Underfunding the IRS is not a neutral act but a policy choice that disproportionately benefits the rich. Auditing complex, high-value returns requires significant resources. A weakened IRS cannot effectively pursue wealthy tax evaders, creating a massive "tax gap" that functions as a stealth tax cut for the top earners.

The biggest tax cut isn't a legislative change but rather neutering the IRS's budget. The agency lacks the resources to audit the complex finances of the wealthy, incentivizing aggressive tax strategies and leaving hundreds of billions in legally owed taxes uncollected each year.

Taxing a specific industry like AI is problematic as it invites lobbying and creates definitional ambiguity. A more effective and equitable approach is broad tax reform, such as eliminating the capital gains deduction, to create a fairer system for all income types, regardless of the source industry.

Contrary to common belief, Arthur Laffer asserts that historical data shows a clear pattern: every time the highest tax rates on top earners were raised, the government collected less tax revenue from them. The wealthy use legal means to avoid taxes, and economic activity declines, ultimately harming the broader economy.

The primary barrier to realizing the benefits of new technologies like AI isn't the tech itself, but a societal structure Stripe calls the "Republic of Permissions." Non-market forces like regulators, committees, and courts create synthetic impediments that prevent economically superior solutions from being adopted.

The gutting of the IRS is not an ideological choice but a symptom of a fiscal crisis. With unmanageable debt, politicians cannibalize institutions for short-term electoral gain, as traditional tax enforcement can no longer solve the core problem.

Instead of focusing on changing the tax code, the most significant tax benefit for the ultra-wealthy has come from systematically cutting the IRS budget. This prevents the agency from auditing complex returns, effectively making the wealthy 'protected by the law, but not bound by it,' and creating a massive enforcement gap.

When a political party uses the IRS to punish enemies, it simultaneously shields its wealthy allies from audits. This allows them to evade taxes, creating a revenue gap. To fund the government, that money must be collected from lower and middle-income taxpayers, effectively creating a tax increase for them.

The vast majority of the 1.2 million licensed tax preparers focus on compliance, not proactive tax reduction. This specialization gap means most business owners miss significant legal savings because their accountant isn't trained to find them, focusing only on putting numbers in the right boxes on a form.