Two Cheers for Extended Tax Cuts and an IRS in Chaos
It’s not the reform we need, but it’s welcome relief from ravenous and unpopular tax collectors.
With Tax Day rapidly approaching, I can't be the only person who chuckles over reports about layoffs and top officials quitting at the Internal Revenue Service (IRS). "Oh, that should put them off their game," I think to myself. I'm equally pleased to see Congress moving to extend tax cuts even while knowing that the federal government really needs to balance its books. After all, the feds have never shown much willingness to cut spending even as they burn through every dime they collect and more. The fact is that I hate taxes and the system that collects them, and so do most Americans.
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Most of Us Agree That Taxes Are Too High
According to a Gallup survey published this week, "when asked about the amount of federal income tax they have to pay, 59% of Americans say it is too high, 38% about right and 2% too low."
A March WalletHub survey put the percentage saying their current tax rate is too high at 66 percent. Thirty-one percent said it's just right and 3 percent wanted to be taxed more.
These results aren't unusual. Gallup has tracked public opinion on taxes since 1956. Except for a few brief periods, including during the COVID-19 pandemic when too many people foolishly bought into the idea that government was looking out for them, majorities have always picked "too high."
The distaste isn't confined to federal income taxes. In January 2024, two-thirds of respondents told A.P.–NORC pollsters that federal income taxes are too high, while 7 in 10 said the same about local property taxes, and 6 in 10 voiced the same opinion of state sales taxes. Last week, 57 percent of those surveyed by Reuters/Ipsos opposed the import taxes (tariffs) which currently dominate headlines.
Americans (Kind of) Want To Pay Less for a Smaller Government
What's interesting is that Americans understand that opposing high taxes requires tradeoffs, and they say they're willing to make them. According to that same A.P.–NORC poll finding widespread agreement that we're overtaxed, "half say they would prefer having fewer government services if it meant reducing their bill. One-third would keep their taxes the same in exchange for the same services, and 16% would opt to increase taxes for more services."
That's similar to the majority of Americans (55 percent in 2024) who say year after year that "the government is trying to do too many things that should be left to individuals and businesses," according to Gallup. Like the belief that taxes are too high, more have consistently held to the position that government should do less than have advocated for an expanded role except for brief periods, such as during the pandemic. At least in the abstract, Americans seem to accept that if they want to pay a smaller chunk of their paychecks to the government, they must ask less of it.
Whether that holds once you get into details is another issue. Too many people like the idea of smaller government in the abstract but also want it to spend more in areas that cost a lot, like Social Security, Medicare, defense, education, border security, and other pet projects that immediately run up huge price tags. It's impossible to cut the size and expense of government without paying serious attention to those big-ticket items. The contradiction here is a big part of why it's much easier to get tax cuts through Congress than to even try to balance the budget by cutting back on what government does, beyond the usual nibbling around the edges inherent in hunts for "waste," "fraud," and "abuse."
But, if we can't easily get the government to cost less, for now we can cheer for congressional moves to keep federal income tax rates from jumping higher—even knowing that, without large cuts in government spending, we have a looming day of reckoning with the federal addiction to deficits and debt. The tax cuts in the 2017 Tax Cuts and Jobs Act (TCJA) are expiring unless Congress acts to extend them. After much wrangling, both the Senate and the House have now done so, likely sparing Americans additional pain in their future tax bills (the pain of a bankrupt government will be dealt with, whether anybody likes it or not, at a later date).
Welcome Relief From an IRS in Chaos
Also offering some relief is evidence that things are a little chaotic at the IRS. Even as the tax-collecting agency is preparing to mug Americans to support an institution and activities that many of us would rather leave to wither, its top officials are headed out the door. "The acting head of the Internal Revenue Service and other top officials are quitting the tax-collecting agency after it struck a deal this week to share data with federal agents on migrants living illegally in the United States," Nathan Layne and Kanishka Singh of Reuters reported April 8.
The dispute is the result of a conflict between old arrangements to keep government data in silos and the Trump administration's focus on border control and immigration. Officials uncomfortable with data sharing are expressing their displeasure by leaving. They'll eventually be replaced by officials of the Trump administration's choosing, but the turnover comes as millions of tax returns are being filed.
Turnover is also a fact of life for the rank and file at the IRS. They're receiving reduction in force notices—word of pending layoffs—that will reduce the staffing of the tax agency by as much as 25 percent. "IRS went on a hiring spree under President Biden," according to Government Executive, and the layoffs are meant to trim its bloated ranks. For awhile, at least, that means a little confusion for the federal government's designated muggers.
Reductions in workforce mean fewer tax collectors to conduct intrusive audits of Americans. Those inquisitions are already less common than in the past, and according to Ben Blatt of The New York Times, "a decrease in staffing would inevitably lead to fewer audits." The Biden administration's IRS hiring spree was intended, in part, to increase the frequency of audits—especially, we were told, for the "rich." But tax collectors inevitably shied away from people who could fight back and targeted lower-income Americans. A tax-collection agency with less ability to put the screws to us over taxes that Americans despise is good news.
Still Waiting for Real Reform of the Bloated Government
There's more to real reform than preserving tax cuts and hobbling tax collectors, of course. At some point, Americans will have to address the large gap between what most are willing to pay for government and the large role many want that government to play (often in conflict with their expressed preferences) if we're to get deficits and debt under control. It would be even better if we could all make our own choices, so we're not stuck with whatever the majority picks.
But so long as Americans and their supposed representatives in government are unwilling or unable to make hard choices, we'll settle for a little relief in the form of lower tax rates and an IRS in chaos.
