The Department of Government Efficiency is reportedly advocating for a 20% reduction in the workforce of the Internal Revenue Service, with the changes anticipated to be implemented by May 15, 2025.
According to various reports, this reduction would affect approximately 6,800 employees at the agency, in addition to the 6,700 probationary employees who have already been dismissed and the 4,700 IRS agents who received retirement packages.
However, a recent ruling from US District Judge William Alsup, which mandates that federal agencies reinstate probationary workers terminated under the Department’s cost-cutting measures, could disrupt the planned layoffs unless the ruling is overturned.
Former President Trump has committed to comprehensive tax reform in the country, which could include the possible elimination of the federal income tax and exclusive funding for the federal government through tariffs on international goods.
Former President Trump discussing his policy proposals with reporters in the Oval Office.
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Department of Government Efficiency advocates for cost-cutting measures
The Department of Government Efficiency, led by entrepreneur Elon Musk, is investigating ways to cut down the $36 trillion US national debt by significantly shrinking the federal bureaucracy and implementing cost-saving initiatives.
A notable suggestion put forth is to place all public expenditures on a blockchain to enhance transparency and reduce deficits.
On February 21, the Securities and Exchange Commission announced the reduction of its regional office directors to align with the administration’s cost-saving instructions.
Under the proposed reorganization, however, the regional offices located in major US cities would remain operational, and the SEC has recently submitted its budget proposal to Congress for 2025, requesting $2.6 billion.
The national debt of the United States has surged to over $36 trillion.
Discussions between Trump and Musk have suggested the possibility of distributing 20% of the savings from the Department’s initiatives to Americans in the form of stimulus checks or tax credits.
Research from a company specializing in accounting automation claimed that Trump’s proposal to abolish federal income tax could lead to an average saving of $134,809 per person throughout their lives.
Moreover, these lifetime tax savings could be as high as $325,561 per individual if other state-level wage taxes are also eliminated.
Despite these projections, there is skepticism surrounding the Department’s cost-reduction strategies, with US Senator Elizabeth Warren expressing strong criticism of Musk, Trump, and the overall initiative.
In January 2025, the Massachusetts Senator sent a letter to the Department advocating for increased taxation and federal spending to enhance government efficiency.
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