Commentary: Petersen Foundation warns against IRS cuts that risk trillions in lost revenue

In a commentary, the Peter G. Peterson Foundation argues that steep staffing cuts at the Internal Revenue Service will weaken tax enforcement, reduce federal revenues and drive deficits higher. The organization cites analysis from the Budget Lab at Yale estimating that a projected reduction of 22,000 IRS employees by 2025 could lower net federal revenue by $198 billion, while broader declines in taxpayer compliance could push losses to $1.9 trillion, placing ever-greater strain on nonprofits and service organizations as public funding continues to wither. The commentary notes the IRS lost more than 28,000 employees since January 2025, including auditors and customer service staff, even as the agency implements the myriad tax-law changes tied to 2025’s Big Beautiful Bill. The foundation emphasizes that increased IRS funding more than pays for itself, citing research showing every additional $1 spent auditing higher-income taxpayers can generate more than $12 in added revenue.