Recent IRS staff cuts, aimed at reducing government spending, may paradoxically lead to increased losses in taxpayer revenue. With a diminished workforce—about 18% fewer employees than earlier this year—the IRS faces challenges in both tax collection and enforcement. Experts warn that these cuts could embolden taxpayers to cheat, betting on reduced audits. Estimates suggest a potential loss of $395 billion in revenue over the next decade as part of the plan to halve the agency's staff, overshadowing any claimed savings of $140 billion.
The IRS is effectively the government's accounts-receivable department. Staffing cuts set up the IRS to lose money in two ways, as Natasha Sarin explains.
The plan to cut half of the agency's workforce alone would conservatively translate to $395 billion in lost revenue in the next decade.
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