The “DOGE” commission Elon Musk is running masquerades as a “government efficiency” project. Its supposed goal is to streamline the federal bureaucracy and give taxpayers more bang for the buck.
Here’s the best indicator that’s bunk: The DOGE axe-wielders are slashing staff and other resources at the Internal Revenue Service, which collects the taxes Americans rightfully owe. This will impair the agency’s ability to do its most difficult job: policing tax cheats who are often some of the nation’s wealthiest people. Falling tax revenue will lead to growing budget deficits and make the $36 trillion national debt bigger, not smaller.
Shrinking the tax gap by squeezing evaders would generate desperately needed revenue without raising anybody’s tax rate. Congress wouldn’t have to pass any new laws. If the IRS could collect all the owed money, it would boost federal revenue by 14% and bring the $1.8 trillion annual budget deficit closer to $1 trillion.
Even closing the tax gap by half would be a big improvement in the government’s budget prospects.
Yet the Republican approach to the IRS has been to deprive it of resources and keep it impotent. Nobody running a normal, solvent organization would ever turn down revenue it’s rightly entitled to. But part of the GOP strategy is to “starve the beast” and shrink government revenue so that the government itself must shrink for lack of funding.
It’s also an effort to protect the craftiest, and usually wealthiest, taxpayers from paying what they owe. The Yale Budget Lab estimates that the top 5% of earners account for 53% of the tax gap, or $386 billion worth of unpaid taxes per year. The bottom 70% of earners account for just 15% of the tax gap, or $107 billion in unpaid taxes.
Most workers in the United States get paid through an employer that withholds federal taxes, making it hard to cheat for most people living off a paycheck. Wealthier people have more income from investments, business revenue, asset sales, foreign transactions, and other sources that are less clear-cut — and therefore harder to tax than an annual salary or hourly wage. That provides numerous opportunities for creative accounting, aided by the armies of accountants and tax attorneys wealthy Americans employ.
The IRS has complained for years that it is badly outgunned in its effort to catch more tax evaders. In 2022, the Democrat-controlled Congress added $80 billion to the IRS’s 10-year budget to upgrade obsolete computer programs, hire more auditors, and beef up enforcement. That would have brought IRS funding back to where it was around 2010, before Republican funding cuts slashed its budget by nearly 20% in inflation-adjusted terms.
Republicans have been trying to rescind that extra IRS funding ever since, and now Musk seems to be applying the usual DOGE formula — staffing cuts and administrative chaos — to kneecap the agency in addition to whatever Congress does through legislation later this year.
Honest taxpayers, as a result, will get less bang for their buck, not more.
“You couldn't think of a more backward approach to government efficiency,” Daniel Hornung, a top economic aide in Joe Biden’s White House, said at a recent event. “Their approach has been to slash the workforce at the IRS, which, among other things, will bring in less tax revenue and worsen our fiscal outlook.”
The Trump administration claims to have cut the IRS staff by about 7,000 people so far. It may be aiming to cut as many as 50,000, from a total workforce of about 100,000 at the start of the year. The Yale Budget Lab estimated the effect on the federal budget in both scenarios.
Cutting 7,000 IRS staffers would save about $7 billion in personnel costs over a decade, but lead to $71 billion in foregone tax revenue. That’s $64 billion added to the national debt.
Cutting 50,000 staffers would save $45 billion in personnel costs over a decade while cutting the amount of collected tax revenue by $323 billion. That’s $286 billion added to the national debt. Reducing this logic to the absurd extreme would leave no tax collection agency, no government, and a John Galt-style society in which the Musks and Trumps of the world self-govern while everybody else fights for their scraps.
The IRS itself seems to expect lower tax revenue this year as DOGE hamstrings tax-collection efforts. The agency forecasts a 10% decline in collected revenue, according to the Washington Post. That would add $500 billion to the national debt per year.
Target IRS: Elon Musk listens to U.S. President Donald Trump speak in the Oval Office of the White House in Washington, D.C., U.S., February 11, 2025. (REUTERS/Kevin Lamarque/File Photo) ·Reuters / Reuters
Trump also needs fiscal savings, whether more revenue or less spending, to help finance the tax cuts and tax cut extensions likely by the end of the year. On their own, those are going to add $4 trillion to $10 trillion to the national debt, depending on which set of tax cuts Congress pursues and how long they’re in effect. It’s also in Trump’s interest to pare back the unprecedented issuance of Treasury debt, lest his presidency be the one holding the bag when a full-blown debt crisis metastasizes.
DOGE started out as an effort to apply businesslike efficiency principles to the federal bureaucracy but quickly transmogrified into a war on government that seems driven by Musk’s own grievances and biases. DOGE has dismembered “soft power” organizations such as the Agency for International Development, gutted the sorts of regulations Musk seems to loathe, and axed federal workers Musk seems to regard as useless. Lawsuits are flying, and it’s not clear which DOGE actions will ultimately stand.
For now, DOGE’s attack on the IRS seems to contravene Trump’s pledge to tackle the national debt and undermine Trump’s need for more revenue to finance his tax cuts. There might be a kind of cruel logic behind DOGE, but it has nothing to do with fiscal responsibility.
Maybe Trump and Musk will start to worry about that when there's a lot less government to be responsible for.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
