Trump’s Second Term: An IRS Under Siege?
The Internal Revenue Service (IRS) faces a potentially turbulent future under a second Trump administration. Personnel choices, public statements by Trump and his appointees, and policy blueprints from influential conservative think tanks all signal a significant shift in the agency’s trajectory. This shift could extend far beyond the IRS itself, potentially impacting voluntary tax compliance and the nation’s fiscal health.
Trump’s history of controversial tax statements, including his assertion that avoiding income tax "makes me smart," sets the stage for a potentially adversarial relationship with the agency. This stance is reinforced by his choice for IRS commissioner, former Representative Billy Long, a proponent of abolishing the IRS and replacing the income tax with a national sales tax. Other key figures in Trump’s circle, such as Vivek Ramaswamy and Russell Vought, echo this sentiment, advocating for significant cuts to the IRS’s budget and accusing the agency of being "weaponized" against ordinary taxpayers. These accusations often clash with reality, as IRS audit rates remain low, affecting a small percentage of individual taxpayers.
The proposed changes go beyond budget cuts. Trump is expected to replace current IRS Commissioner Daniel Werfel, whose term extends to 2027, with Long. Long’s background lacks significant tax expertise, raising concerns about his ability to lead the complex agency. Furthermore, there are concerns that Trump may reinstate an executive order making it easier to fire civil servants, potentially paving the way for replacing career IRS employees with political loyalists. This potential politicization of the IRS workforce is further fueled by proposals like those in Project 2025, a conservative blueprint for a Trump government, which calls for replacing career officials with political appointees in key positions, including the head of IRS enforcement.
The implications of these changes are far-reaching. A drastically reduced budget, coupled with a potential exodus of experienced staff, could cripple the IRS’s ability to effectively administer the tax code. The ripple effects could extend to tax compliance, as taxpayers may be less inclined to voluntarily comply if they perceive the IRS as an enemy or a tool of political retribution. This could lead to a decline in tax revenue, exacerbating the nation’s fiscal challenges.
The immediate future of the IRS hinges on several key decisions by the incoming administration. Will Trump replace Werfel mid-tax season, potentially disrupting the filing process? How quickly will political loyalists be installed in key IRS positions? How deep will congressional Republicans cut the agency’s budget, impacting its ability to function? Will the agency’s modernization efforts, including upgrades to its computer systems and the development of a direct file program, be allowed to continue? And perhaps most importantly, will the IRS be used as a tool for political retribution, as Trump has hinted?
The long-term consequences of these decisions remain uncertain, but the potential for disruption is significant. The rhetoric surrounding the IRS, portraying it as an enemy of the people, could erode public trust and undermine the principle of voluntary tax compliance. This, in turn, could have profound implications for the nation’s fiscal stability.
The question remains: how will taxpayers respond to a president and administration that openly vilifies the nation’s tax collector? Will they view the IRS as a legitimate institution or a tool of political oppression? The answer to this question will determine the future of the IRS and, to a large extent, the future of the nation’s fiscal health. While some may dismiss the attacks on the IRS as mere campaign rhetoric, the actions of the Trump administration will have real consequences for the agency, taxpayers, and the nation’s finances. The coming months will reveal the true extent of the changes and their impact on the American tax system.
