IRS Hackathon, IRS Staff Cuts, and The American Innovation and R&D Competitiveness Act of 2025
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Tax Policy/News:
April 6: DOGE plans now reportedly include an IRS ‘hackathon’
Elon Musk’s Department of Government Efficiency (DOGE) is planning to hold a “hackathon” next week to create a “mega API” for accessing Internal Revenue Service (IRS) data, reports Wired.
The API would move the data into a cloud platform, potentially a third-party one, to serve as the “read center” of the agency’s systems. DOGE’s plan includes gathering “dozens” of IRS engineers in DC to build the API, with third-party providers like Palantir involved. However, an IRS employee told Wired that the 30-day timeline is “not technically possible” and would “cripple” the IRS.
DOGE operatives Gavin Kliger and Sam Corcos are orchestrating the project. A March 14th letter from Senator Ron Wyden and others praised the IRS’s “rightful rejection” of DOGE’s requests to share data across the government. Sources suggest that understanding the IRS data DOGE is after “would take years” and that the operatives lack experience in government, taxes, or the IRS. DOGE has been moving through federal agencies since Trump’s inauguration, recently gaining access to data from the US Citizenship and Immigration Services.
April 4: IRS plans to cut up to 25% of staff, starting with closing its civil rights office, AP sources say
The IRS plans to cut as many as 20,000 staffers, up to 25% of its workforce, as part of layoffs that began on Friday. The job cuts will start with the IRS Office of Civil Rights and Compliance, which will be reduced by 75% through layoffs, with remaining workers absorbed into the agency’s Office of Chief Counsel.
The workforce reductions are part of the Trump administration’s efforts to shrink the federal bureaucracy through Elon Musk’s Department of Government Efficiency. The administration has closed agencies, laid off probationary employees, and offered buyouts through a “deferred resignation program.”
A Treasury spokesperson stated that staffing reductions are part of larger process improvements and tech innovations to allow the IRS to operate more effectively. The IRS started workforce reductions in February, notifying roughly 7,000 probationary employees with one year or less of service that they would lose their jobs.
However, a federal judge recently ordered those workers to be reinstated. In March, IRS employees involved in the 2025 tax season were told they could not accept a buyout offer until after the taxpayer filing deadline of April 15.
April 3: The tax change that blindsided tech firms may finally be reversed — but time is running out
A bipartisan bill reintroduced in Congress last month could offer long-awaited relief to small tech companies hit hardest by an obscure federal tax change.
The American Innovation and R&D Competitiveness Act of 2025 (HR 1990), introduced by US Reps. Ron Estes and John Larson, aims to restore the ability for companies to immediately take tax deductions on research and development costs, including software development labor.
This act would undo the controversial Section 174 change that took effect in 2022, which now requires businesses to amortize those costs over 5 to 15 years. The change has significantly impacted small software firms with limited cash reserves, leading to project cancellations and layoffs.
The bill, which sits in committee, has garnered support from industry groups and over 100 House members. Advocates believe a fix could come in time for this year’s tax filings, but legislative gridlock remains a challenge. Without the reversal, more companies may face foreign acquisition or closure.
April 2: Senate Republicans release budget blueprint with new tax cuts and a $5 trillion debt limit hike
Senate Republicans unveiled a new budget blueprint that includes $1.5 trillion in new tax cuts and aims to make President Donald Trump's 2017 tax cuts permanent. The plan uses a controversial accounting method called "current policy baseline" to score the cost of extending Trump's tax cuts at $0, which Democrats have criticized as "magic math."
The budget resolution also includes a $5 trillion debt limit increase. Senate Republicans are using the budget reconciliation process to bypass the 60-vote hurdle in the chamber and exclude Democrats from the process. The plan aligns with Trump's agenda on taxes, immigration funding, and other priorities.
Senate Majority Leader John Thune stated that the Senate parliamentarian has deemed the Budget Committee's substitute amendment appropriate for consideration under the Budget Act, though Democrats dispute this claim. The budget proposal opens the door to increased military spending and immigration enforcement funding.
