Republicans’ Assault on IRS Resources Gives Away Their Fake Populist Game
They should back the Democrats’ funding infusion, not keep cutting it.
THE INTERNAL REVENUE SERVICE is an easy agency to hate. And Republicans, with an accidental assist from Democrats, just made it easier than ever.
It’s sad—or SAD, as Donald Trump might say—because the unlovable tax-collection bureaucracy is just beginning to get its act together after decades of cutbacks and restrictions, sometimes in reaction to scandals that proved false or overblown. The upshot has been a depleted IRS with ancient technology, severe personnel shortages, and record gaps between taxes owed and taxes paid on time ($688 billion in 2021 and $696 billion in 2022).
Democrats broke the cycle with the 2022 Inflation Reduction Act signed by President Joe Biden. The law, which passed both the House and Senate with zero GOP votes, gave the IRS nearly $80 billion over ten years to improve customer service, update business systems, and increase compliance by high-income people and corporations.
A better, more consumer-friendly IRS? One that has the people, expertise, and technology it needs to answer taxpayer phone calls, clear 24 million backlogged paper tax returns, contact high-income taxpayers who owe more, delve into complicated tax-evasion schemes, and offer more online digital services? And collects far more money from rich and corporate tax evaders than it spends on audits, thus helping to reduce deficits and the need to raise taxes?
“It seems like a fiscal no-brainer to me,” Maya MacGuineas, head of the Committee for a Responsible Federal Budget, said in November. Count me in, too.
Unfortunately, Republicans have been trying to claw back the money ever since Biden signed the law. Debt and budget negotiations in 2023 shaved the $80 billion to $58 billion. Then, wait for it, a funding bill in September mistakenly duplicated the language of the original $20 billion IRS cut last year—and Democrats didn’t notice.
They tried in negotiations to cancel the unintended $20 billion repeat cut and ensure the money remained with the IRS. But the GOP rejected the change, and the government spending law Biden just signed largely continues that September law through March.
Democrats say they’ll try again in March. Will anyone care, or even notice? Here’s why they should:
Wait times for callers in the last two filing seasons have averaged three minutes, the IRS said, down from twenty-eight minutes in the 2022 filing season before the new law. They’ll be back to twenty-eight minutes in the 2026 filing season if resources are not restored, Deputy Treasury Secretary Wally Adeyemo said in November.
A fall 2023 initiative using the law’s new resources recovered over $1.1 billion in recognized tax debt from millionaires, the IRS reported in September. It also reported collecting $172 million from people with known income over $400,000, but who had not filed tax returns since 2017. Cost to collect per $100? Thirty-four cents. This is what you call evidence-based policymaking. (Remember the days when at least some Republicans preached that concept?)
The agency says it has introduced more digital tools in the last two years than in the past twenty, including mobile tools for taxpayers and online accounts that allow them to see historical data and refund and audit status. It also launched a free tax-filing tool in twelve states and said in May it would become a permanent option for all taxpayers in the 2025 filing season.
Has success jinxed the direct-file tool? Is it too popular? During a five-week period in the 2024 filing season, the IRS reported, more than 140,000 filers claimed over $90 million in refunds and saved an estimated $5.6 million in tax preparation fees on their federal returns. So maybe that’s why, in a December 10 letter to President-elect Trump, twenty-nine House Republicans urged him to eliminate the direct-file option on Day One of his new term.
Sigh.
The Republican case against the IRS infusion has involved a lot of fearmongering about escalating audits of everyday Americans and IRS agents at their doors. That said, the reality of who actually gets audited is eye-opening. The audit rate in fiscal year 2022 (from October 1, 2021 to September 30, 2022) was 0.5 percent for earners between $200,000 and $1 million, according to a Syracuse University analysis.
“The taxpayer class with unbelievably high audit rates—five and a half times virtually everyone else—were low-income wage-earners taking the earned income tax credit,” the Syracuse analysis said. The odds of a millionaire getting audited by an IRS revenue agent were 1.1 percent.
The agency is still working out how to comply with a Biden administration directive to make sure audit rates of small businesses and under-$400,000 households do not go up. The challenges include how to set a historical baseline year, calculate income, and define “small business.” So in some respects, the reforms are still a work in progress.
Whether that progress continues now is an open question. If you’re a fan of efficient, consumer-friendly, fair-minded government, there’s good reason to be furious with Democrats—who handed the GOP a huge gift by failing to catch that $20 billion error. As the New Republic put it last month, “Democrats forgot to read the fine print on a bill and spoon-fed a huge victory to Republicans who want to kill the IRS.”
But there’s even more reason to call out Republicans because, from Trump on down, they campaigned and won by touting fake populism and pretending to care deeply for the working folk. The endgame in starving the IRS is not to make it work better for normal people, or to bring in more revenue to reduce the deficit or the tax burden on low- and middle-income taxpayers.
It’s to make sure the billionaires, millionaires and corporate captains in Trump’s circle don’t have to endure tax audits or even nudges to pay up. An IRS once again cut to the bone won’t have the resources to chase after the billions in taxes owed by the nation’s economic elite.
That is the point, and everyone should care.
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