The IRS has shrunk. So has public trust in tax fairness.
Mark Lennihan/AP/File
Washington
As this year鈥檚 Tax Day arrives, Americans are anxious about their finances 鈥� and also skeptical about whether the wealthiest taxpayers are shouldering their fair share of the burden.
Driven by new cuts enacted by Congress, many households are getting tax refunds averaging about 11% higher than last year, only to see much of the money disappear at the gas pump in higher fuel prices.
And while Americans are enjoying the new tax breaks, rising numbers of people believe they are paying more than their fair share; 60% feel that way now, up from 51% in 2019, the Pew Research Center.
Why We Wrote This
Taxpayers are frustrated over the perception that the wealthy are not paying their fair share. Despite government spending reductions that partially offset tax cuts, experts warn that new tax provisions will expand federal deficits.
A top frustration, according to the same poll: The feeling that some wealthy people are paying less than they should. A large majority 鈥� 4 in 5 people 鈥� said this bothers them 鈥渁 lot鈥� (61% of respondents) or 鈥渟ome鈥� (another 21%).
Our package of charts with this article tells that tale. The frustration over fairness outweighs other big concerns, such as tax-system complexity, though that鈥檚 a big worry, too, as anyone wrestling with last-minute questions today might attest.
For the nation, the larger story is that, however little people like to pay taxes, the revenue appears to be needed. In fact, overall projected tax revenue continues to fall short of covering the rising costs of everything from national defense and interest on the debt to popular programs including Social Security. Health care entitlements are expanding in cost even as last year鈥檚 One Big Beautiful Bill Act put some curbs on Medicaid, the health insurance program for low-income Americans. Other safety net programs also faced cuts in the bill.
Despite those reductions in government spending, finance experts say the law鈥檚 larger tax cuts will expand federal deficits in the coming years.
Some federal spending cuts are also hitting where it might hurt the budget most: on tax collection itself.
The IRS鈥� staff has declined by more than 25% since last year. Already, research from the Budget Lab at Yale University suggests that in taxes owed are not paid on time. That disparity, without supervision, is likely to grow.
鈥淭his tax gap is highly responsive to the resources IRS is given for enforcement,鈥� the Budget Lab says in .
Rising strains on U.S. households
But what鈥檚 most on American minds at the moment is their own pocketbooks.
As the U.S. war against Iran prompted a surge in oil and gasoline prices worldwide, an index of consumer attitudes fell sharply in April. The RealClearMarkets/TIPP Economic Optimism Index declined to 42.8 from 47.5 in March. A reading below 50 represents negative sentiment.
Last year鈥檚 tax law might be easing the strain for some. Even as it offered tax breaks for wealthy taxpayers and corporations, the act also included several tax-cut provisions affecting working Americans 鈥� eliminating taxes on overtime wages and up to $25,000 in tips, and increasing the standard deduction.
Overall, the American tax code is progressive, meaning that the effective tax rate rises with income. But the anti-poverty group Oxfam, citing research by various organizations on how the rich capitalize on loopholes in the tax code, says 鈥淏illionaires in the U.S. often pay a lower tax rate than teachers and nurses.鈥�
Will your return get an April 15 postmark?
As many taxpayers race to meet the April 15 filing deadline for personal income taxes, the software firm TurboTax offers one more piece of advice: Don鈥檛 assume that dropping your return in a mailbox on Wednesday will ensure your return will be counted as filed on time.
U.S. Postal Service practices have been changing, and an item collected from a box on Wednesday might not get the needed April 15 postmark.
鈥淣ow, the postmark may be a day or more after you mailed it,鈥� TurboTax posted last week.
To avert problems, the best solutions include e-filing, using certified mail to establish the filing date, or dropping your return off at a post office as early as possible.