Senate Minority Leader Chuck Schumer and other Democrats have condemned the plan, arguing that it prioritizes tax cuts for billionaires at the expense of health insurance, child hunger, and jobs. The budget resolution is expected to be adopted in the coming days to instruct committees to begin work on a massive bill to pass Trump's agenda.
Economic News/Policy:
April 6: Trump says he’s not backing down on tariffs, calls them ‘medicine’ as markets reel
President Donald Trump stated that he will not back down on his sweeping tariffs on imports from most of the world unless countries even out their trade with the U.S. Speaking to reporters aboard Air Force One, Trump said he wasn’t concerned about the massive sell-off in global markets, adding, “sometimes you have to take medicine to fix something.”
His comments came as global financial markets appeared on track to continue sharp declines once trading resumes Monday. Trump’s aides sought to soothe market concerns by saying more than 50 nations had reached out about launching negotiations to lift the tariffs. Trump emphasized that he wants surpluses or at worst, breaking even in trade relations.
The higher rates are set to be collected beginning Wednesday, ushering in a new era of economic uncertainty. Treasury Secretary Scott Bessent said unfair trade practices are not “the kind of thing you can negotiate away in days or weeks.” U.S. stock futures dropped on Sunday night, and Asian shares nosedived. Trump’s tariff blitz, announced April 2, fulfilled a key campaign promise as he acted without Congress to redraw the rules of global trade. Countries are scrambling to respond to the tariffs, with China and others retaliating quickly.
Top White House economic adviser Kevin Hassett acknowledged that other countries are “angry and retaliating,” but also coming to the table for negotiations. The new tariffs are hitting American allies and adversaries alike, including Israel and Vietnam. Commerce Secretary Howard Lutnick made clear there was no postponing tariffs that are days away. Several Republican senators have signed onto a new bipartisan bill that would require presidents to justify new tariffs to Congress. Trump’s government cost-cutting guru, Elon Musk, suggested a zero-tariff situation, but Trump disagreed, emphasizing that the European Union must pay the U.S. a lot of money on a yearly basis. Economist Lawrence Summers said Trump and his economic team are sending contradictory messages about reviving manufacturing while negotiating with trade partners.
April 4: Trump urges Fed to cut rates as tariffs cause stock plunge
President Trump urged the Federal Reserve to cut interest rates on Friday, criticizing Fed Chair Jerome Powell for allegedly refusing to do so for political reasons.
Trump’s call for rate cuts comes as new tariffs have caused stocks to plunge, with the Dow Jones Industrial Average down more than 1,000 points and the Nasdaq composite and S&P 500 index also down more than 3 percent.
In a speech shortly after Trump’s post, Powell warned that the new tariffs and their economic blowback would be larger than expected, leading to higher inflation and slower growth.
Powell also cautioned that the tariffs could cause both short- and long-term increases in inflation, which has remained above the Fed’s target level for months.
April 3: Trump announces sweeping new tariffs to promote US manufacturing, risking inflation and trade wars
President Donald Trump announced significant new tariffs on nearly all U.S. trading partners, including a 34% tax on imports from China and 20% on the European Union. These tariffs aim to boost domestic manufacturing but risk triggering broader trade wars and dismantling the global economy.
In a Rose Garden announcement, Trump described the global trade system as exploitative and declared a national economic emergency to levy the tariffs. The tariffs could lead to higher costs for middle-class essentials and disrupt international alliances.
Trump promised that factory jobs would return to the U.S., but his policies could cause an economic slowdown due to sharp price hikes. The tariffs, imposed without congressional approval under the 1977 International Emergency Powers Act, have faced criticism from several Republican senators and led to a sharp sell-off in U.S. stock market futures.
The average tariff rate charged by the U.S. will increase significantly, potentially leading many countries into recession. The new tariffs will be collected starting April 9, with a 10% baseline rate to ensure compliance. Trump's announcement has prompted countermeasures from trading partners like Canada and the European Union, and criticism from Democratic lawmakers. Despite the risks, Trump believes the tariffs will raise hundreds of billions of dollars annually in revenues and restore fairness to global trade.
