too noticeable this tax season so far, Timur Taluy, CEO of tax-prep service FileYourTaxes.com, told the Post. So far, IRS data shows a roughly eight percent drop in representative availability on the IRS helpline compared to last year—a small indicator of the forthcoming changes. But IRS specialists argue that more changes are on the way.
“We tried to make clear this is a logistics operation. There’s a science to it. If you put 30 people on the line, this is how much you can accomplish today. If you put 15 people on the line, you can accomplish half of that,” a source that was involved in warning the Trump transition team about the planned IRS changes told the Post. “You can change the productivity over time with a smaller input of personnel, but not this filing season. This is where we are today.”
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