Donald Trump is proposing a 14.1 percent cut in the IRS’s budget next year. This is incredibly dumb, for four reasons:
1. It won’t save money. To the contrary, this move worsens the budget deficit. That’s because every dollar spent by the IRS to collect taxes generates $4 in unpaid taxes.
2. It worsens the federal budget deficit. The current estimate of unpaid taxes per year is almost as large as the federal government’s annual budget deficit.
3. It widens inequality. Since most IRS audits are of high-income people, the real beneficiaries of Trump’s move are the wealthy, more of whom will now be able to skirt their duty to pay taxes.
4. The IRS is already understaffed. The number of individual tax return audits fell last year to its lowest level since 2004, and enforcement levels were already down by nearly 30 percent from 2010.
Donald Trump hates the IRS and has spent years battling it. There’s reason to think he doesn’t even want to pay his own taxes. But this is no reason to explode the Federal Budget Deficit and give another windfall to the rich.