CSPAN - Washington Journal Richard Rubin
Aired: 2026-04-15
Duration: 09:59


=== Why People Want to Pay Taxes (08:56) ===

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[00:00:49]  Welcome back to Washington Journal.
[00:00:51]  We're joined now by Richard Rubin.
[00:00:52]  He is U.S. tax policy reporter for the Wall Street Journal.
[00:00:56]  Richard, happy tax day.
[00:00:58]  Happy tax day.
[00:00:59]  I guess it depends on if you're going to get a refund or not.
[00:01:02]  Right, if you're happy.
[00:01:03]  But most people do.
[00:01:04]  We're thinking about 70% of people who've been filing so far are getting refunds.
[00:01:09]  So I think it's for most people happy tax day.
[00:01:12]  And how are those refunds looking as compared to previous years?
[00:01:17]  So they're a bit larger.
[00:01:18]  They're 10, 11% larger on average than we've seen in the past.
[00:01:22]  And it's important to think about this in a couple dimensions.
[00:01:25]  It's not just the refund size that matters because you've got people who are paying less than they would have otherwise because of the new tax law.
[00:01:33]  And what's happened is some people went from paying, owing with their tax return to owing less or from owing to a small refund.
[00:01:43]  So we've seen that average refund come up $350 or so, 10, 11%.
[00:01:48]  We also have people who've gone, say, from owing $800 to getting $200.
[00:01:52]  And so there's, you know, this is money that's going out to people because they're getting all of the breaks, the extensions of tax provisions that otherwise would have been expired, but then also the new tax provisions for tips and overtime and seniors.
[00:02:07]  Well, let's talk about enforcement because you wrote an article for the Wall Street Journal called America's New Tax Mantra, quote, the IRS isn't going to catch me.
[00:02:17]  So what is happening with IRS enforcement?
[00:02:21]  Right.
[00:02:21]  So I guess we should preface this by saying, like, we're not at all advising people to not pay their taxes, right?
[00:02:26]  But what's happening is IRS enforcement is smaller, significantly smaller than it was 12 to 15 months ago.
[00:02:32]  So we had this big ramp up under the Biden administration where they gave the IRS more money and the IRS added more people in collections and audit.
[00:02:42]  And the Trump administration came in and dialed that back pretty significantly, both by getting rid of probationary employees, some of the people that the Biden administration had just hired, and then also by offering those buyouts, the deferred retirement for federal employees.
[00:02:56]  And you had the IRS had been saying for years that it had so many people who were at or near retirement age, and a lot of people took that.
[00:03:04]  So the IRS went from about 103,000 employees in January of 2025 down to closish to 70,000 now.
[00:03:13]  And what we've seen is, you know, in audits of very high-income people with people with incomes of $10 million or more, those went down 9% last year, on track to be down another 39% this year.
[00:03:26]  We've had audits of large partnerships, complex partnerships that the IRS have been trying to ramp up scrutiny of, things like private equity firms.
[00:03:34]  Those are also down.
[00:03:36]  So what's the Trump administration's rationale for decreasing IRS enforcement?
[00:03:43]  So their argument is basically that they want the government to be smaller, right?
[00:03:48]  This is why they shed federal workers.
[00:03:51]  There's been Republicans oppose the IRS expansion in the first place, warning that it would be too burdensome on taxpayers, on small businesses in particular.
[00:04:01]  And that's part of what's driven this.
[00:04:05]  And then you've got the administration arguing for further reductions in the budget that they're proposing now for fiscal year 2027.
[00:04:12]  So I want to show you a portion of your article about this.
[00:04:18]  And this gives some of the numbers so people can kind of follow along.
[00:04:22]  So what you say is this.
[00:04:23]  The cutbacks will be costly for the government's bottom line and expand budget deficits.
[00:04:29]  The administration's own IRS budget document acknowledges that chasing scufflaws generates more money than it costs.
[00:04:37]  The IRS workforce reduction so far would cut an estimated $46 billion in federal spending over the next decade and reduce revenue collections by $643 billion.
[00:04:49]  That's according to the budget lab at Yale, a nonpartisan center run by former Biden administration officials.
[00:04:55]  So it would seem, Michael, that the math is definitely in favor of more enforcement.
[00:05:01]  If you're approaching it from that government bottom line, for sure.
[00:05:04]  And like we said, the administration's own budget says lost revenue opportunities for the United States, return on investment for additional enforcement spending, reductions cost the U.S. in the bottom line.
[00:05:17]  That Yale estimate is a pretty big return on investment estimate.
