Summary
Under the Trump administration’s “efficiency initiative,” spearheaded by Musk’s DOGE, over 6,000 IRS employees, many specializing in auditing wealthy individuals and corporations, were fired.
This action reverses efforts to address prior underfunding and staffing shortages within the IRS.
With studies showing the IRS generates $5-$12 for every dollar spent on audits, especially on wealthy taxpayers, experts like fired engineer Nershi argue that these cuts will reduce revenue, not save money.
Former IRS Commissioner Koskinen questioned, “why would you cut back on the revenue side?”. Critics argue these cuts, framed as fiscal responsibility, will actually cost more through lost revenue and ultimately benefit “tax cheats.”
Before the cuts, the IRS generated $0. After the cuts, the IRS will generate $0. Getting rid of the IRS can’t cost the US government any amount of US dollars because the US government has infinite US dollars.
To be clear, I think it’s a bad idea to cut the IRS. We should be beefing it up and tasking it with going after the rich, because taking money away from rich people is a good thing. But buying into the framing that the US needs to take money from people because it can then spend that money on something else is a mistake, and not just because it’s false. It’s bad politics. Conservatives don’t actually give a shit about government efficiency or fiscal responsibility, they just hate taxes. If it makes the deficit 10x worse they still want to cut taxes however they can. But they are happy to weaponize concern trolling about the debt and deficit to cut government programs that benefit the poor (or prevent such from coming into existence), and liberals are very susceptible to these arguments.
Isn’t the value of the dollar tied to how much money is circulating? It makes no sense to talk about infinite money if all that does is dilute what’s around.
This is a very econ 101 take. A similar argument is that if you increase the minimum wage, people will per se lose their jobs because of supply and demand curves. But the empirical evidence doesn’t support that. I don’t think we know for sure why, but increasing the minimum wage has second order effects that seem to counteract this. Similarly, it’s true that if you print money, you increase the supply of money which according to supply and demand means the money will be worth less. Now I don’t think we have as clear empirical evidence that shows this isn’t true, but we do print money all the time. I mean, that’s how government works; congress passes a bill, and the federal reserve supplies (“prints”) the money to fund it. There’s not some bank account somewhere that has to have the money and if it doesn’t we have an overdraft situation. But, if the bill is printing money to support farmers and provides an increase in the food supply, the cost of food relative to the dollar could go down. Now maybe the cost of other things goes up, but the point is that it’s much more complex than “government print money, inflation go up.”
The argument I’m making here is based on Modern Monetary Theory (maybe I’m doing a bad job of representing it or understanding it), which you should definitely check out if you haven’t.
Yes, I’m a pharmacobiologist and not an economist. 😅
Thanks for elaborating, though!