During last week’s negotiations to avert a government shutdown, Congress quietly slashed $20 billion from the Internal Revenue Service (IRS). This decision stems from the long-standing Republican agenda targeting the tax agency and is expected to significantly hinder its efforts to clamp down on wealthy tax evaders and modernize its operations.
This latest round of cuts marks the second time Republicans have successfully reduced the IRS budget, previously taking $20 billion from President Biden’s $80 billion funding boost allocated to the agency under the 2022 Inflation Reduction Act. The recent legislation has perpetuated these cuts from the earlier 2023 budget deal, reinforcing the Republicans' commitment to eroding financial support for the IRS.
The Biden administration has been vocal about its concerns, stating these cuts will contribute approximately $140 billion to the national debt. Aimed at ensuring the tax agency can perform adequately, these cuts directly undermine its ability to conduct audits, impacting both large corporations and wealthy individuals.
According to the White House, the IRS will be able to conduct 400 fewer major business audits and 1,200 fewer audits of high-net-worth individuals each year as a direct result of these funding cuts. Such reductions could lead to significant tax revenue losses, which is already straining the federal budget.
Customer service for taxpayers is also on the chopping block. Deputy Treasury Secretary Wally Adeyemo raised alarms about these impending issues, indicating, “By 2026, the IRS will only have the resources to answer two of every 10 phone calls to its helplines, with wait times increasing to an average of 28 minutes.” This scenario paints a troubling picture for the average taxpayer who may find it increasingly difficult to receive timely assistance during tax season.
The Inflation Reduction Act had previously brought some relief to the IRS by clearing up persistent backlogs of tax filings and instituting a popular free tax filing pilot program. With these recent cuts, all those advancements are now at risk, fitting seamlessly within the larger Republican strategy to weaken the IRS and diminish its efficacy.
Adding fuel to the fire, President-elect Donald Trump has indicated plans to appoint anti-tax extremist Billy Long to head the agency next year. Long’s track record includes consistent efforts to abolish the IRS altogether during his tenure as a Congressman, raising serious concerns about his potential influence on tax policy and enforcement moving forward.
With such cuts and strategic appointments looming, the upcoming tax season is likely to spell trouble for many taxpayers, potentially creating inconveniences and complications across the board. At the other end of the spectrum, these shifts may result in windfalls for the wealthy and well-connected, as enforcement of tax compliance wanes.
The overarching impact of these developments translates to not only immediate challenges for the IRS but also hints at broader fiscal difficulties. The concern is palpable: will Trump and the GOP manage to carry forward such significant changes without facing backlash? Their strategy of fiscal resistance raises questions about the IRS’ capacity to fulfill its mandate and ensures fairness within the tax system.
The juxtaposition of promising affordability for taxpayers against crippling budget cuts paints the current political climate as increasingly fraught. The latest political moves seem to indicate deepening party lines, with the IRS now serving as the battleground of ideological strife over taxation and government spending.
With the government shutdown looming and the IRS facing rises in complexity and frustration, taxpayers may soon find themselves caught up in the GOP's wider war against federal taxation. The question remains as to how much more the IRS can shrink before it ceases to serve its purpose effectively. The cuts to the IRS are likely to have far-reaching consequences, impacting taxpayer experiences and the government’s financial health.