[00:05:20]  The Congressional Budget Office, the administration have differing numbers, but the direction is all the same, which is basically that if you spend more on enforcement, those people will go find non-compliant taxpayers, whether that's people who just haven't filed tax returns and then get nudged to do so and penalized for not doing so, people who owe more because they claim deductions or credits that they weren't eligible for, those kinds of things.
[00:05:46]  That's what tax enforcement does is make sure that people are following the law.
[00:05:51]  If you've got a question for Richard Rubin of the Wall Street Journal, you can start calling in now.
[00:05:55]  Republicans are on 202-748-8001, Democrats 202-748-8000, and Independents 202-748-8002.
[00:06:04]  So as far as compliance rates, what's the percentage of Americans that actually pay all the taxes that there are due?
[00:06:16]  Yeah, the IRS estimates that of the taxes that are owed, the Americans pay about 85% of them of the number, not people, but the number, 85% of taxes owed on time.
[00:06:28]  And then another 2% is actually from direct enforcement.
[00:06:31]  So the actual enforcement revenue that comes in isn't really that large in the grand scheme of things for the government.
[00:06:37]  But of course, knowing that that enforcement is out there is part of what keeps that voluntary compliance rate as high as it does at 85.
[00:06:44]  And what people, you know, there's two things, a few things that drive that compliance rate.
[00:06:49]  One is that people want to follow the law, right?
[00:06:51]  People want to do their civic duty.
[00:06:52]  They want to pay their taxes.
[00:06:54]  By and large, not true of everybody, but in large part, people want to pay their taxes.
[00:06:58]  Two people know, particularly wage earners, know that the IRS has information about what you made.
[00:07:06]  So if you're a W-2 wage earner, you know that your employer has sent the IRS, say, a form at the end of the year that says you made $92,000.
[00:07:14]  You're not going to write $74,000 on your tax return.
[00:07:17]  They will send you a letter and then you'll have to pay.
[00:07:20]  So that kind of information and the ethic of tax compliance that we have in the country and have had for a long time are what keep that up.
[00:07:28]  And then the enforcement actual and then the enforcement threat of deterrence are what.
[00:07:33]  But at a certain point, if that deterrence goes down, compliance goes down, right?
[00:07:39]  If you feel like you're not going to get caught at whatever it is.
[00:07:43]  Yeah, there's two pieces of it.
[00:07:46]  One is you feeling like you might not get caught and you can say you had a $1,000 office furniture expense for your business.
[00:07:53]  Maybe you just put an extra zero on it.
[00:07:55]  Again, not advising that.
[00:07:58]  Or you overstate how much you donated in clothes to Goodwill or whatever it is that you're kind of pushing the envelope on.
[00:08:08]  So yes, you might feel like you're not getting caught.
[00:08:10]  The other thing is that part of what drives compliance is the sense that everybody else is complying.
[00:08:16]  So it's this very much a cultural expectation that if, and a worry that if you think that other people are getting away with something, that maybe you can get away with something too.
[00:08:27]  And so that's part of what drives this cycle.
[00:08:30]  And that's what some people in the tax system are concerned about is that you start eroding over time.
[00:08:36]  It doesn't happen overnight at all, but you start eroding some of that voluntary compliance if there's a sense that you can get away with things.
[00:08:43]  Before we take calls, I want to ask you about AI.
[00:08:45]  The Trump administration has said that they want to use artificial intelligence to flag which returns need to be audited.
[00:08:52]  How is the IRS using AI now and how could that change?

=== Prospecting for Change with Less (01:02) ===

[00:08:57]  They're ramping it up.
[00:08:58]  And they're trying to do it in a way that respects the tax privacy laws that they have that can't have an AI that's roaming outside of the IRS systems necessarily.
[00:09:09]  But I think that's the basic idea is to be more efficient in terms of case selection, case identification.
[00:09:15]  Because for the IRS and for taxpayers, one of the worst situations is they open an audit on you and you spend a lot of time, the IRS spends a lot of time, you spend a bunch of money hiring a CPA and paying somebody, and then they come and say, oh, actually everything's just fine, right?
[00:09:32]  So what they're trying to do is prospect for cases that are going to yield some sort of change and direct the shrunken resources they have into the right place.
[00:09:43]  And I think they're relatively early in that, but they say they're making some good progress with the idea that essentially you can do, if not more with less, maybe the same with less.
[00:09:52]  All right, let's talk to callers.
[00:09:53]  We'll start with Lester in Washington, D.C. Democrat, you're on the air, Lester.
[00:09:57]  We'll lead this here to take you live now to House Democratic Leaders.