It’s easy to muster sympathy for CDC scientists doing critical research and National Park rangers protecting the environment, but this April, the nation’s tax collectors could use some love as well.
Last week the acting head of the Internal Revenue Service, Melanie Krause, resigned over an agreement reached without her knowledge that will allow the Department of Homeland Security to access IRS files of people suspected of being undocumented immigrants.
She was the third person to head the agency since Donald Trump became president. Danny Werfel, a Joe Biden appointee, resigned ahead of news that he was about to be fired. He was replaced as acting head by Doug O’Donnell, who retired after clashing with the Department of Government Efficiency (DOGE). Trump has nominated former U.S. Rep. Billy Long of Missouri for the position, but he is still awaiting Senate confirmation.
Only three days later Krause’s replacement, Gary Shapley, who is seen as a DOGE ally, was fired by Trump at the insistence of Treasury Secretary Scott Besent. His replacement — now the fifth to head the agency under Trump — is Deputy Treasury Secretary Michael Faulkender.
Meanwhile, the first layoffs, which are expected to result in a massive reduction in the IRS’ workforce of 90,000 — possibly as much as 50 percent — began this month. About 5 percent of the workforce has accepted buyouts and left. Some 6,700 probationary employees have been subjected to a particularly confusing game of ping pong. They were fired in February, reinstated in March and put on paid leave, told to show up for work on April 14 and then told last week to stay on paid leave until further notice. All during tax season.
Periodically, when it’s to the advantage of one party or the other, we get ourselves all lathered up over the national debt. The best proof of the emptiness of this sanctimonious exercise is how little attention we pay to national debt collection.
In fiscal 2024, the IRS collected $5.1 trillion, which sounds like a lot until you set it aside from the gross national debt, which is $36.22 trillion. Attempting to reduce the size of the second number, which starts by making it harder to collect the first number, sounds like a long shot.
There has already been a dramatic reduction in the size of the IRS after complaints of intrusive tactics and political targeting. In the decade after 2010, Republican efforts to rein in the agency resulted in a 19 percent reduction in funding and a 22 percent reduction in the size of the IRS workforce. Audits on millionaire filers also fell by 71 percent.
Restoring and modernizing the agency was a major aim of the Inflation Reduction Act of 2022, which increased funding by $80 billion over 10 years. There’s an argument between Republicans and Democrats over how much return this increase in spending has actually delivered, but there was a measurable increase in collections from deadbeat millionaires.
Trump has frozen grants and otherwise tried to undermine the Biden legislation, spelling danger for the new Direct File program, which allows some taxpayers to file directly to the IRS for free. DOGE has declared that the program hasn’t been a success, although the numbers on this year’s expanded version of the program haven’t been tabulated yet.
Like so many of the inconvenient problems of our age, the huge reduction in the number of IRS employees is supposed to be made up for by the fantastic gains insured by that magic wand of contemporary imagineering, artificial intelligence. We are coming ever closer to the moment when the realization of AI’s promise has to match the expectations. But the promises keep piling up.
What is much more likely than an AI transformation is another plunge in the rate of audits, a system that is much harder for the average taxpayer to reach, and an increasing divide between those who have the means to game the system and those who don’t. So far the grand strategy for reducing the national debt has been to search for waste and fraud in places where the money isn’t, while enabling waste and fraud in the places where the money is.
This week marks Tax Day for most Americans, but Georgia and other states affected by Hurricane Helene don’t have to file until May 1. But why wait?
Thank you for this insightful analysis of the IRS workforce reductions and their implications for national debt collection. The article highlights the paradox of attempting to reduce the national debt by diminishing the very agency responsible for tax collection.
Given the significant decrease in audits of high-income earners and the challenges faced by the IRS in maintaining efficient operations, I’m curious about the long-term fiscal impacts of these staffing cuts. Specifically, how might these reductions affect the IRS’s ability to enforce tax compliance among corporations and the ultra-wealthy?
Additionally, with the increasing reliance on artificial intelligence to compensate for human resource shortages, what measures are in place to ensure that AI implementations do not inadvertently exacerbate existing inequalities in tax enforcement? Are there safeguards to prevent potential biases in AI-driven audit selections?
Understanding these aspects is crucial for assessing the efficacy of current strategies aimed at managing the national debt.
Looking forward to your thoughts on these questions.