Senators Demand Answers From Trump Treasury Secretary on Impacts of Gutting IRS

In response to U.S. Treasury Secretary Scott Bessent's recent suggestion that hiring more Internal Revenue Service auditors hasn't been shown to increase tax collections or revenue, 10 senators on Wednesday demanded answers from the former hedge fund manager about the consequences of significantly reducing IRS staff.

"We write to ask whether Treasury has conducted any analyses on the effect cutting up to 40% of the IRS workforce will have on revenue collection, customer service, modernization efforts, and the share of audits comprised of corporations and the wealthy compared with those making less than $400,000," explains a letter led by Sens. Sheldon Whitehouse (D-R.I.) and Ron Wyden (D-Ore.).

"When Republicans forced through IRS budget cuts between 2010 and 2021, the results were clear. As the IRS enforcement staff shrank by 30%, audit rates fell for millionaires by 77% and for large corporations by half. Freeloaders rejoiced," the senators noted. "The IRS reported that between 2017 and 2021, over 125,000 high-income taxpayers with cumulative financial activity over $100 billion did not even bother to file a tax return."

"Between 2017 and 2021, over 125,000 high-income taxpayers with cumulative financial activity over $100 billion did not even bother to file a tax return."

While "low-income recipients of the Earned Income Tax Credit were audited at a higher rate than millionaires," by the end of President Donald Trump's first term, congressional Democrats and the Biden administration sought to boost the agency's ability to target wealthy tax dodgers with nearly $80 billion in Inflation Reduction Act (IRA), the letter points out. Although the funding "had already begun to allow the IRS to improve customer service, modernize old technology, and crack down on wealthy tax cheats," Congress has since clawed back about half of it.

"Besides being unfair to honest taxpayers, hobbling the IRS increases the deficit," the senators stressed. "According to the nonpartisan Congressional Budget Office (CBO), the more than $40 billion rescission of IRS funding provided by the IRA will mean over $100 billion less revenue collected, which on net will increase the deficit by over $60 billion. According to the Budget Lab, firing over 7,000 probationary employees will increase the deficit by an additional $100 billion. On top of these cuts, the president's budget proposes a $2.5 billion reduction in the IRS discretionary budget for next year."

The lawmakers sent Bessent questions about recent IRS terminations and resignations under the deferred resignation program, and how staff reductions impact customer service, efforts to modernize outdated technology, revenue collection from individuals making over $400,000, and corporate audits. They called for responses by June 27.

In addition to Whitehouse and Wyden, the letter is signed by Sens. Richard Blumenthal (D-Conn.), Ben Ray Luján (D-N.M.), Jack Reed (D-R.I.), Bernie Sanders (I-Vt.), Chris Van Hollen (D-Md.), Raphael Warnock (D-Ga.), Elizabeth Warren (D-Mass.), and Peter Welch (D-Vt.).

"For wealthy and corporate tax cheats, an IRS starved of resources means a free pass," the letter declares. "For the vast majority of hardworking Americans who pay what they owe on time and in full, it means not getting their calls answered and bearing a larger share of audits."