France, the IRS, and Das Leben der Anderen

In 2006 a fascinating movie came out from Germany, Das Leben der Anderen, released in the English-speaking world as The Lives of Others.  It’s set in 1980s East Berlin.  The minister of cultural affairs takes a shine to a particular actress, who happens to be the inamorata of and cohabitant with a famous playwright who happens to be an “approved” socialist artist.  The actress of course resists the minister’s advances, in consequence of which the minister has the Stasi install bugs in the old boy’s apartment.  The chief investigative officer is a colonel who is a classmate of the Stasi chief (they went through training together).  During the course of his surveillance he turns, so to speak.  Won’t spoil the plot, but I can highly recommend the film.

A subplot of the film is the playwright’s relationship with his mentor and bosom friend, a director who has been blacklisted and can no longer work in theater.  Discouraged finally by the realization that he will never again do the only thing which gives meaning to his life, the director kills himself.  This prompts the playwright to action.  He composes an article to be smuggled out of East Berlin about this director’s death.  The lead-in paragraph begins with the observation that the state tracks everything about him, from his shoe size to how many children he has to where he goes shopping, etc., and can tell him all the population-wide statistics on all that, in numbing detail.  But the one thing it can’t tell him is how many citizens of the Worker’s and Peasant’s Paradise killed themselves, because years before the government simply quit tracking that number.  Why?

Gerard Depardieu, identified in the article as perhaps the most famous actor in France, has moved to Belgium.  Just across the border, of course, but sufficiently far across the border to escape Hollande’s punitive taxes, specifically the recently-increased taxes on incomes over a million Euros and the jacked-up estate tax.  As the article points out, Depardieu hasn’t done too well with his acting roles recently, but that’s OK, since he owns wineries in France and Algeria, restaurants, real estate investments, and a film production company.  As the article gently points out, a “further sale” of these assets will be “significantly cheaper” for Depardieu if he can show his principal residence to be Belgium.  But I thought capital gains taxes didn’t make a difference to people’s behavior!!  Depardieu only lengthens the list of prominent Frenchmen who have bailed on their homeland since Hollande’s election earlier this year.

Once upon a time the Internal Revenue Service compiled and published data on American tax migrants.  The IRS and the Census Bureau would track people’s addresses and changes in them (such as where they left and where they went), and of course could correlate changes in those addresses with the reported incomes of the people concerned.  They’d been doing that since 1991.  No more.  The program has been stopped, and neither agency has explained why.  Maybe it has to do with being able to document the flight, by the thousands, of high-income Californians from there to Texas.  Or the 31,000 Marylanders who left their state from 2007 to 2010.  Or the New York Post’s article,“Outgoing Income, Millions Flee New York’s Tax Burden,” which ran back in May of this year.

As the NRO article drily observes, “Some would be glad if the IRS data simply went away. Blue states with high state and local tax burdens have come out looking bad in recent years. California and New York have been embarrassed publicly, as a steady exodus is underway from both.”  Gosh, I dunno; think maybe?

In the 1930s Stalin didn’t like the census results which showed how many missing Soviets there were in consequence of the Holodomor and related massive starvation.  So he shot the census board, appointed a new bunch, and got some numbers more to his liking.  For the time being Dear Leader isn’t going that far, but you can bet that data on tax migration patterns will not turn out to be the last data set to vanish.  Nor is this the first time that inconvenient data has either been disappeared or carefully timed.  Like the employers who were bullied by the BLS not to send out lay-off notices until after the November, 2012 presidential election.  Or the “revisions” to the rosy economic data which was released early, just prior to the election.

Lest the gentle reader think this practice is confined to specific administrations, in specific countries, and among specific sorts of functionaries, LIBOR was cooked for years.  TurboTax Tim Geithner, as head of the New York Federal Reserve Bank, knew it was being cooked.  TurboTax Tim said nothing.

All of which raises the not-uninteresting question of how does the ordinary person — the person who’s not wired into the power relationships of the Beltway or the Northeast corridor — navigate a world in which you can no longer trust the basic numbers.  How?  Fannie Mae and Freddie Mac cooked their books, and got away with it.  How do I trust that GM isn’t cooking its books?  If I can’t pick up a phone and call my homey at the Undersecretary for Blank to get the real, hard numbers, where do I turn?  Folks, the ending point of a system in which the information feed-back cannot be trusted is a barter-and-cash economy.  It’s the Soviet bloc.  How did that work out, again?

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