As Republicans work to pass comprehensive tax reform by renewing the 2017 Tax Cuts and Jobs Act (TCJA) in Congress, the Trump White House is making major cuts to the agency that will need to enforce it.
The IRS is in the process of getting rid of thousands of workers from different parts of the agency, including the taxpayer help service, the compliance division and general operations.
Meanwhile, the already hugely complicated U.S. tax code is set to become even more complex as Republicans work to restore business tax breaks including interest deductibility, research and development expensing and a new depreciation schedule, among many others.
Tax law and tax administration are moving in opposite directions, leading many in Washington to worry about the collection of federal revenues, which already fall short by hundreds of billions of dollars per year.
“What we don’t know is how this tax legislation is going to interact with the massive and haphazard workforce cuts DOGE is trying to impose on the IRS,” Vanessa Williamson, a senior fellow at the left-leaning Brookings Institute, told The Hill.
“The largest proposed cuts will have serious revenue effects---effects on the order of some of TCJA’s more hotly contested provisions! But we’re having a legislative conversation that ignores the IRS entirely,” she said.
— Tobias Burns