The Fiscal State Under Siege: Why People Hate the IRS, and Why You Should Care

How Trump, DOGE, and Project 2025 Are Turning the IRS Into a Tool of Authoritarian Rule

Editor’s Introduction: Hello readers, it's Nathan Tankus and I am very happy to bring to you the first in a long multi-part series on the IRS spearheaded by Anisha Steephen. Anisha worked for the United States Treasury from 2021 through January  2025. They concluded their tenure around the time Fiscal Assistant Secretary David Lebryk was pushed out of government. Because of their specialization in economic and tax issues, they were the perfect person to take on investigating what has been going on in the Internal Revenue Service and providing the big picture understanding Notes on the Crises readers need about what’s going on.  

Anisha Steephen (they/them) is a nationally recognized expert in domestic economic policy and mission-driven investing, with over 15 years of experience advancing public policies that address structural inequality. Anisha served as the first Senior Policy Advisor for Racial Equity at the U.S. Department of the Treasury.  Anisha can be found on bluesky ‪@asteephen.bsky.social‬. If you are a current or former IRS employee with knowledge of  DOGE’s data  access details and role of contractors such as Palantir  please reach out to Anisha on signal at their username as2795.01 

Let’s begin with full disclosure: I love the IRS. And I love taxes. From mid-2021 through January 2025, I worked at the U.S. Treasury. Among many roles during my time there, I spent some time in the Office of Tax Policy, where I helped implement the tax provisions of the Inflation Reduction Act. This is the first in a Notes on the Crises series that I, along with others, will be tackling about the IRS and taxes. In the weeks ahead, we’ll explore the agency transformation and the House Republicans’ disastrous reconciliation package that is unfolding right now. But first, we have to understand what taxation is — and why it’s always been about power. What’s below is an overview, then we will go in depth on many aspects as the series evolves. 

Project 2025 and the Structural Takeover

If you’ve read Project 2025, you know there was a plan. The authors laid out a blueprint to bring the IRS under greater executive control by infiltrating political appointees, gutting the civil service, and pushing an ambitious slate of regressive tax policies through Congress.

Well, it’s happening.

The first public signal of chaos at the IRS came on February 17 when the Associated Press reported that DOGE was seeking access to the IRS’s Integrated Data Retrieval System—one of the most sensitive (I would argue the most sensitive) databases of personal information in the federal government. Privacy experts and lawmakers immediately sounded the alarm that this was no ordinary tech integration. It was a structural takeover.

Since then, the chaos has only multiplied to include leadership purges, workforce cuts, and a DOGE-hosted IRS “hackathon.” These aren’t isolated incidents. They reflect a strategic campaign to transform the IRS into a politically partisan enforcement mechanism and a lever of executive power. 

This goes far beyond just administrative disorder that is expected with any administration change, which would be concerning enough on its own. This is a systematic takeover of the federal government’s fiscal core. What’s at stake is not only the architecture of how the state sees, collects, and allocates public resources, but whether a functioning democracy can survive without it.

Why the IRS Matters

The IRS sits at the center of the federal government’s fiscal architecture. As the financial nexus between the state and its residents, it facilitates the movement of trillions of dollars through the Bureau of the Fiscal Service. It enforces tax law, detects fraud, and has the authority to audit the ultra-wealthy to crack down on tax evasion that enables them to become even richer. The IRS does not write tax law, but enforces the code passed by Congress. Confusing the IRS with the architects of tax policy lets lawmakers off the hook. Its role is administrative, not factional, and that’s precisely what makes it so powerful. 

But its role goes deeper. The IRS is not merely a tool of extraction: it can be a mechanism for redistribution, stabilization, and democratic investment. In Fiscal Year 2024, the IRS collected $4.9 trillion in taxes, which comprised 96% of total government revenue and was equivalent to 17% of GDP that year. When governed with public purpose, the IRS powers the fiscal machinery that sustains democracy itself by facilitating the spending that funds housing, healthcare, climate action, education, and income support that reaches millions. For example, In 2021 the IRS delivered over $100 billion in expanded Child Tax Credit payments. 

At the beginning of this piece, when I say I love the IRS and taxes, I'm referring to these core social responsibilities, not to institutional permanence or bureaucratic tradition. The IRS is a vital institution, but it is not above critique. Studying it is essential, yet we must resist the impulse toward institutional reverence. This is especially important now, as agencies like the IRS grow increasingly susceptible to authoritarian encroachment. These institutions are not immutable moral authorities; they are only as democratic as the political forces that shape and control them.

To control the IRS is to control the operating system of the American state. That is precisely what makes this moment so dangerous. DOGE isn’t simply trying to dismantle the agency. It is trying to capture and rewire the IRS into a vehicle for executive dominance, privatized tax enforcement, and algorithmic control over public infrastructure. 

