The Billionaire Tax Cut You’ve Never Heard Of
Slashing IRS enforcement wasn’t about saving money, it was a deliberate decision to stop collecting it from the people who owe the most.
The difference between what Americans owe and what the IRS collects on time is called the Tax Gap. It was $696 billion in 2022.
That’s not a rounding error. That’s nearly 3% of GDP. Enough to significantly narrow the deficit without raising rates or slashing services. All we’d need to do is enforce the tax code.
For a moment, it looked like we might.
The Inflation Reduction Act allocated $80 billion over ten years to rebuild IRS capacity — auditors, tech, enforcement. According to the Yale Budget Lab, that investment would have generated $637 billion in revenue.
Larry Summers and Natasha Sarin projected that simply restoring IRS enforcement to historical norms could net over $1 trillion in the next decade.
But the funding was gutted. Quietly, surgically, and with bipartisan complicity. In the name of compromise, we defunded the only agency tasked with holding the powerful accountable.
It was the most regressive tax policy of the last 50 years disguised as cost-cutting.
Lower and middle-income Americans are easy to audit. Their returns are simple. Their income is visible. But the tax code is no longer built for simplicity — it’s become a maze of 74,000 pages, up from just 400 a century ago.
The wealthy can afford guides: lawyers, accountants, shell structures. Everyone else is on their own.
When we slash the IRS, we aren’t saving money. We’re choosing not to collect it from the people who owe the most.
Roughly $381 billion of the tax gap comes from individual income taxes. $111 billion from unpaid employment taxes. $80 billion from underpayments. $53 billion from non-filers. One study found the top 1% of earners are responsible for nearly 30% of unpaid taxes, largely because their income flows from complex or opaque sources that avoid third-party reporting. In other words, this isn’t a mystery. We know exactly where the money is.
But we don’t. The audit rate has collapsed from 3% in 1960 to just 0.36% today — a 90% drop. Not because fraud disappeared. Because we stopped looking. And because some very rich people made sure we stayed blind.
It’s a vicious feedback loop: the more complex the economy gets, the harder it is to enforce the rules. The more we neglect enforcement, the more it pays to exploit complexity. A dollar spent on audits returns $7 in revenue, yet every budget fight seems to frame IRS funding as wasteful or oppressive. As if letting billionaires ghost their tax returns is somehow the price of liberty.
AI could help — not replace agents, but supercharge them. It can sift millions of returns for anomalies, flag high-risk patterns, and even assist with complex casework. That would free up human staff for more sensitive tasks: field audits, appeals, taxpayer assistance. The Government Accountability Office has said as much. But none of it matters if we don’t want enforcement in the first place.
We’re gutting the fire department during wildfire season. Not because we lack water. Because the fire isn’t in the rich part of town.
This isn’t oversight. It’s policy. The tax gap is a feature — not a bug — of a system increasingly designed to shift burdens downward. What we call “deficit politics” is often just code for a transfer of obligations: from capital to labor, from complexity to visibility, from those who can hide to those who can’t.
If we’re serious about deficits, we know what to do. But if we’re serious about protecting wealth, we also know what to defund. We’ve made our choice.