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tax evasion
Tax Prosecutions Plummet to Lowest Level in Decades as Trump Guts Enforcement Efforts
"Decreasing criminal enforcement... would signal an indifference to cheating and insults the millions of honest filers who pay the taxes they owe," said one tax law expert.
Dec 10, 2025
President Donald Trump's administration has drastically slashed resources for enforcing tax laws, and the result has been a massive plunge in tax-related prosecutions.
A Tuesday report from Reuters found that federal tax prosecutions in 2025 fell to "their lowest level in decades this year," falling by 27% over the last year.
The report noted that the Trump administration has made "deep cuts to the Internal Revenue Service’s criminal investigative unit," and has also reassigned some agents who worked in the unit to focus more on immigration cases.
The Trump administration has even assigned more than 20 IRS agents in the agency's DC office to conduct patrols alongside city police officers as part of the president's purported plan to reduce crime in the capital city, Reuters reported.
Reuters also observed that the US Department of Justice closed its Tax Division, and that "a third or more of the criminal lawyers who worked there quit."
Sources told Reuters that the Trump administration explicitly told DOJ prosecutors earlier this year that tax prosecutions were not a top priority, and one source said that DOJ leadership under the second Trump administration was "very skeptical about white-collar crime and whether we should be doing those cases."
The report added that US attorneys' offices at the moment are unlikely to pick up the slack for enforcing tax laws given that DOJ records show "more than 1,000 lawyers have left US attorneys’ offices this year, roughly double the number who quit or were pushed out in previous years."
David Hubbert, a senior fellow at the Tax Law Center at New York University’s law school, told Reuters that these cuts would likely result in a surge in tax cheating.
"Decreasing criminal enforcement across all types of taxpayers would signal an indifference to cheating and insults the millions of honest filers who pay the taxes they owe," Hubbert explained.
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Musk's SpaceX Likely Paid 'Little to No Taxes' Despite Lucrative Government Contracts
Patriotic Millionaires, an organization that lobbies for higher taxes on the wealthy, said the report was a "reminder of how unfair our tax code is."
Aug 15, 2025
Although Elon Musk's space exploration company SpaceX has benefited over the years from several lucrative government contracts, it has largely avoided paying any taxes to the federal government.
The New York Times reports that SpaceX has "most likely paid little to no federal income taxes since its founding in 2002 and has privately told investors that it may never have to pay any."
The reason that the company has gotten away with paying practically no taxes, writes the Times, is that it takes advantage of a tax benefit commonly referred to as a net operating loss carryforward "that allows it to use the more than $5 billion in losses it racked up by late 2021 to offset paying future taxable income." This tax benefit was initially limited in its scope, but congressional Republicans and US President Donald Trump in 2017 scrapped its expiration date for all companies, thus letting SpaceX and other firms take advantage of it indefinitely.
Danielle Brian, the executive director of the Project on Government Oversight, told the Times that this tax benefit was intended to help struggling firms weather tough times to stay in business, but that it was "clearly not intended for a company doing so well" as SpaceX.
In its review of SpaceX's internal documents, the Times found that SpaceX had paid a small amount of taxes over the years, although none of them were to the federal government.
"In one document, the company said it expected to pay $483,000 in income tax to foreign governments and $78,000 in state income tax in 2021," writes the paper. "Separately, it reported paying $6,000 for income taxes in 2020 and 2021, but did not disclose if the payments were for federal, state or local governments."
What makes SpaceX's tax avoidance particularly noteworthy is its own dependence on the federal government for business. In 2020, the Times found, federal contracts accounted for nearly 84% of the firm's total revenues.
Patriotic Millionaires, a group of wealthy Americans who advocate for higher taxes on the rich, wrote on X that SpaceX's almost total lack of tax payments to the federal government was yet another piece of evidence about the tax system being rigged for the big corporations.
"SpaceX has secured billions in government contracts over the years," they wrote. "In return, it has likely paid... $0 in federal income taxes—and may never have to. Just in case you needed a pre-weekend reminder of how unfair our tax code is!"
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The Ultra-Rich Have Exploited Our Tax System Long Enough—Make Them Pay!
Funny how these same apologists for our richest don’t have much sympathy for ordinary Americans who lack the “wherewithal” to pay for medical care, adequate housing, and other necessities.
Mar 30, 2025
The most gaping loophole in our tax law? The tax-free compounding of gains on investments.