This is not about eliminating bureaucracy, fraud, waste, or abuse. It’s about repurposing it to serve a new model of power and breaking the chain of democratic accountability between Congress, the law, and the public.  

What Taxes Actually Are (And Why They’ve Always Been About Power and Control)

Taxes are often portrayed as technocratic minutiae of statecraft—matters best left to accountants, economists, and congressional scorekeepers. But in truth, they are the lifeblood of state power.

In theory, taxes facilitate the provision of public goods and services: everything from national defense and infrastructure to schools and our social safety nets. Taxes come in many forms, including income taxes (on wages, salaries, and capital gains), consumption taxes (such as sales and excise taxes), property taxes, and corporate taxes. Taxes may be direct or indirect, progressive or regressive, visible or embedded in prices. No matter how they’re designed, taxes define the boundaries between the state and its people and the contours of political life. They determine who owes what to whom, and who gets to decide.

Throughout history, taxation has functioned not merely as a means to help resource the government but as an instrument of visibility and control. Political theorist James C. Scott argued that states are often more motivated to tax in order to render societies legible in order to govern. Tax systems compel individuals to make themselves known to the state: declaring income, disclosing assets, and proving eligibility for social benefits. In doing so, they map economic life and assign political meaning to it. Taxes and tax policies create the conditions under which labor is counted, whose wealth is protected, and whose lives are monitored, audited, or excluded.

Political economists have long recognized this dual function. Adam Smith, in The Wealth of Nations, emphasized that the sovereign’s survival depended on the ability to raise taxes efficiently and equitably. Marx saw taxation as one of many battlefields where class conflict played out over the distribution of social surplus. In the turmoil of the twentieth century, John Maynard Keynes emphasized taxation was- or could be- a tool for macroeconomic stabilization.  Piketty, working in the twenty-first century, warns that progressive taxation is essential to preventing the return of entrenched oligarchies. Legal realist Robert Hale, writing in the 1920s, argued that all income and property rights are upheld through coercive legal rules—and therefore taxation is not an intrusion on freedom but a foundational mechanism by which the state structures economic life. Even libertarians, though begrudgingly, concede taxation’s necessity to facilitate minimal state functions. These views span ideological terrain, but converge on one point: taxation is not merely math. It is a political infrastructure. It is how the state exercises power, asserts authority, and signals its priorities. In short, it is governance in its most distilled form.

The State’s Obligation to Its People 

Taxation defines what the state can see and, by extension, what it can control. In a democracy, that visibility is supposed to be reciprocal. If the state can see you, you should be able to shape what the state does in return. That mutual recognition is the only viable foundation of our social contract with the State. The American Colonists in their revolution understood this intuitively. Their demand was not against taxation itself, but against taxation without representation—a refusal to cede fiscal power to distant, unaccountable authorities. The colonists clashed with their British imperial counterparts and insisted that taxation be tethered to the democratic voice.

And yet, U.S. tax policy has long prioritized extraction over equity. In its early years, the republic relied heavily on regressive tariffs—taxes on imported goods that disproportionately burdened consumers, especially the poor, while shielding elites. For example, the 1790s federal revenue system was primarily concentrated on duties for goods like sugar, salt, and textiles, staples that made up a large share of working-class consumption. Meanwhile, wealthy landowners and merchants, who benefited from domestic production and trade, paid little by comparison.

Efforts to create a more equitable fiscal order, like those proposed by Thomas Paine, were largely ignored. Paine, recognizing the dangers of concentrated wealth, advocated for what we would now call a wealth tax: a 100% marginal tax on estates above a certain threshold. In his view, taxation was not just an instrument of state power—it was a means to dismantle economic hierarchy and protect political equality. The Civil War briefly disrupted the tradition of regressive taxation. The Union introduced the first federal income tax, an extraordinary expansion of the Treasury’s infrastructure and fiscal capacity. The ratification of the Sixteenth Amendment in 1913 made that authority permanent, embedding the principle that those who benefit most from the economic system should contribute proportionally to its upkeep. In theory, it marked a new democratic fiscal compact.

But in practice, that compact has always been contested by the elite. The U.S. tax system has long operated as a machine of selective visibility. Today, working-class Americans are subject to invasive scrutiny. They must document their income, family structure, and eligibility for basic social benefits like the Earned Income Tax Credit. Meanwhile, the wealthy conceal assets in trusts, shell corporations, and offshore accounts. This asymmetry is not accidental: it is a structural feature of the fiscal state, built on political choices about who must be accountable and who is allowed to remain invisible. Taxation, in this system, reinforces hierarchies of obligation where the poor are tethered to bureaucratic surveillance, while the rich rig the system to float above it.

