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Former Treasury Secretary Lawrence Summers has warned that the Trump administration's efforts to downsize the Internal Revenue Service (IRS) could lead to a $1tn loss in federal revenue over the next decade. He said: "We are threatening the basis of our tax system, which is based on voluntary compliance," as he highlighted the potential for increased tax non-compliance. Approximately 20,000 IRS employees have opted for deferred resignations, exacerbating the agency's staffing crisis. Summers, now a Harvard University professor, noted that the downsizing could push many taxpayers to shift income to cash payments and engage in dubious transactions to evade taxes. He cautioned that the consequences of these changes could be severe, observing: "I don't think we've seen large consequences yet from all of this. But the risks are very big." The Budget Lab at Yale estimates that layoffs could result in a revenue loss of $159bn over ten years, potentially escalating to $1.6tn if non-compliance increases.
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