By J. Simpson
Editor’s note: The opinions expressed here are those of the authors. View more opinions on ScoonTV
The Internal Revenue Service (IRS) is one of the most complicated, divisive, and polarizing institutions in the United States. Before the early 20th Century, a federal income tax was essentially impossible, as it was classified as a “direct tax,” meaning it needed to be collected by the state government based on its population. Federal income taxes were even briefly considered unconstitutional between 1895 and 1913, based on the findings from Pollock v. Farmers’ Loan & Trust Co. This was later overturned by the 16th Amendment in 1913. Still, even then, it was basically non-existent. Fewer than 5% of Americans paid an income tax, and even then, it was only between 1% and 7% of their income.
This all changed in World War II, when the American government needed a huge influx of income. Patriotic sentiments were leveraged to lower the taxable income threshold, allowing tens of millions of American workers and low-income individuals to be taxed for the first time. Unfortunately, World War II ended, but the widespread federal income tax did not. This shifting, contradictory history places the IRS squarely in the crosshairs of individuals and organizations on all sides of the political spectrum. With all of the political upheaval and unrest of 2025, the end of the IRS feels more possible than it has in over 100 years. Could the end of the IRS be in sight and, if so, who would benefit?
The History of the IRS
The history of the IRS’s predecessors stretches back to the Civil War, when President Abraham Lincoln established the Commissioner of Internal Revenue in 1862 to manage the nation’s first income tax, a temporary measure to fund the Union war effort. While its operational mandate solidified after 1913, the agency’s capacity has historically been defined by its appropriations. For decades, the Bureau of Internal Revenue, later renamed the IRS, received consistent funding to manage the growing complexity of the tax code and the increasing volume of returns.
The IRS entered a period of steady decline in funding and staffing following the 2010 fiscal year. Between 2010 and 2021, the IRS budget was cut by nearly 20% in real terms, and staffing levels dropped to those not seen since the 1970s, even with the U.S. population and economy growing dramatically more complex. This lack of investment led to critical failures in taxpayer services, a substantial backlog of unprocessed returns, and, most critically, a dramatic loss of experienced, specialized auditors. This erosion of enforcement capacity directly contributed to an expanding “tax gap,” the estimated difference between legally owed taxes and those actually collected.
The most significant reversal of this trend came under the Biden administration when they passed the Inflation Reduction Act (IRA) in 2022. These reforms allocated nearly $80 billion in mandatory funding over ten years, a dramatic increase intended to counteract the long-term deterioration. The funding was distributed across several key areas: enforcement, operations support, business systems modernization, and taxpayer services. For Democrats, this was framed as a necessary investment to tackle the massive tax gap, which the Treasury Department has estimated to be in the hundreds of billions of dollars annually. The Congressional Budget Office (CBO) estimated that this increase in funding could raise hundreds of billions of dollars in net revenue for the government. Republicans fiercely opposed the measure, on the other hand, claiming the expansion was aimed at unleashing a flood of audits on middle-class families and small businesses, often warning of an imminent mobilization of 87,000 new agents.
Audit Debate and the Middle Class Dilemma
The political debate often centers on who the IRS primarily targets. Republicans argue the agency’s actions disproportionately harm the middle- and lower-classes, while Democrats argue the enforcement is necessary to hold the wealthy accountable.
The reality, according to IRS data and non-partisan analyses, is complex. Before the IRA funding, audit rates for millionaires and large corporations fell dramatically due to the agency’s diminished capacity. Auditing these entities requires highly trained, specialized staff – often lawyers and forensic accountants – and involves navigating complex legal structures, trusts, and multinational dealings, which is both time-consuming and expensive. The agency lacked the resources to pursue these sophisticated cases.
As a result, while the audit rates for the vast middle class remained the lowest overall, taxpayers claiming the Earned Income Tax Credit (EITC) – often lower-income working families – historically faced a higher audit rate than most middle-income groups. These audits are typically simpler; mail-in correspondence audits aimed at verifying eligibility for the credit. They are less costly and easier for an underfunded IRS to conduct, leading to a higher frequency in low-income brackets despite the low dollar value of each case.