This classic loophole enables the two most lucrative inequality-driving income tax avoidance strategies. The first, buy-borrow-die, allows wealthy Americans to avoid income tax entirely on even billions in investment gains.
These wealthy need only hold on to their appreciated assets until death. What if they need cash before then? They merely borrow against the appreciated assets, typically at very low interest rates.
Are rich Americans, including billionaires, truly unable to pay tax on their investment gains before they sell the assets yielding those gains? Wanna buy a bridge?
The second avoidance strategy, buy-hold for decades-sell, lets wealthy investors pay a super low effective annual tax rate on investments that appreciate at high rates over long periods of time. These investors typically experience decades of compounding gains without taxation.
The effective tax rates involved in this second strategy won’t reach buy-borrow-die’s zero tax, but may in some cases get as low as a 4% effective annual rate. A 4% effective annual tax rate would have an investment with a pre-tax growth rate of 20% per year enjoying an after-tax growth rate of 19.2% per year.
Congressional apologists for the ultra-rich on both sides of the aisle regularly claim that their wealthy patrons should be entitled to endless tax-free compounding of investment gains. Without this tax-free compounding, the argument goes, our richest wouldn’t have the “wherewithal to pay” tax on their investment gains before their assets get sold. U.S. Sen. Ron Johnson (R-Wis.) invoked this tired canard at a recent Senate Finance Committee hearing.
Funny how these same apologists for our richest don’t have much sympathy for ordinary Americans who lack the “wherewithal” to pay for medical care, adequate housing, and other necessities. Average wage earners, under current law, can’t even wait until year-end to pay Uncle Sam their taxes. Those taxes come out of each paycheck, wherewithal to pay or not.
Are rich Americans, including billionaires, truly unable to pay tax on their investment gains before they sell the assets yielding those gains? Wanna buy a bridge?
Let’s start with the easiest case: a publicly traded investment that can be sold in smaller units, an investment in stocks, for instance. Say Rich, a wealthy investor, buys 1 million shares of Nvidia at $100 per share, and those shares, by year’s end, increase in value to $120 per share.
Our investor Rich now has a $20 million gain. If that annual gain faced a 25% tax rate, Rich would have a $5 million tax liability. To raise the cash to pay that tax, Rich could sell off 41,667 of his shares, leaving him with 958,333 shares, now worth just under $115 million.
That doesn’t seem very painful.
Now, let’s say Rich didn’t want to sell any shares. He could instead just borrow $5 million against the shares to pay the tax.
Or what if Rich had bought a parcel of land instead of Nvidia shares and, for whatever reason, having him borrow to pay tax on his annual investment gains didn’t turn out to be feasible?
Still no problem for Rich. For gains on illiquid assets, Rich could defer the payment of tax until he sold the assets, but the tax could be computed as if it accrued annually. How might this work? Say, for example, that Rich’s $100 million parcel of land grew at an annual rate of 10% for 20 years, at which point he sold it at its appreciated value of $672,749,995.
Had Rich paid tax at 25% on his gain each year, his rate of return would have been 7.5% per year, and after 20 years his investment would be worth $424,785,110.
The $247,964,885 difference between his sale price and the value of his investment with its actual rate of return reduced by the tax paid would be his tax liability upon sale. Payment of that amount would leave Rich with the same sum, $424,785,110, had he been able to sell a small share of his parcel each year, to pay the tax on his investment gain.
Put another way, Rich would be left with the same amount using this tax computation as he would if he sold his parcel each year, paid tax on the gain, and reinvested the remaining proceeds in another parcel.
And if Rich died before selling his parcel? His income tax could be determined for the year of his death in the same fashion as if he’d sold the parcel for its fair market value at the time of his death. Or, in the alternative, his inheritors could step into his shoes and pay the same tax when they sold the parcel as Rich would have had he survived and sold it at that time.
The bottom line: If we closed the tax-free compounding of investment gains loophole, some situations might exist where the immediate payment of tax on investment gains could pose a problem. But we can address those situations by deferring payment of the tax until investments get sold and accounting for the tax-free compounding in the determination of the tax.
These problematic situations, in other words, don’t justify leaving a gaping loophole in place.
So the obstacle to shutting down buy-borrow-die and buy-hold for decades-sell has absolutely nothing to do with ultra-rich investors lacking the wherewithal to pay taxes. That obstacle remains the politicians in Washington, D.C. who lack the wherewithal to summon the courage to make our rich pay the taxes they owe our nation.
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