Trump’s IRS cuts will make it easier for rich Americans to avoid paying what they owe

Experts say staffing cuts at the Internal Revenue Service will make it easier for wealthy tax evaders to avoid paying what they owe to the U.S. Treasury each year. In addition to costing the government billions of dollars in owed revenue, they say cuts by President Donald Trump’s administration will likely mean more audits for working Americans and worse customer service.

After years of underfunding and understaffing at the IRS, congressional Democrats and President Joe Biden agreed in 2022 to invest almost $80 billion to modernize the agency and crack down on wealthy tax evaders. Now, through legislation and executive actions, Trump and his Republican allies are reversing that progress.

What was the state of the IRS before 2022 and how did the Inflation Reduction Act change it?

Congress reduced annual appropriations for the IRS by about a quarter between 2010 and 2022, reducing funding for enforcement by 28%, according to the nonpartisan Tax Policy Center. Staffing at the agency dropped by 30% between 1993 and 2022, with more than half of the drop occurring since 2010. 

With that insufficient funding for enforcement and customer support, a 2023 Pew Research Center poll found, the agency was the one viewed most unfavorably by the American public. The agency estimated that hundreds of millions of dollars were owed by wealthy individuals who had not filed tax returns, but said that it lacked the funding to collect those owed funds.

In 2022, Biden signed the Inflation Reduction Act, which included about $80 billion over a decade in additional IRS funding. About half of that funding was designated to increase enforcement. Treasury Secretary Janet Yellen directed that the money be used only to increase audits of large businesses and of individuals earning $400,000 or more annually and predicted that audit rates for everyone else would decline as the agency better targeted its enforcement.

The nonpartisan Congressional Budget Office predicted that the $79.6 billion investment in the IRS would be more than offset by the $203.7 billion the agency would be able to collect in money already owed by those wealthy individuals and corporations. 

Republicans in Congress have criticized the progress. “Taxpayers are not receiving the return on investment promised by the injection of billions of dollars to supposedly modernize the IRS and improve customer service from the Democrats’ so-called Inflation Reduction Act,” Republicans on the House Ways and Means Committee said in a Feb. 13 press release. “Instead of taking advantage of efficiencies offered by new technology, Democrats chose to allocate the majority of the $80 billion they gave the IRS to hire agents to hit more working families with audits.” 

But tax policy experts disagree. 

The law paid immediate dividends, according to David Kass, executive director of the nonprofit Americans for Tax Fairness. “Last year, the agency collected over a billion dollars from 1,600 millionaires who owed but had failed to pay at least $250,000 each,” he said in a telephone interview. “The IRS has actually improved its customer service with the money that was made available. So average wait time on calls to the agency dropped from 30 minutes to three minutes.”

“They’re making improvements,” said Joe Hughes, senior policy analyst with the nonpartisan Institute on Taxation and Economic Policy. “What the IRS calculated as their successful resolution rate on those phone calls was about 15% in years prior, meaning 85% of people who were calling the IRS and waiting 30 minutes to talk to somebody did not get a successful resolution to whatever their question was. That number reversed in the first year after the IRA funding, and so 85% of calls were successfully resolved.”

What have President Trump and the Republican Congress have done since?

Republicans in Congress unanimously opposed the Inflation Reduction Act, falsely claimed that it would fund an army of 87,000 new IRS agents, and have repeatedly attempted to undo it. In March 2024, they forced Biden to accept a $20 billion cut to the modernization funds. On March 15 of this year, Trump signed a year-long continuing resolution that cut another $20 billion.

Additionally, the Trump administration’s Department of Government Efficiency (DOGE) has further pushed to slash IRS staffing, attempting to fire 6,700 newer employees, coaxing 4,700 longtime employees to voluntarily quit, and reportedly planning nearly 6,800 more layoffs, according to an internal document reviewed by CNN. The cuts could amount to 20% of the IRS workforce. A legal challenge to the initial firings is working its way through the federal courts.

The IRS did not respond to a request for comment for this story. 

The White House has touted its IRS cuts. “I think our objective is to make sure that the employees that we pay are being productive and effective. And there are many, many — more than 100,000 people working to collect taxes, and not all of them are fully occupied,” Trump’s National Economic Council director Kevin Hassett said at a Feb. 20 White House briefing when asked about 3,500 people being laid off at the IRS. “And the Treasury secretary is studying the matter and feels like 3,500 is a small number and probably can get bigger, especially as we improve the IT at the IRS.”

“I think one thing that’s really important to remember is that 10% of the IRS employees are military veterans. These are people who are doing their job, serving their country, and making wealthy tax cheats pay what they owe,” Kass said. 

What will the impact of staffing cuts be for billionaires?

The CBO predicted on March 11 that the latest rescissions to IRS funding would result in less enforcement and less owed revenue being paid by the wealthiest Americans: “Taken together, CBO estimates, the reductions in revenues attributable to the cumulative $20.2 billion withdrawal continued by this legislation would total $1.7 billion in 2025, $38.2 billion over the 2025-2029 period, and $65.8 billion over the 2025-2034 period.”

The Washington Post reported on March 22 that IRS and Treasury Department projections were already showing a massive dropoff in the number of people paying what they owe. The agencies estimate there will be $500 billion in lost revenue, a drop of 10% in the total amount paid. The article noted that the agency has already had to drop investigations of individuals and corporations that owe significant amounts. 

“This is just another example of Republicans protecting their billionaire donors,” said Kass. “It should not be a matter of debate that wealthy people should pay the taxes that they legally owe. This shouldn’t even be something we’re having to discuss.”

Hughes observed that it is ironic that the Department of Government Efficiency, which claims to be trying to make government function as an efficient business, is doing the opposite. “What sort of business, if they were looking at their finances and said, We want to streamline, we want to make sure that we’re maximizing profits and oh, here we have billions and billions of dollars that our customers owe us, and we’re just not bothering to even collect it — in what world would that not be your first stop? And you would say, OK, we actually want to make sure. We want to do everything that we can to ensure that we’re collecting all the revenue, or all the income that we’re owed, right? Instead of cutting the services, cutting the employees who are making sure that those payments are coming in. That’s about the least efficient thing I could imagine.”

What will be the impact for everyone else?

Kass and Hughes both said that when the IRS doesn’t have enough staff to do complicated audits of wealthy individuals, it typically audits more working families, whose tax returns tend to be simpler to examine.

Kass also warned that the improvements to customer service will be reversed: “Average taxpayers, when they have a question and they call the IRS, they need enough staff to be able to answer the phone. If you want to go in person to meet with somebody from the IRS, unfortunately, the administration is planning to close 100 taxpayer assistance centers across the country. So that’s going to mean most Americans won’t be able to get in-person help. And so it’s going to mean that it’s going to be a delay of getting your refund. It’s going to be harder to get your calls answered.”

With less revenue coming in, the federal government will have to either make massive cuts to safety-net programs or increase the national debt even more, Kass said: “There is no magic, right? You either have to put more on the government’s credit card, which, you know, is the wrong thing, or you cut things. It’s just the total wrong approach. We shouldn’t be giving more protections to billionaires. They’re fine. We should be making sure that the rich pay their fair share.”

“In gutting the IRS and cutting thousands of jobs across the country, President Trump and [the Department of Government Efficiency] are giving wealthy tax cheats a free pass to rob the American public. Between 2023 and 2024, the agency recovered over half a billion dollars from millionaires skipping out on payments,” Tony Carrk, executive director of the nonpartisan organization Accountable.US said in an email, adding that the Trump administration has “made it impossible to hold big corporations and billionaires responsible for their share of taxes, send refund checks, or provide basic services to millions.”