Gerard Shrugged, or the Newest New Russian

by Yanni Kotsonis

Depardieu

I am struggling to find some deeper meaning to the petulance of Gerard Depardieu, but the actor is already an idiosyncrasy. He is after all Gerard Depardieu and plays Gerard Depardieu whether he mounts the guillotine or waits in line for his Green Card interview or overindulges as Rasputin. Now he has become the spokesperson for the demographic of extremely wealthy, well known, and shockingly clueless French actors who play themselves on the screen and do clueless things in public. That makes two, if we count Brigitte Bardot who, despite bouts of xenophobia and anti-Muslim outbursts, threatens to renounce her French citizenship and join the multi-confessional and multi-racial Russian community in order to prevent two elephants from being euthanized. Or maybe Depardieu could be the front man for a few thousand French millionaires (meaning those who show an annual income of over 1,000,000 euros), were it not for their tendency to quietly establish residency in Belgium where most of us will never notice them. Not since 1914 have so many French held Belgium in such high regard.

No, I’m afraid Depardieu has little to tell us directly about the big picture because he is Depardieu, tout court, and it turns out he is not very bright, either. Never mind that he is unoriginal to the point farce. There is nothing he has said about progressive taxation that was not said over a century ago when the Russians (1916), the French (1914), the Americans (1913), and the Germans (1913) were introducing the personal income tax. Cries of “socialism,” “Marxism,” and “leveling” abounded back then and provided as much entertainment in the old plutocratic orders as they do in ours. Very rich taxpayers who do not want to pay tax I understand; academics who give them cover I understand less; but now we all have Gerard Depardieu, speaking truth to power on behalf of defenseless French millionaire actors everywhere.

Then Depardieu played his Russia card and began to look interesting in spite of himself, but this is also where he shows himself to be dim. There is the moral question, to be sure. If there were any doubt that Depardieu has an empty space where social consciousness or national solidarity should have been, just follow his money. It has moved in the course of one month from France where the marginal rate is 75 percent on each euro over one million received in one year, to Belgium where that rate was 50 percent or so, and now to Russia where he will pay 13 percent flat. Quite suddenly he admires Russian culture, wants to get to know the real Russia of the provinces, and promises to learn some Russian words to access the culture (флэт тэкс). He has the unselfconsciousness of the John who expresses a personal interest in the prostitute he hires, which as far as I can tell is how he views Russia.

But his decision to move from France to Belgium and then to Russia implies a comparison of the fiscal systems whereas in fact they are not comparable. Why does Russia have a flat tax of 13 percent? Because as the Soviet state was being dismantled in the 1990s and capital was being privatized, so was any information that would have led a tax collector to the mountains of cash that were being secreted away. To be sure, in the 1990s the well-off and the journalists whom they employed gave tongue-in-cheek accounts of the murderously high rates that they were liable to pay – up to 99 percent! – leaving unstated what everyone knew to be true: only fools, wageworkers, and white-collar employees who were on the books actually paid taxes. In private anyone else would tell you that they paid no taxes at all: “Why should we? Look at our roads,” was the common refrain, as if driving on the Brooklyn-Queens Expressway was fun.

The situation in Russia circa 2000 was not that far removed from the cradle of tax evasion, Greece, where the humble shop-keeper who hides a few thousand in taxable euros finds solidarity with the ship-owner who hides millions, and at the polls they exact from the state a social contract: don’t collect taxes and don’t insist on declarations, and we’ll vote for you again. For the most part the politicians go along because they, too, are tax non-payers and would like to win elections. Anyway, why go through the miles and miles of paperwork that Americans use to claim deductions each year so that half of them pay no tax and the wealthy pay little? Greeks take the shortcut of evasion; Americans make evasion perfectly legal as avoidance and deductions; and Russia followed the third path of the flat rate.

Russia’s solution was regression in the name of expediency. A flat rate was introduced for the personal income tax in January 2001 for any income of almost any size; there would be only a small exemption level and some deductions but not many. Firm but fair? Not entirely firm because the income had to be visible to be taxed. And not fair in the least: it went against a century of fiscal and social thought. Progressive taxation was introduced in the 1890s (Prussia became the worldwide model in 1892) to mark one’s distance from subsistence: the higher the income above the Existenzminimum (прожиточный минимум, exemption level), the less the income was necessary to one’s survival, and the more it could be handed over to the state for the national or social good. Welfare states and arms races were expensive and the rich would pay their fair share, though in those days that could mean marginal rates of 10-12 percent.

Well, the Russian flat tax of 2001 was a step backward but it was an improvement. Revenue from the personal income tax increased (in adjusted rubles, by about one quarter in one year) even as each payment meant much more to the lower income groups than to the upper ones. It returned Russia to the outlines of the British income tax of 1842 or the American one of 1862 in the sense that it was flat, but it was arguably the best this state could do. The Russian flat tax of 2001 was drafted with no illusions of fairness, only hopes of universal liability: everyone should pay something as an act of citizenship; it was better than most paying nothing at all. And a flat rate (a proportion of provable income) was marginally more fair than the identical payments hidden in the price of vodka (VAT and excise taxes). And Russia might begin the very slow process of repairing the damage to civic virtue that was done by the cynicism of the USSR and the crass greed of the early Federation.

