Is Elon Musk considering ‘deleting’ America’s Internal Revenue Service?

Elon Musk is prepared to cut the administration with his scissors.

The Internal Revenue Service (IRS) is where he begins.

US President-elect Donald Trump has appointed the SpaceX CEO to head the Department of Government Efficiency (DOGE) , an informal advisory body that will try to reduce government spending.

Here’s why Musk wants to “delete” the IRS.

What is the IRS?

The Internal Revenue Service (IRS) is part of the US Department of the Treasury.

Then-President Abraham Lincoln established the IRS in 1862 as the Commissioner of Internal Revenue to oversee the nation’s first federal income tax, which was authorised to pay for the Civil War.

When the tax was first imposed, it was three per cent on income above $600 and five per cent on all income over $10,000.

The IRS is in charge of processing tax returns, conducting audits, providing support to American taxpayers, and enforcing and administering federal tax laws.

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Individual income tax and corporate income tax comprise the majority of the IRS’s work.

All individuals and businesses pay taxes to the agency, which also provides tax refunds to those who overpay their income taxes.

Along with managing gift taxes, excise taxes, and inheritance taxes, it has also been entrusted with allocating numerous “social safety net programmes” for energy, health care, education, and other areas.

Will it be ‘deleted’?

On his microblogging platform X, Elon Musk questioned users about whether the IRS ought to be “deleted.”

The question comes as his and Vivek Ramaswamy's DOGE make an effort to reduce government spending and cut down on bureaucracy.

This unusual query came in after the department requested for $20 billion to continue operating.

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Whether the IRS’s budget should be “increased,” “kept the same,” “decreased,” or “deleted,” the billionaire posted.

The IRS just said it wants $20B more money.

Do you think it’s budget should be:

— Elon Musk (@elonmusk) November 27, 2024

Amazingly, 60.6 per cent of the more than 212,000 respondents chose the deleted option, suggesting that they are unhappy by this monetary request.

Merely 3.9 per cent of them stated that the funding should not change.

About 5.6 per cent of voters supported an increase, while 29.9 per cent supported a cut to the budget.

Musk then said, “Well, the public has made their view clear.”

Additionally, a user asked him to audit the IRS, to which he replied, “Gonna happen.”

Why is the IRS asking for $20 billion?

Wally Adeyemo, the deputy secretary of the Treasury Department, has advocated for the IRS to get billions of dollars in financing in the forthcoming full-year budget discussions, which Congress must approve by December 20.

“The IRS is going to potentially have to make dramatic decisions about stopping hiring and starting to budget for a world in which they don’t have $20 billion, which will stop a lot of their progress,” Adeyemo told reporters on Tuesday.

He added, that if this doesn’t happen, there is a “risk they would run out of enforcement money at the current pace sometime in fiscal year 2025.”

The Wall Street Journal claims that congressional Republicans have included a $20 billion IRS enforcement decrease in the federal spending package.

In the impending budget struggle, Adeyemo requested Congress to provide the $20 billion in IRS funding, arguing that without it, the national deficit would increase by almost $140 billion due to thousands of fewer audits for large firms and the wealthy.

The leader of the nonprofit group that promotes fiscal restraint, the Committee for a Responsible Federal Budget, joined Adeyemo on the call and supported his appeal.

“Given the fiscal situation we deeply hope there is no backsliding in the coming months and years with rescinding, diverting, repealing any of the revenue that is going effectively into the IRS to help with tax collection,” Maya MacGuineas, the president of CRFB, said according to Newsweek.

Her team reversed President Biden’s “Directive Limiting Use of IRS Enforcement Funding” on Wednesday, identifying $20 billion in possible savings.

Over a decade, the IRS received an additional funding of $80 billion under President Biden’s Inflation Reduction Act, which the White House says is “dedicated to closing the tax gap by specifically pursuing tax compliance by the wealthiest tax evaders."

However, the IRS and other government agencies were kept at the same level of financing by temporary budget measures implemented in September of this year. This could change if lawmakers pass a year-through budget at the end of this year.

The IRS must retain $20 billion of its planned Inflation Reduction Act funding under the current continuing resolution, which may be extended into the new year and Trump’s second term.

What are Musk’s future plans?

Additionally, Musk has been in discussions with authorities to develop a free tax filing app, according to the Wall Street Journal.

Tax services like H&R Block and Intuit, the company that makes TurboTax, have seen their stock values plummet by eight per cent and five per cent, respectively, due to the possible launch of such an app.

Many view the app concept as a continuation of the IRS’s new Direct File system, which took effect in February.

Taxpayers can file their taxes for free using the system. This year, it has already been utilised by more than 100,000 taxpayers.

Moreover, posts from DOGE’s and Musk’s X accounts imply that he wishes to streamline the tax code.

With inputs from agencies