With tax day come and gone, the Internal Revenue Service is on track to collect less revenue this year than last. Former IRS employees blame cuts by billionaire Elon Musk and Republicans for the decline in revenue, which stands to expand the federal deficit ahead of a debt ceiling deadline this summer.
New weekly filing data from the IRS, released Friday, shows that the agency has received 1.7% fewer total tax returns compared to the same time period last year. The IRS notes a few reasons why the agency might be seeing fewer filings this year, including that multiple states are in a state of emergency and have had the tax deadline for their residents moved to May; other people may have filed for an extension as well.
However, a former IRS employee and the president of the National Treasury Employees Union, Doreen Greenwald, told Salon that, in her view, the reduction in filings and income is largely due to the dramatic cuts to the agency pursued by Musk and President Donald Trump.
“What we've seen is DOGE going to federal agencies across the board, them removing federal employees — federal employees who are trained and skilled in the work that they do to deliver for programs for the American people, they think,” Greenwald said. “Federal employees are an efficient way of doing business. So when you invest in a federal employee, let's say you invest $1 on average, the return is $8 back. If you invest in an auditor that does the complex audits, you see $12 back.”
Greenwald said that even if the Republicans replace some of the workforce with contractors, those contractors will be less efficient than federal employees and likely lack the expertise to conduct complex audits that are often required for higher earners. She added that contractors would also sacrifice the privacy Americans enjoy from IRS employees.
In March, The Washington Post reported that Treasury Department and IRS officials were anticipating a tax revenue decrease of around 10% when compared with the previous year. This decline would amount to an absolute decline in revenue of around $500 billion. Even by DOGE’s own estimates — estimates which the New York Times reports are vastly overinflated — the agency claims to have saved only around $155 billion, meaning that Musk’s agency, through its cuts to the IRS, is on track to cost the U.S. government billions more than it has purported to save.
The agency has been in turmoil since the beginning of Trump's term, and has had three acting leaders just in the past week, with Musk and Treasury Secretary Scott Bessent struggling for influence in the Treasury Department. As of Friday, Bessent's deputy, Michael Faulkender, is set to assume the role of acting head of the IRS.
According to reports in the Post and The New York Times, DOGE set out to cut around 20,000 jobs at the IRS at the beginning of the Trump administration, with the lion’s share of these jobs coming from the tax compliance department and taxpayer services. Around 22,000 IRS employees have signed up for the administration’s resignation offer, about one-fifth of the agency’s total workforce. Those losses could result in an even larger decline in tax revenues next year.
In the background of Musk's posturing on deficit reduction, The Wall Street Journal reported that actual federal spending has climbed under Trump, with an analysis of Treasury Department data indicating that the Republican administration has actually spent around$154 billion more than President Biden's administration over the same time period.
DOGE’s takeover of the agency, apart from potentially costing billions, has also included a mass scraping of taxpayer data, giving Musk and his team of young staffers access to taxpayers’ personal information, including Social Security numbers, incomes, banking and brokerage account numbers, potential medical expenses and immigration status.
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The executive director of Americans for Tax Fairness, David Kass, told Salon that the cuts to staffing at the IRS will overwhelmingly benefit the richest Americans, who tend to have more complex taxes that require more effort to audit.
“We know that the very rich have complicated tax returns. They have partnerships and all kinds of fancy financial things. And so in order to make sure that they are complying with the law, you need people at the IRS who have the experience to be able to go through those things,” Kass told Salon.
Kass said that after the 2022 passage of the Inflation Reduction Act, which increased IRS funding, payments from the wealthiest Americans increased, with the agency collecting “hundreds of millions of dollars from multi-millionaires who were not paying their taxes.” Kass said that the sort of cuts Musk is ushering in at the IRS are exactly the sort that he personally stands to benefit from.
“If you're a billionaire, the last thing you want is the IRS to be able to audit you. So what a great system where you have these, all these billionaires who are in Trump's cabinet, who are working so hard, and particularly Elon Musk, to make sure that it the IRS doesn't have the capacity to audit them, and so it really leads to more and more cheating,” Kass said.
While the current data doesn’t give the whole picture for taxes collected in this past year, the anticipated further decline in revenue likely means the U.S. will have to address the debt ceiling, the cap on the total amount of money the government is allowed to borrow, sooner than the expected date in August. Friday’s data also only concerns individual taxes and does not address corporate taxes. Many corporations also take extensions, meaning it will likely be May when a fuller picture emerges.
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