But who would have thought that this necessity would become a virtue elsewhere, and that Russia would give Hall and Rabushka (the brains behind the flat tax) an example of existing libertarianism? Russia in some eyes became something of a European Singapore or Chile where some things were distasteful but its tax was a model of rational simplicity. Russia was trying to recapture a moment of civic virtue while American tax protesters were trying to pass through an age of civic obligations, come out the other end to arrive at a post-civic order, and achieve the “pay as you go” society of sauve qui peut.

The flat tax sounds entirely ludicrous in the US because it is: think Herman Cain (9-9-9) or Ron Paul or Steve Forbes and try to keep a straight face. In the US calls for a flat tax would take us far backward (to 1862) when there is no crisis of the state other than the one we are creating by underfunding a government that we can easily fund. And there is no serious economic argument to support the notion that low and lower taxes on the rich are good for the economy. How many more houses and cars and blenders and electric can openers will they buy, how many more servants will they hire, and how many more luxury restaurants will they patronize? If it’s spending we want, leave it to the poor and middle classes who spend what they earn.

There’s more. Russia had good reason to introduce the flat tax but we can assume that this is the prelude to a progressive one in years to come, as petrodollars (half the state budget in some years, with 20 percent coming from Gazprom alone in 2008) are not enough. Historically this was the aftermath of every flat tax on income, and proponents could claim that the initial measure was modest or symbolic while opponents held that it was a Trojan horse. The opponents were right: the added purpose of nominal or flat taxes (other than universal obligation and state revenue) was to register persons and incomes in order to better tax them in the future. A flat tax is part of the process of rebuilding and remodeling the state in new conditions, but it is only the first step. Here it would part of the degradation of the state and, to paraphrase Grover, making it small and weak enough to drown in the bathtub.

Which brings us back to Depardieu because he has nothing to do with any of this and clearly does not know or care. His taxes help everyone by making the roads better and the population healthier and the children better educated. He’s not being measured as Depardieu but as an income bracket and a citizen, which could be the source of his angst: it’s all so deeply banal and depersonalizing. He has ultimately done as much to serve the cause of progressive taxation as Romey’s missing returns or the ones he made pubic. His campaign reported that Romney and his wife paid 14.1 percent on an income of $13.7 million in 2011, meaning that he paid $1.94 million and kept $11,760,000; the vast majority of the population would have been ecstatic about keeping a quarter of what the Romneys paid in taxes. Both Romney and Depardieu are oblivious to their achievement, which is to make legal avoidance seem like legitimate evasion.

Russia, meanwhile, is about where it should be and is probably on its way to progressive taxation, Putin notwithstanding. That conversation is waiting to happen and we should have it soon because when it comes to Russia we have all agreed to talk culture and political scandal (ideally simultaneously) at the expense of plain old wealth disparity. Every loopy utterance by the president and every new journalist or artist persecuted is worth talking about, but no one will seriously address the very deep, pervasive, and at times brutalizing material inequality – not the intelligentsia, not the professional classes, not the Communists, not the academics there or here, not even the poor themselves. There are already glimmers of hope. Just this week protesters in Moscow refused to take the chauvinistic bait when adoptions of Russian children by Americans was banned: Why don’t we pay for proper state orphanages, and why can’t Russian families afford adoptions?

Maybe Depardieu, the newest New Russian, will ignite an intelligent debate entirely in defiance of his natural talents, before he takes the next logical step and moves to the Abu Dhabi to pay no taxes at all. Think of the pageantry and colorful costumes as he debuts as Scheherazade, that sly and demur harem girl (why not?), a middle-brow tribute to an ancient Arab petro-culture and his native Russia via the Rimskii-Korsakov soundtrack. Think of the words he would never have to learn as he explored the new culture (ضرائب), of the old ones he could unlearn (impôts, налоги). Think of the new social realities he could stumble upon with complete ignorance and remind us why we should care.

 

 

  • Eric

    Awesome rant. Well done.

    • yanni

      Thanks! And that wasn’t even ranting.

      • watkins

        While I share Eric’s verdict of “awesome,” I agree with the author that this does
        not fit comfortably under the rubric of “rant.” From the OED: “An
        extravagant, bombastic, or declamatory speech or utterance; (now esp.) a long,
        angry, or impassioned speech; a tirade.” OK, so perhaps
        a soupçon of bombast and a glimpse of extravagance snuck in there, as it
        should given the subject matter. But this was simply too well-argued and too
        wrapped up in a compelling historical analysis to carry such a title. Well done
        indeed.