Dan Buckley
Associate Editor
Loyola University Chicago School of Law, JD 2026
As part of the Trump administration’s broad efforts to downsize the federal government, it reportedly plans to cut more than 20% of the Internal Revenue Service (“IRS”) workforce by mid-May 2025. This planned reduction in staff follows the nearly 6,700 probationary IRS employees already fired by the administration and the 4,700 employees who left the IRS after accepting the administration’s “voluntary buyout” offer. In total, reports indicate that the Trump administration could reduce the IRS workforce by nearly half its current size. Downsizing of this magnitude could greatly impact the amount of tax revenue collected by the IRS as there may no longer be adequate staffing to conduct large audits and complete other tax collection efforts. In fact, these cuts have led Treasury Department and IRS officials to project a decrease of up to 10% in federal tax collection compared to 2024, representing over $500 billion in lost revenue for the federal government. This level of reduced tax collection would primarily benefit the wealthiest Americans, while low- and middle-income individuals would be the most impacted by the likely continuation of offsetting funding cuts to public welfare and services.
Increased government debt and loss of revenue from IRS workforce reduction
In 2024, the IRS collected $5.1 trillion in tax revenue. A potential 10% decrease in the federal government’s tax revenue would thus be devastating to government budgets and lead to increased government borrowing, which does not match with the Trump administration’s frequent comments that they are seeking to reduce borrowing. IRS officials reportedly informed the Trump administration in January 2025 about the potential revenue losses from their planned IRS staffing and budget cuts, and further emphasized that the agency’s collection efforts are often tied directly to workforce levels and funding. However, the administration has nevertheless pressed on with their plans on an aggressively quick timeline, even repealing a Biden-era government funding law that was set to allocate an additional $20 billion in IRS funding.
The impacts of these reductions may take time to fully realize, but in addition to lost revenue, the cuts will almost certainly also result in worsening taxpayer assistance capabilities. Issues like longer service delays for taxpayers facing identity theft, insufficient staff to answer phone calls, and decreased technological innovation are only some of the potential consequences for regular taxpayers.
Another consequence of the decrease in IRS staffing is the potential for wealthy individuals and large companies to avoid paying certain taxes in the first place. These taxpayers have access to teams of accountants and lawyers specifically trained in hiding income and decreasing tax due, and a weakened IRS will likely lead them to take even more aggressive tax dodging positions. Large complex tax audits can sometimes run into the multi-billions and the more complicated the tax situation, the more work hours and funds are needed for the IRS to complete it. Investing this amount of time and money has proven fruitful for the IRS as it reportedly brings in over 4 dollars of tax revenue for every 1 dollar it spends auditing the top 1% of earners and 6 dollars of revenue for every 1 dollar spent auditing the top 0.1%. High earners are thus likely to continue to underreport and hide income, and with reduced staff and funding, IRS agents are unlikely to be unable to conduct the necessary inquiries to catch them.
Additional debt consequences from extending Trump tax cuts and impacts on social services
Even without consideration of the IRS staffing cuts, the Congressional Budget Office projects that keeping the 2017 Trump tax cuts in place, as is currently planned by the Trump administration, would also cause federal debt levels to massively rise. These tax cuts serve to only further lessen the tax burden on wealthy individuals and corporations and do little to improve the lives of low- or middle-income Americans.
All in all, it is easy to see how fallout from these projected debt increases, and massive tax revenue shortfalls, will lead the Trump administration and the Department of Government Efficiency (“DOGE”) agency to increase its attacks on federal social service spending. The administration has already cut billions of dollars of federal spending on international aid and domestic welfare spending. Now, there are increased threats by administration leader Elon Musk to go after key social welfare institutions like Medicare and Social Security. There is no other way to view these threats but as an administration directive to decrease tax burdens on corporations and wealthy taxpayers on the back of lower-income Americans, and the American public and politicians should push back on this reallocation of wealth away from the working class.