This disparity fuels the core political disagreement. The average middle-class person relies on streamlined, online services like Tax Slayer or TurboTax to file, as their income is largely reported via W-2 forms, making compliance straightforward. The wealthy have sophisticated accountants and tax lawyers dedicated to minimizing liability through complex financial structures. The Democrats argue that a better-funded IRS is needed specifically to acquire the sophisticated talent and technology to audit these complex, high-net-worth returns, focusing enforcement on those most capable of evasion as a result. The Republicans argue that the sheer difficulty of auditing the rich means the agency will take the path of least resistance and increase audits on the middle class to demonstrate its productivity, validating their claim that the agency targets those least able to afford professional legal defense.
Who Benefits from a Larger or Smaller IRS?
The question of who benefits from a change in the IRS’s size perfectly illustrates the fundamental disagreement over the role of government enforcement. A larger, better-funded IRS primarily benefits two groups: government revenue and law-abiding taxpayers who believe in a fair system. By increasing audits on the wealthy and large corporations that utilize sophisticated tax evasion schemes, the tax gap is reduced, and honest taxpayers, including the middle class, are reassured that everyone is paying their legally mandated share. Crucially, a larger IRS also means improved Taxpayer Services, reducing the wait times and improving the process that frustrates ordinary filers.
A smaller, less-funded IRS primarily benefits taxpayers seeking minimal government intrusion and, critically, the wealthy and corporations most capable of exploiting the tax code’s complexity, however. A smaller IRS inherently lacks the resources and specialized staff to pursue complex, high-value tax evasion cases, effectively granting an enforcement reprieve to those with the means to hire high-powered accountants and legal teams. While budget cuts might reduce the low-level EITC correspondence audits, the cost in missing revenue from the top earners is exponentially greater, disproportionately shifting the compliance burden from the top to the bottom.
Political Chess Games
The political battle over the IRS often appears to be a high-stakes game of political chess. The move to drastically cut the IRS’s enhanced funding, or even propose its abolition, can be seen as a savvy strategy that forces the Democratic Party to actively defend an inherently unpopular institution.
For many Americans, regardless of their income, the IRS is associated with stress, complexity, and the obligation to pay taxes. By attacking the agency, politicians tap into a deeply ingrained public skepticism toward government bureaucracy and taxation. This strategy neatly pivots the debate away from the highly unequal compliance system. The defense of the IRS by Democrats is then framed as a defense of a large, expensive government bureaucracy, rather than a defense of comprehensive tax compliance and closing the tax gap on the ultra-rich. This tactic is potent because it reinforces anti-establishment sentiment, creates a powerful political symbol, and, most practically, hinders the agency’s ability to successfully audit the complex returns of the very wealthy, a demographic that often includes large political donors. Any minor or mismanaged audit of a middle-class citizen by the newly funded IRS is amplified as definitive evidence of the agency’s overreach.
The Practical Impossibility of Abolition
While “abolishing the IRS” makes for a compelling campaign promise, the practical reality of eliminating the agency under the current tax system is virtually impossible. The federal government collects over $5 trillion in annual revenue, overwhelmingly administered by the IRS. To abolish the agency, one would need to simultaneously replace the federal income tax entirely. This would require a constitutional amendment or the adoption of a radical alternative, such as a national sales tax, a flat tax, or a consumption tax. Economists note that replacing the income tax would necessitate an extremely high national sales tax rate, which would be highly regressive, disproportionately burdening lower- and middle-income Americans.
Even with an alternative tax system, an enforcement and collection agency would still be necessary. People and businesses do not voluntarily pay taxes at a 100% compliance rate; some form of enforcement body would be required to audit compliance, investigate fraud, and collect revenue. Abolishing the IRS would simply necessitate creating a functionally identical Bureau of Revenue under a different name.
In the end, the debate isn’t about the existence of a revenue-collecting agency, but its size, funding, focus, and transparency. The true choice lies between an underfunded agency that focuses on easier, high-volume audits of the poor and middle class – leaving the greatest tax evasion unchecked – and a robustly funded agency with the capacity to pursue tax non-compliance at every income level, including the multi-million dollar evasion schemes of the ultra-wealthy. The end of the IRS as an institution is a pipe dream without a revolutionary overhaul of the U.S. Constitution and its tax base. Its dramatic reimagining, however, remains entirely politically possible.
Curtis Scoon is the founder of ScoonTv.com Download the ScoonTv App to join our weekly livestream every Tuesday @ 8pm EST! Support true independent media. Become a VIP member www.scoontv.com/vip-signup/ and download the ScoonTv App from your App Store.
