Tax season is always a busy time at the IRS. This year has been especially eventful. In February, the agency was told to start firing up to 7,000 workers—before judges ordered that such firings needed to be paused. Some 5,000 more workers have signed up for the government’s deferred-resignation offer, and various departments have been slashed or targeted for cuts. About 50 IT workers were put on administrative leave Friday. Overall, The Washington Post reported, the agency will end May with about 18 percent fewer employees than it had at the start of this year. And people familiar with the matter told The New York Times that the Trump administration’s ultimate goal is to cut the agency’s staffing by half.

The stated purpose of these firings, and of DOGE’s other cuts across federal agencies, is to save money. But the cuts may actually translate to a meaningful dip in taxpayer revenue. The IRS is effectively the government’s accounts-receivable department. Staffing cuts set up the IRS to lose money in two ways, Natasha Sarin, a Yale law professor and former Treasury counselor, told me: A reduced IRS has less capacity to collect and enforce taxation, and taxpayers who think they won’t be audited may be more inclined to start cheating. Sarin expects that the agency’s losses will far outweigh the $140 billion DOGE says it has saved (DOGE’s self-reported data is opaque and has been full of errors). She and her colleagues at the Budget Lab at Yale forecast that the plan to cut half of the agency’s workforce alone would conservatively translate to $395 billion in lost revenue in the next decade, and possibly up to $2 trillion.

Other expectations have been bleak, too—and have considered factors beyond reductions in force. Amid the chaos of this filing season, the agency is on track to see a more than 10 percent drop in tax receipts by the tax-filing deadline this month, according to predictions from Treasury and IRS officials who spoke anonymously with The Washington Post last month; if that happens, it would translate into more than $500 billion in lost revenue this year. Such changes could be because some people are skirting their duties and hoping that an understaffed IRS will lead to less enforcement, but other people’s filing may just happen later this year. Victims of natural disasters, including the 2025 California wildfires, have received deadline extensions—and, in general, corporate tax receipts may decline if businesses are facing challenges. (A spokesperson for the Treasury department denied that a $500 billion tax-revenue drop is plausible, adding that “baseless claims from those who have promoted wasteful spending for years at the IRS should be dismissed out right.” Representatives of DOGE did not immediately respond to a request for comment.)

Recent history provides a case study in what happens when the IRS is diminished: In the 2010s, the IRS’s budget was depleted over several years. The number of agents declined by a third from 2010 to 2017, and the audit rate went down by about 40 percent (and down by about 50 percent for people earning more than $1 million) in that period. The number of agency investigations of people who didn’t file returns went from 2.4 million in 2011 to 362,000 in 2017. The total amount of money lost through weak enforcement during those years amounted to some $95 billion, ProPublica estimated.

One theme of the late 2010s and early 2020s was general sloppiness in filing, especially from corporations, Michael Kaercher, the deputy director of the NYU Tax Law Center and a former IRS lawyer, told me. That period, Sarin argued, demonstrates the “direct relationship” between reduced capacity for enforcement and loss of revenue—though the cuts then were much smaller and more spread out than DOGE’s current plan. Of course, even if the public starts to get the impression that there won’t be consequences for evasion, many will continue to do their civic duty and make good on their obligations. But if the IRS doesn’t have enough staff to help people with the (often confusing) process of filing, some people may just make mistakes, too, and start accidentally underpaying.

The exact amount the IRS may lose in the years to come will depend on a few factors, including which functions and staff end up ultimately being cut. Since January, the IRS has lost nearly 40 percent of the staff of the Global High Wealth unit, which focuses on audits of very wealthy individuals. Those audits have an extremely high return on investment, Vanessa Williamson, a senior fellow at the Urban-Brookings Tax Policy Center, reminded me—a single audit can lead to millions or tens of millions in revenue. In the 2010s, she noted, the “tax gap”—the amount of taxes that were owed but not paid—rose, which was primarily attributable to high earners underreporting their income. In 2021, the top 1 percent of earners were responsible for more than a third of unpaid taxes, which cost the government nearly $200 billion.

As some of the agency’s functions are diminishing, it is being tasked with a new role. The IRS, which holds information about every taxpayer, is close to signing an agreement with Immigration and Customs Enforcement in which it would share addresses and names about migrants. Sending sensitive taxpayer information to authorities would cut against a fairly core aspect of the IRS’s culture, Kaercher told me: The agency has always taken data privacy very seriously. For decades, the IRS has told undocumented people that they need to pay taxes, and that it would not share information with immigration authorities. Now that the agency is reneging on that promise, the changes may deter immigrants from paying taxes, leading to further dips in the revenue the agency can collect.

In recent decades, Williamson noted, even through lean IRS eras, what’s called “tax morale,” or a willingness to pay taxes, has remained high in the United States. “Americans are traditionally good taxpayers by international standards,” she said. But trust in the system is predictive of compliance. As that trust diminishes, compliance may go with it too.

Related:

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Here are four new stories from The Atlantic:

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Today’s News

1. Voters are heading to the polls in the contentious Wisconsin Supreme Court race. Elon Musk has handed out $1 million checks to two people who signed a petition against judicial activism.
2. Senator Cory Booker of New Jersey is delivering a speech on the Senate floor that has gone on for more than 23 hours.
3. The U.S. Health and Human Services Department started issuing notices of dismissal to employees; layoffs are expected to total approximately 10,000 people.

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Evening Read

The New Marriage of Unequals

By Stephanie H. Murray

Once upon a time, it was fairly common for highly educated men in the United States to marry less-educated women. But beginning in the mid-20th century, as more women started to attend college, marriages seemed to move in a more egalitarian direction, at least in one respect: A greater number of men and women started partnering up with their educational equals. That trend, however, appears to have stalled and even reversed in recent years. Gaps in educational experience among heterosexual couples are growing again. And this time? It’s women who are “marrying down.”

Read the full article.

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Culture Break

Read. In a new book, Elaine Pagels searches for the narrative origins of Jesus’s miracles.

Listen. In 1966, the conductor Leonard Bernstein arrived in Vienna with a mission: to restore Gustav Mahler’s place in 20th-century music.

Play our daily crossword.

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P.S.

I have some personal news to share: This is my last edition of The Daily. I am moving on to pursue other career opportunities.

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— Lora

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Stephanie Bai contributed to this newsletter.

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