That class betrayal extends beyond the collection of taxes to how the Federal Government’s budget is designed. While working-class communities are urged to see tax paying as a civic virtue, they receive little in return. The essential services that taxes are (in theory) meant to make possible—public education, housing, and healthcare—remain systematically underinvested. At the same time, public dollars finance militarized policing, mass incarceration, and global warfare. For many Black and brown Americans, paying taxes means giving up purchasing power while governments, corporations, and the wealthy use this country’s fiscal apparatus to sustain a bureaucratic machinery of broader oppression and marginalization. The fiscal system doesn’t just deepen state control over daily life—it entangles citizens in state violence, without offering them protection in return.

This is why debates over tax policy are never just about money, and why more people should be paying attention. They are about visibility, legitimacy, and power—about who the government chooses to see, to trust, and ultimately, to protect or to punish. The IRS, then, in its role administering tax policy, is not and has never been a neutral bureaucratic entity. It is the institutional expression of political economy—a mechanism that enforces who must justify their presence in the fiscal order. Its failures reflect political choices, but so do its successes. When aligned with democratic goals, the IRS can function as a pillar of economic justice, making visible the invisible, delivering benefits directly to the people, and ensuring that those who extract the most from society contribute their fair share.

Taxation is therefore not just a tool of technocratic administration; it is the terrain of democratic struggle. And while that struggle has always been fraught, today it is perilous. 

The IRS and Its Current Political Transformation

The IRS, as the institution that we know, took shape during the Civil War, but its modern incarnation grew alongside the rise of the 20th-century administrative state. As federal responsibilities expanded, so did the need for an agency capable of managing the government’s most powerful claim over its citizens: the power to tax. Over the decades, the IRS became both an indispensable and a deeply resented bureaucratic punching bag for anti-government sentiment. Though often blamed for the tax system’s outcomes, the IRS does not write the rules—it enforces the tax code passed by Congress. This administrative role makes it structurally nonpartisan, yet politically vulnerable.

The IRS is not just another federal agency. It is supposed to enforce tax laws impartially based on statutes passed by Congress. That mandate was tested—and violated—during the Nixon administration. In the early 1970s, President Nixon ordered the IRS to audit his political opponents, civil rights activists, and journalists, weaponizing the agency for personal and ideological retaliation. The resulting scandal led to the creation of Section 7217 of the Internal Revenue Code, which explicitly prohibits executive branch officials, including the president, from interfering in IRS audits or administration. This firewall was designed to safeguard the agency’s independence and, by extension, the democratic legitimacy of the tax system itself.

However, the assault on the IRS did not end with Nixon. In the decades that followed, it became a central target of conservative movements intent on dismantling the federal state. The Reagan era marked a turning point. As the gospel of small government and supply-side economics took hold, efforts to defund, discredit, and destabilize the IRS intensified. The 1990s brought relentless anti-tax rhetoric, and the 2010s delivered defunding and institutional decline. Between 2010 and 2022, Congress slashed the IRS budget by over 20%, leading to the loss of more than 20,000 employees (including auditors, investigators, and IT specialists) as basic customer service collapsed under the weight of chronic understaffing.

In that same period, enforcement against the wealthy all but virtually disappeared. According to economists Emmanuel Saez and Gabriel Zucman, the top 1% of U.S. earners evaded roughly $160 billion in taxes annually.  Meanwhile, audits of low-income taxpayers, especially those claiming refundable credits like the Earned Income Tax Credit, surged. A 2023 Quarterly Journal of Economics study, using IRS data from 2010 to 2018, found that Black taxpayers were audited at nearly five times the rate of non-Black taxpayers. This wasn’t because they were more likely to commit fraud, but because their returns were simpler and cheaper to audit. During years of budget cuts, the IRS leaned on algorithms that prioritized efficiency over fairness. The result was a classist and racialized audit and enforcement system built for speed and to protect the wealthy. 

The Biden administration hoped to reverse course by restoring the IRS’s capacity to serve the public. The Inflation Reduction Act of 2022 secured nearly $80 billion in new funding aimed at modernizing technology, rebuilding the workforce, and ensuring that tax enforcement was applied to the wealthy as well as the poor. The New York Times recently reported that the IRS upheld Biden’s pledge to increase audits but only on the wealthy. Those efforts have now largely been halted.

These decades of targeting the IRS weren’t just an attack on one agency. They were an attack on the state’s ability to govern fairly. A well-resourced IRS is more than a bureaucratic necessity; it is democratic infrastructure. It enables the equal enforcement of the law, the redistribution of wealth, and the delivery of public goods. Fiscal fairness becomes impossible when that capacity is gutted, and democracy becomes performative. The IRS wasn’t neglected by conservatives: it has been meticulously redesigned to concentrate power and wealth along lines of class and race. Its mission was retooled to be less a guardian of the public interest and more a servant of market discipline. 

