The IRS Shrank. Will That Lead to More Tax Cheating?

The Internal Revenue Service is undergoing a significant reduction in workforce, with headcount dropping to approximately 70,000 employees—a decrease of 30,000 since the end of the Biden administration. Richard Rubin, a tax policy reporter for The Wall Street Journal, explains that this retrenchment, driven by the current administration's focus on shrinking federal agencies, has weakened civil tax enforcement. While the agency is attempting to offset staff losses through technological upgrades and AI-driven case selection, audits of high-income individuals and complex partnerships are declining sharply. This shift is fostering a perception among taxpayers that tax evasion is becoming easier, potentially undermining the long-standing norm of voluntary compliance. Projections from the Budget Lab at Yale suggest these cuts could result in $643 billion in lost federal revenue over the next decade, even as the administration acknowledges the resulting missed opportunities for enforcement.