As millions of Americans raced to file their taxes by the April deadline, the nation’s wealthiest quietly stood to gain from a plan that could hollow out the Internal Revenue Service and open the floodgates to unprecedented levels of tax evasion. Under a proposal advanced by the Trump administration and backed by Elon Musk’s Department of Government Efficiency, the IRS could lose half of its workforce, paving the way for an additional $30 million per day in unpaid taxes by the ultra-rich, according to a new analysis released by Oxfam America.
The plan to cut roughly 50,000 IRS employees—about half the agency’s total workforce—threatens to dismantle the government’s ability to enforce tax laws, particularly for high-income individuals and corporations. The analysis draws on projections from the Yale Budget Lab, which found that such dramatic reductions in IRS capacity would result in $395 billion in lost federal revenue over a decade, with $110 billion of that attributed directly to increased noncompliance by the wealthiest 1 percent.
“While the rest of us dutifully file our taxes, ultra-wealthy tax cheats drain over a half a billion a day from the public coffers,” said Rebecca Riddell, Oxfam America’s senior policy lead for economic and racial justice. “By seeking to gut the IRS, President Trump and Elon Musk would make it harder to fight poverty but even easier for the very richest taxpayers to avoid paying what they owe. This would undoubtedly be great for billionaire tax cheats but bad for everyone else.”
The Trump administration’s efforts to slash IRS staffing are already underway. Through DOGE—the Department of Government Efficiency—the administration has pushed a wave of layoffs that began with the firing of approximately 7,000 IRS workers, most of whom were involved in compliance and enforcement. These mass firings have sparked legal challenges, with one federal judge ordering the reinstatement of thousands of affected workers, but the administration remains committed to its proposed reduction in force, which would shrink the agency to levels not seen since the 1960s.
Oxfam’s report warns that the impact of these cuts extends far beyond bureaucratic inconvenience. If implemented, the plan would effectively allow wealthy individuals and corporations to treat paying taxes as optional. The Yale Budget Lab estimates that the loss of IRS enforcement capacity would enable the top 1% to steal an additional $110 billion in taxes over the next decade. That figure does not account for the likely rise in noncompliance that experts believe would result from the collapse of audit deterrence—a shift that could increase revenue losses to $2.4 trillion over the same period.
The wealthy already benefit from significant advantages in the tax system. A 2021 analysis found that the 400 richest households in the U.S. paid an effective federal income tax rate of just 8.2 percent, lower than many middle-class workers. Income sources like business profits and rental income, which are common among high earners, are far less transparent and subject to verification than wages, making them ripe for abuse. The top 1 percent alone are responsible for nearly 30 percent of unpaid federal taxes, according to the Budget Lab. That amounts to about $205 billion per year—or $562 million every single day—that is lost due to noncompliance at the top.
“President Trump and Elon Musk’s IRS cuts are part of a broader plan to further rig the tax system to favor billionaires and corporations,” Oxfam stated in its April 2025 issue brief. “Congress should not only invest in the IRS but also reject efforts to have ordinary people pay for tax handouts to the ultra-rich.”
IRS audits are a crucial mechanism for ensuring tax compliance, but current patterns in enforcement show a troubling bias. Due to limited resources, the agency has focused disproportionately on lower-income households, particularly those claiming the Earned Income Tax Credit. These audits are cheaper and easier to conduct, but they fail to capture the high-value tax evasion occurring among wealthy filers with complex financial arrangements. Recent studies show that every $1 spent auditing the top 0.1 percent of earners yields $6.29 in direct revenue—a return on investment that does not account for the added benefit of general deterrence.
Despite these returns, enforcement efforts are being systematically dismantled. The Inflation Reduction Act of 2022 had initially allocated over $45 billion to improve IRS enforcement. In under a year, that funding helped the IRS recover more than $1 billion from rich tax dodgers. Yet since then, Congress has rescinded the majority of those funds—including $1.4 billion in 2023, $20.2 billion in 2024, and another $20.2 billion this year—undermining what had proven to be a highly effective investment.
The implications extend beyond enforcement. Reduced IRS staffing affects customer service and delays refunds, disproportionately harming working-class and low-income taxpayers. The agency’s efforts to expand access to services like Direct File—a free tax filing tool—are also at risk. Even in its pilot phase, Direct File saved nearly 141,000 taxpayers more than $5.6 million in preparation fees. If scaled nationally, the tool could save taxpayers up to $8 billion annually.
“Without enforcement, the tax code would be nothing but words on paper,” the Oxfam brief warns. For billionaires with the means to employ legions of tax lawyers and accountants, the dismantling of IRS enforcement turns tax compliance into a matter of personal choice.
As Trump and Musk continue to advocate for aggressive reductions to the IRS, lawmakers are weighing proposals that would extend the 2017 Tax Cuts and Jobs Act—a law that delivered an average tax break of $252,300 to the top 0.1 percent, compared to just $70 for the bottom 20 percent. Critics say these proposals represent not just fiscal irresponsibility but a deliberate reshaping of the tax system to entrench inequality.
Ultimately, slashing IRS enforcement funding is more than an administrative change—it is a transfer of wealth from the public to the powerful. With billions in lost revenue, working families may face slower refunds, cuts to critical programs, and higher tax burdens to make up for what the ultra-rich refuse to pay.
“Corporations and the wealthy primarily benefit from the ongoing attacks on the IRS. Low-income and marginalized communities will likely bear the cost of decreased funding and staffing,” concludes the Oxfam America Brief.
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