April 1: Factory activity slumps as manufacturers brace for Trump tariffs
U.S. manufacturers are expressing concerns about the Trump administration's trade policies ahead of an anticipated announcement on tariffs. The Institute for Supply Management's (ISM) manufacturing purchasing managers index revealed that manufacturing activity contracted in March, continuing a 26-month downward trend.
Manufacturers of chemical products, electronics, metals, machinery, foods, and transportation equipment are worried about the impact of tariffs on their businesses. Some respondents noted slower-than-normal sales in Canada and concerns about Canadians boycotting U.S. products.
Limited tariffs already implemented by President Trump, including a 20-percent tariff on certain Chinese imports and select goods from Canada and Mexico, are affecting profits and orders. The National Federation of Independent Business's (NFIB) February survey showed high uncertainty among businesses, with confidence in economic growth fading. Federal Reserve Chair Jerome Powell mentioned that tariffs could delay progress on inflation, and the central bank is currently pausing interest rate cuts due to inflation and policy uncertainties.
Both the NFIB and ISM surveys noted recent inventory accumulation as businesses try to avoid tariffs. Consumer sentiment has also declined, with surveys from the New York Fed and the University of Michigan indicating increasing pessimism about financial conditions among households.
Energy and Environmental Policy/News:
April 7: US electricity demand will grow 50% by 2050, electrical manufacturer study finds
Driven by data centers and transportation electrification, U.S. electricity demand is projected to increase 2% annually and 50% by 2050, according to a study by the National Electrical Manufacturers Association (NEMA).
The analysis, completed by PA Consulting, anticipates a 300% growth in data center energy consumption over the next 10 years and a 9,000% growth in e-mobility power consumption through 2050. Improvements in energy efficiency will mute some potential demand gains, placing NEMA's projections "somewhere in the middle" compared with other recent studies.
NEMA President and CEO Debra Phillips highlighted the need for creative technology and policy solutions to meet the expected demand growth. The report calls for permitting and siting reform, tax certainty around incentives for grid technologies, and an all-of-the-above approach to energy resources, including natural gas, small modular reactors, and geothermal.
Energy storage will be key, with an estimated 1,100% growth in storage connected to the U.S. electricity grid over the next 15 years. Regional variations in electricity consumption changes are expected, with the Mid-Atlantic and Texas seeing the largest data center electricity demand growth through 2035, and the Northeast and West experiencing the largest electricity demand growth from EVs between 2035 and 2050.
April 1: Average person will be 40% poorer if world warms by 4C, new research shows
Economic models have systematically underestimated how global heating will affect people’s wealth, according to a new study that finds 4C warming will make the average person 40% poorer – an almost four-fold increase on some estimates.
The study by Australian scientists suggests average per person GDP across the globe will be reduced by 16% even if warming is kept to 2C above pre-industrial levels. This is a much greater reduction than previous estimates, which found the reduction would be 1.4%. Scientists now estimate global temperatures will rise by 2.1C even if countries hit short-term and long-term climate targets.
Criticisms have mounted in recent years that a set of economic tools known as integrated assessment models (IAM) – used to guide how much governments should invest in cutting greenhouse gas emissions – have failed to capture major risks from climate change, particularly extreme weather events. The new study, in the journal Environmental Research Letters, took one of the most popular economic models and enhanced it with climate change forecasts to capture the impacts of extreme weather events across global supply chains.
Dr Timothy Neal, of the University of New South Wales’s Institute for climate risk and response and the lead author of the study, said the new research had looked at the likely impact of global heating of 4C – seen by many climate experts as catastrophic for the planet – finding it would make the average person 40% poorer. This compared with about 11% poorer when using the models without enhancements. Previous economic models that “inadvertently concluded” even high levels of global heating would have only modest impacts on the global economy had “profound implications for climate policy”, Neal said.
Technology:
April 7: Shopify CEO tells teams to consider using AI before growing headcount
In a recent memo to employees, Shopify CEO Tobi Lütke announced a policy change requiring teams to demonstrate why AI cannot perform a job before requesting additional headcount and resources.
