Friday October 14, 2022
12:30-1:30 p.m.
Meeting Both In-Person and by Zoom
Dampeer Room, Second Floor of Kelvin Smith Library*
Case Western Reserve University
Dear Colleagues:
You may have noticed that Republicans have been running attack ads against Democratic candidates such as Tim Ryan – or, rather, “Taxing Tim Ryan” – claiming they voted to send an “army of IRS agents” (or enough to fill a football stadium) to harass middle class taxpayers, including to increase collections by about $20 billion. The ads refer dishonestly (sorry, there is no better word) to provisions in the “Inflation Reduction Act” that provide a nearly $80 billion increase in funding for the Internal Revenue Service over ten years. Of this, just under $46 billion is designated to increase enforcement, e.g. more audits, with the rest for operations support and other aspects of customer service, which might reduce processing backlogs, enable more people to get help on phones, and possibly even stop filling the cafeteria at the IRS facility in Austin, TX, with file folders.
The Congressional Budget Office estimated (with what the Congressional Research Service rightly called substantial uncertainty) that the spending for more enforcement is likely to increase tax collections by about $204 billion over a ten year period.
At one level this is a simple political battle. Republicans have been attacking the IRS for years, both because that is popular and because crippling tax collection would help “starve the beast” of the federal government. As a result, IRS funding has declined, relative to the size of the economy, for a long time. After the deficit reduction legislation of 2011, spending adjusted for inflation fell by 20% from FY2010 to FY2018, with personnel falling by 22 percent. Many Democrats have wanted to increase spending because the ”tax gap” – the nearly half a trillion dollars per year that is estimated to go uncollected – seems to offer a chance to reduce deficits and pay for more programs without voting to increase specific taxes. Democrats have seen this especially as a way to collect more from people with higher incomes, while Republicans have sought to present this as an attack on average voters even though the estimates they use rather contradict that. After all, $20 billion is only a tenth of $204 billion.
But behind the political battle there are a host of important issues. The first is who actually is evading how much in taxes (and how well can we tell)? A second is how well more extensive enforcement should work – presumably richer people, especially, have ways to resist. A third is which kinds of evasion to look for – what is the “low-hanging fruit” and what targets might offer the most “bang for the buck?” Are some of the most important kinds of evasion particularly difficult to catch? A fourth is how easy it will be for the Biden administration to look like it isn’t going after “the middle class.” For example, Treasury Secretary Yellen ordered the IRS not to use any new resources to increase the share of audits on households or businesses earning less than $400,000 per year. But one has to figure that one point of audits is to find people who are claiming to make less than that but are actually earning more, so how would that work? A fifth is simply how long it would take to fix an IRS that not only has faced severe funding constraint but is working with (in Information Technology Time) ancient systems that require major updating. And we all know how hardware and software installations often blow up.
In short, behind the political claims lurk very substantive questions about one of the core activities of any government. We are very fortunate to have as a colleague Tim Fogarty, who is not only a leading expert on accounting education and the accounting profession but also teaches the core course on the Income Tax and has been publishing research on the “tax gap.” We’re sure to learn a lot about the reality behind the campaign rhetoric.
In-Person and Virtual Attendance
In order to make it easy for people to protect themselves and still participate, the meetings are accessible on Zoom. Participants can register for each meeting in the same way they did for the past two years. The link is posted below.
This “dual delivery” remains a work in progress. Please be patient with any glitches. The ways we can set up video and audio to work for both people in the room and on Zoom are not perfect.
The discussion begins at 12:30 p.m., but the room should be open no later than Noon. We try to have beverages and refreshments set up soon after that. Participants should be able to sign on to Zoom also by Noon. But please remember not much will be happening online until the talk begins at 12:30 pm. Please also remember to show identification when entering Kelvin Smith Library.
Zoom participants should speak up when asked for questions or comments, or submit thoughts through Zoom’s chat function. Please keep yourself muted until you are choosing to speak.
Each week we will send out this newsletter with information about the topic. It will also include a link to register (for free) for the discussion. When you register, you will automatically receive from the Zoom system the link to join the meeting. If you do not get the newsletter, you should also be able to get the information each Monday by checking http://fridaylunch.case.edu/. Then if you choose you can use the contact form on that website to request the registration link.
This week’s Zoom link for registration is:
https://cwru.zoom.us/meeting/register/tJYsdOmtrTkqGNcaL2KVDtmhwTsQakl_80Zv
After registering, you will receive a confirmation email containing information about joining the meeting.
Please e-mail padg@case.edu if you have questions about how the Zoom version of the Friday Lunch will work or any other suggestions. Or call at 216 368-2426 and we’ll try to get back to you. We are very pleased to be partnering this semester with the Siegal Lifelong Learning Program to share information about the discussions.
Best wishes for safety and security for you and yours,
Joe White
Luxenberg Family Professor of Public Policy and Director, Center for Policy Studies
About Our Guest
Timothy J. Fogarty, Ph.D., is a professor in the Accountancy Department at the Case Western Reserve University Weatherhead School of Management, where he is also the KPMG Peat Marwick Faculty Fellow. He has been an attorney for 30 years and a CPA for 25 years. Before coming to Weatherhead, Dr. Fogarty taught at Pennsylvania State University and North Carolina A&T State University.
Dr. Fogarty’s teaching interests include accounting, auditing, income tax and the legal environment of management. He has published close to 200 articles on a wide variety of topics, in both academic and practitioner journals. He serves on the editorial boards of over 20 accounting and management journals, including several outside the U.S. He has served in several capacities at the national level for the American Accounting Association, including President of the Teaching and Curriculum Section (2005-2006), the Public Interest Section (1996-1997) and the Accounting, Behavior and Organizations Sections (1999-2000). He has worked on research and educational projects for the Financial Executives Research Foundation, ACT and the AICPA. Dr. Fogarty was heavily involved with the design of the current CPA examination, and occasionally does expert testimony.
* Kelvin Smith Library requires all entrants to show identification when entering the building, unless they have a university i.d. that they can magnetically scan. We are sorry if that seems like a hassle, but it has been Library policy for a while in response to security concerns. Please do not complain to the library staff at the entrance, who are just doing their jobs.
Schedule of Friday Lunch Upcoming Topics and Speakers:
October 21: The NRA: Past, Present, and Future. With Matthew J. Lacombe, Ph.D., Visiting Associate Professor of Political Science.
October 28: Is This the EU’s Moment? With Elliot Posner, Ph.D., Professor and Chair, Department of Political Science.
November 4: Midterm Election Polls and Prospects. With Thomas Sutton, Ph.D., Professor of Political Science and Director of the Community Research Institute, Baldwin Wallace University, and CWRU faculty.
November 11: Law Enforcement and the Opioid Epidemic. With Daniel J. Flannery, Ph.D., Dr. Semi J. and Ruth Begun Professor and Director, Begun Center for Violence Prevention Research and Education, MSASS.
November 18: The First Energy Scandal and the Challenge of Utility Regulation. With Miranda Leppla, J.D., Director, Environmental Law Clinic, CWRU School of Law.
November 25: Thanksgiving Break
December 2: To Be Determined
December 9: To Be Determined |
