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The Washington Post reported that unnamed IRS officials are projecting a huge $500 billion drop<\/a> in tax revenue this year due to DOGE’s cuts to enforcement. <\/p>\n I’m not buying that argument, and here’s why.<\/p>\n The IRS argues that if people think there’s less tax enforcement, they won’t pay up.<\/p>\n But audit rates are already super low – less than 1% overall.<\/p>\n So, would slightly reducing these already tiny percentages really cause a 10% revenue collapse?<\/p>\n No.<\/p>\n Here’s what most people don’t realize: <\/p>\n Compared to the rest of the world, Americans are very honest.<\/p>\n About 85% of taxes owed are paid voluntarily, without the IRS doing anything.<\/p>\n All their enforcement efforts only bump that number to 87%.<\/p>\n That said, if I were running DOGE, I wouldn’t start by cutting the government’s revenue-generating arm. <\/p>\n Instead, I’d invest in technology.<\/p>\n The IRS systems are ancient. This makes complex audits of the wealthy and big businesses super inefficient.<\/p>\n With proper tech investment, they could do more audits with fewer people through automation.<\/p>\n The IRS already does great when information is reported electronically, like with W-2s. <\/p>\n They can automate notices and adjustments based on that data. <\/p>\n On the other hand…<\/p>\n Here’s a troubling stat that could back up the idea that tax compliance will drop a lot:<\/p>\n An Intuit Credit Karma survey found that 17% of millennials<\/a> are considering not filing taxes this year, believing their audit risk is lower due to IRS cuts. <\/p>\n The psychological deterrent of enforcement might matter more than actual audit rates. <\/p>\n If people believe the IRS is vanishing, that perception alone could hurt compliance.<\/p>\n But a 10% drop?<\/p>\n I don’t think that’s backed by any evidence. And these IRS officials are just trying to protect their budget and their jobs by speaking anonymously to the press.<\/p>\n What we need isn’t more auditors. What we need is smarter systems that catch discrepancies automatically.<\/p>\n That would boost revenue without the huge price tag of traditional enforcement.<\/p>\n For more news and analysis like this, subscribe to The Accounting Podcast<\/a> wherever you get your podcasts.<\/p>\n<\/div>\n