Lütke shared the memo publicly on social media, emphasizing the potential for autonomous AI agents to contribute to team projects. This policy is likely to attract controversy due to concerns about AI's impact on jobs, with a report from the United Nations' Trade and Development organization estimating that AI could disrupt over 40% of roles globally.
Other tech leaders, such as Klarna CEO Sebastian Siemiatkowski, have also expressed similar sentiments, highlighting AI's efficiency gains. Klarna's AI chatbot reportedly performs the work of 700 customer service agents, and Siemiatkowski has suggested that Klarna's workforce could eventually be reduced to 2,000 people. Shopify, which had around 8,100 employees as of 2024, laid off 20% of its staff the previous year and reportedly quietly laid off employees in its customer service division in January.
April 3: Trump’s new tariff math looks a lot like ChatGPT’s
President Donald Trump announced the White House’s latest trade policy, which includes a 10 percent baseline tariff on all imports into the US and higher rates on specific countries.
The immediate response was bafflement, as the tariffs seemed to be based on an oversimplified calculation that several major AI chatbots recommend. Economist James Surowiecki reverse-engineered the tariff pricing and found it could be recreated by taking a country’s trade deficit with the US, dividing it by their total exports to the US, and halving that number to get a “discounted reciprocal tariff.”
The White House objected to this claim but published a formula that looks similar to Surowiecki’s method. AI chatbots like ChatGPT, Gemini, Claude, and Grok consistently suggest this formula when asked for an easy way to solve trade deficits.
The bots caution that this approach could lead to substantial negative consequences, as real-world economic implications are far more complex. It is unclear if Trump’s team used an AI tool to generate the trade policy, but the world will be watching to see the impact of these tariffs starting April 5th.
April 2: Analysts: Trump tariffs ‘worse than the worst case scenario’ for tech investors
Analysts described President Trump’s latest slate of tariffs as “worse than the worst case scenario” for tech investors. Trump announced a sweeping 10 percent tariff on goods from all foreign countries, alongside higher tariffs on nations deemed the “worst offenders” when it comes to trade barriers.
Tech firms, such as Apple, Nvidia, and other chipmakers, could be particularly impacted by the hefty new tariffs on China and Taiwan, with the administration announcing a 34 percent tariff on Beijing and a 32 percent tariff on Taipei. Analysts from Wedbush Securities noted that tech stocks will be under major pressure due to worries about demand destruction, supply chains, and the China/Taiwan tariffs.
Apple produces most of its iPhones in China, and Nvidia and other chip companies have significant exposure to China and Taiwan supply chains. The White House emphasized that the tariffs are not intended as a negotiation tactic but are needed to boost domestic manufacturing.
Major tech stocks have already taken a beating this year, with Nvidia’s stock tumbling more than 20 percent, Google down more than 16 percent, Amazon falling nearly 11 percent, and both Apple and Microsoft down 8 percent. Meta, the parent company of Facebook and Instagram, has dipped about 2.5 percent, while Elon Musk’s Tesla has seen its share price plummet 25 percent.
For Fun:
April 3: How does the brain control consciousness? This deep-brain structure
Neuroscientists have observed for the first time how structures deep in the brain are activated when the brain becomes aware of its own thoughts, known as conscious perception.
The study, published in Science, focused on the thalamus, a region involved in processing sensory information and working memory. Researchers recorded neural activity in multiple brain regions, including the thalamus and the cortex, in participants undergoing therapy for severe headaches.
The participants were asked to move their eyes depending on whether they noticed an icon flash on a screen. The study found that the activity in the thalamus and prefrontal cortex was markedly different when participants were aware of the icon's appearance. The thalamus appeared to act as a filter, controlling which thoughts get through to awareness.
Previous animal studies support these findings, showing that cells in the cerebral cortex activated by sensory stimuli project down to deeper brain regions, including the thalamus. This study is one of the most extensive investigations of the role of the thalamus in consciousness, but further research is needed to fully understand its role.