And today, that project is entering a new and far more dangerous phase.

Trump, DOGE,  and the New Model of Fiscal Control

Under the Trump administration, DOGE has aggressively intervened in the IRS by seeking access to sensitive taxpayer data, orchestrating mass layoffs, and eliminating public-friendly programs like Direct File. They don’t want to just dismantle the IRS. They want to further rewire it, transforming a civic institution into a political instrument. In this vision, taxation is no longer a shared obligation but a mechanism of ideological enforcement. Surveillance becomes the method, and loyalty to the president the metric. This transformation is rooted in the logic of new public management—a technocratic framework that reshapes public institutions to resemble private firms: lean, automated, data-driven, and detached from democratic accountability. 

This shift doesn’t just weaken the IRS. It bypasses the democratic infrastructure that’s supposed to govern it. What was once a chain of accountability—from lawmaking to enforcement to public benefit—is now being rerouted through executive command and algorithmic control. Under this model, the IRS ceases to be a steward of fiscal democracy and instead morphs into an engine of information extraction: surveilling the public, enforcing hierarchy, and concentrating power.

The consequences are already visible: the IRS’s agreement to share confidential taxpayer data with ICE has raised alarms about privacy and the agency's role in enforcement beyond taxation; and the threatened revocations of nonprofit status for universities, climate organizations, and racial justice groups—justified under the guise of fiscal scrutiny—are not neutral acts of enforcement. They are party-focused interventions, using the tax code to intimidate critics and constrain dissent. 

We’ve seen this before, and it should scare us. In countries like Hungary and Rwanda, governments have turned tax authorities into instruments of repression—not by banning civil society outright, but by burying it in audits, compliance demands, and legal ambiguity. Bureaucratic coercion becomes a substitute for overt censorship. The United States is now testing the contours of that same strategy: deploying regulatory pressure to erode opposition, cloaking political retaliation in administrative form, and transforming fiscal policy into a weapon of ideological discipline.

What’s also being lost in all of this is not just IRS institutional expertise or workforce capacity. It’s the legitimacy of the social contract: the idea that taxation is a collective democratic function. DOGE’s approach echoes a system where data is extracted not to serve the public, but to entrench private and executive power. In this framework, the IRS no longer upholds civic duty, but instead enforces obedience. Public authority remains, but democratic accountability disappears.

If You Control the Tax Code and the IRS, You Control the State and The People

This isn’t just bureaucratic reshuffling. It’s a battle over the very structure of American democracy. The IRS, as the engine of fiscal governance, is being gutted, rewired, and weaponized. While Congress still (in theory) formally holds the power of the purse, control over how tax laws are enforced and against whom is increasingly shifting to the executive branch. And the tax code, once a tool for potential shared investment, is being further entrenched as a shield for elite impunity.

If a sitting president can direct the IRS to investigate political enemies, revoke nonprofit status from dissenting institutions, or selectively enforce tax law to reward loyalty, the agency no longer serves the public. It serves power. The slow hollowing of the IRS through funding cuts, staff attrition, and the erosion of norms yields the same result: a weakened institution unable to enforce the law, uphold equity, or hold the powerful to account.

And when that happens, the disparities baked into our fiscal system deepen. The rich, already shielded by armies of tax lawyers and offshore vehicles, become even more invisible to enforcement. Meanwhile, the working class, especially Black and brown taxpayers, are subject to increased scrutiny and bureaucratic punishment. When Nixon overstepped, Congress stepped in. But today, a deeply polarized legislature, decades of executive aggrandizement, and a judiciary increasingly deferential to presidential authority have eroded those checks. Now the stakes are higher, not just because of the power being wielded, but because of whom that power targets and whom it protects.

We are no longer just watching a system decay. We are watching it be consolidated to serve private power, silence dissent, and reverse the very idea of democratic taxation. It’s a constitutional breakdown. If the IRS falls, we won’t just lose an agency; we’ll lose one of the last institutional expressions of democratic obligation. Taxation is not just how we keep a number of key infrastructures running—it is how we declare what we value, who we protect, and who must answer to the public. The IRS reflects that social contract, however imperfectly, and not without deep bias. But unlike some other federal institutions, its mandate remains tenuously anchored in public law and congressional oversight. It is one of the few places where the struggle over fiscal accountability is still active and, for now, structurally possible.

We don’t need to defend what the IRS has been. We need to fight for what it could be: a mechanism of equity, not control by the elite. And accountability, not surveillance. But if we allow it to collapse—or worse, to be captured for authoritarianism—we may wake up in a country where taxation still exists, but democracy does not.