Elon Musk’s first ruling targeting officers run in the federal government, which is based on the fact that the country’s financial situation is in crisis and requires substantial cuts to recover. But at least one of the tailored Musk teams is planning to actually spend the government’s money, exacerbating the so-called fiscal crisis that the Trump administration claims to be a national emergency.
This is Musk’s plan to lay off employees at the IRS.
Under the request of Musk’s government efficiency force, the IRS Reported plan Up to 6,700 employees were laid off and phased out began last Thursday. Those affected include more than 5,000 workers handling audits and collections, although the IRS manager assured that the position that is crucial to the tax filing season has not been affected. Many of them are probation employees who have worked in the federal government for less than a year without the right to sever.
So how will these cuts cost money?
It turns out that the funds spent on IRS agents pay themselves multiple times because when more people are engaged in tax enforcement, the government takes up more income that is legally owed under the tax laws.
The Biden administration shows that investment in the IRS could be a boon for tax revenue, hiring new agents and focusing law enforcement on top earners.
Layouts may just be the beginning: Trump also proposed to build “External tax servicesIt is reportedly funded by tariffs Intent to replace the IRS. This sounds far-fetched, and Trump famously floats many extreme ideas that have never been realized. However, any further significant reduction in the IRS workforce could lead to a corresponding decline in tax collection, especially among the wealthiest Americans who have been subject to tax enforcement targets recently.
The IRS gains more resources and higher tax revenue
In mid-2022, President Joe Biden signed the Inflation Reduction Act, which includes a decade of investment in tax enforcement activities at the IRS, including hiring more IRS agents. In the following two years, the institution’s workforce grew More than 15,000 Permanent employee.
Tax revenues then surged, with total collections jumping to about $4.7 trillion in fiscal 2023 $5.1 trillion The following year, according to data from the IRS and national taxpayer advocates.
Obviously, there are many factors that lead to tax revenue levels, including the status and size of the economy within a given year. But in the leap from 2023 to 2024,
Most of the increase comes from execution activities on people Earn $400,000 a yearAccording to the report of the Government Accountability Office. This shows that enhanced IRS enforcement plays an important role.
The agency collected $1.1 billion for just 1,600 richest Americans Unpaid tax debt in fiscal 2024 was higher than $38 million in the previous year. This money was recovered The estimated gap is $696 billion In unpaid U.S. taxes.
Despite a substantial increase in funds for the IRS, the cost of taxation has actually dropped in recent years. The IRS charges $100 per $100, which costs just 34 cents in the fiscal year 2023, close to historic lows.
For the Trump administration, there is not enough fact that it has saved jobs from thousands of IRS workers facing layoffs. Reducing the IRS’s labor force may eventually backfire at a time of increased income and efficiency, exacerbating the so-called financial crisis Musk claims to be addressed.
