Why Gerard Depardieu is crazy like a fox to exit France for Russia

We all know Russian women are beguiling, yet how many of you understand that personal income tax rates in Russia are actually far more seductive than Russian women? Photo: Anna Chapman - Putin / AP

NEW YORK, January 6, 2013. Sex sells—but the recent decision of a leading French actor to flee eastward does not revolve around sultry women. After all, why leave Paris, the city of love, for Russia, even for Anna Chapman?

Having met Ms. Chapman two days before her arrest at a summer party best described as bacchanalian, I vouch for her spectacular allure and suspect few will disagree. We all know Russian women are beguiling, yet how many of you understand that personal income tax rates in Russia are actually far more seductive?

A survey by accounting firm KPMG[i] recites the highest marginal income tax rates imposed upon personal incomes in a raft of countries. Strict comparisons are difficult because each country has its own particular assessment practices. Still, a surface level analysis is revealing.

Table 1: Summary Comparison of Maximum Personal Income Tax
      Rates among Selected Nations

 

 

 

 

 

 

 

GDP ($B)

Maximum Personal Tax Rate

 

2011

% World

2004

2008

2012

Russia

1,821

2.6

13.0

13.0

13.0

 

 

 

 

 

 

United States

14,830

21.5

35.0

35.0

35.0

Japan

5,773

8.4

50.0

50.0

50.0

Germany

3,550

5.1

45.0

45.0

45.0

France

2,734

4.0

48.1

40.0

45.0

United Kingdom

2,392

3.5

40.0

40.0

50.0

Italy

2,164

3.1

45.0

43.0

43.0

Canada

1,711

2.5

46.4

46.4

48.0

Australia

1,463

2.1

47.0

45.0

45.0

South Korea

1,098

1.6

35.0

35.0

38.0

Selected “Gray Zone”

35,715

51.7

43.5

42.2

44.3

 

 

 

 

 

 

China

7,181

10.4

45.0

45.0

45.0

Brazil

2,453

3.5

27.5

27.5

27.5

India

1,798

2.6

30.0

30.0

30.0

Mexico

1,135

1.6

33.0

38.0

30.0

Indonesia

833

1.2

35.0

35.0

30.0

Turkey

762

1.1

40.0

35.0

35.0

Saudi Arabia

587

0.8

0.0

0.0

0.0

Argentina

437

0.6

35.0

35.0

35.0

South Africa

402

0.6

40.0

40.0

40.0

Nigeria

240

0.3

N.A.

N.A.

N.A.

Selected “Growth Zone”

15,828

22.9

31.7

31.7

30.3

 

 

 

 

 

 

Alone among major nations, Russia is charting a most unusual course concerning income tax policy—one that is polar opposite from “dogma” promulgated on world-leading, western campuses.

According to KPMG for 2012, Russia’s highest personal income tax rate is a staggering 32 percentage points lower than the maximum rate assessed in France and 22 points below the highest rate charged in the United States.

Why is Russia committed to a policy of flat, simple and extremely low personal taxes when “experts” are determined in France, the United States and many other leading countries to lash us all with taxes that even Nobel laureates have trouble understanding?

Has Russia lost her grip on economic sanity? Or, perhaps, have we?

Most of us have difficulty grasping competing economic theories. In modern, troubled waters, should we steer our course following Adam Smith or Karl Marx?

It takes a child, sometimes, to get the painfully obvious as I know from personal experience.

In 1990, around the time that M. Depardieu conquered American cinema with his breakout hit “Green Card” my son uttered his first sentence.

A stalemate concerning radio channel selection ruled then in our marital retreat. I agreed not to turn on Howard Stern in the morning if my ex-wife refrained from listening to New York’s hard left stations.

In violation of our agreement, several American “Professors” from City College in Manhattan tried one morning to convince skeptical Russian guests that Marxism does work best, even as mother Russia reversed course. Noticing my disdainful visage, William cocked his head beaming and exclaimed to his mother “Turn that s*** off”.

What a priceless way to begin a weekend in the country. If only we could turn off the competing noise emanating from leaders of bloated governments everywhere!

Tax policies, even harsh ones, never yield equal outcomes. Inequality is a stark fact of reality, starting with the plain truth that 100% of all humans live on less than 30% of the world’s surface area.

Each of us begins life in different circumstances. Some of us are born in nations with few innate resources that are also crushed by Byzantine and even repressive governments. Others start out in places organized to let those thrive who will work hard to be economically productive.

Table 2: Summary Comparison of Gross Domestic Product, Population, and Useful Land among Selected Nations

 

  

  

  

  

  

 

Share of World Total

  

  

 

  

Active

Useful

Senior/

Persons/

 

GDP

Persons

Land

Active (%)

Sq. Km.

Russia

2.6

2.3

6.9

18.2

120

 

 

 

 

 

 

United States

21.5

4.7

9.7

20.4

188

Japan

8.4

1.8

0.3

39.1

2,743

Germany

5.1

1.2

0.7

31.3

691

France

4.0

0.9

1.1

27.3

335

United Kingdom

3.5

0.9

0.3

25.7

1,112

Italy

3.1

0.9

2.0

31.2

178

Canada

2.5

0.5

5.4

24.0

37

Australia

2.1

0.3

2.8

21.3

46

South Korea

1.6

0.8

0.2

16.2

1,374

Selected “Gray Zone”

51.7

12.2

22.4

25.8

211

 

 

 

 

 

 

China

10.4

22.3

8.9

12.4

870

Brazil

3.5

3.1

3.8

10.5

301

India

2.6

17.8

8.9

8.5

785

Mexico

1.6

1.7

1.6

10.3

424

Indonesia

1.2

3.7

1.9

9.6

760

Turkey

1.1

1.2

1.5

9.5

312

Saudi Arabia

0.8

0.4

0.2

4.4

701

Argentina

0.6

0.6

1.6

17.5

148

South Africa

0.6

0.7

0.9

8.9

312

Nigeria

0.3

2.0

1.9

5.6

517

Selected “Growth Zone”

22.9

53.6

31.2

10.4

644

  

  

  

  

  

  

Other nations

22.8

31.9

39.5

8.0

341

  

  

  

  

  

  

World Total

100.0

100.0

100.0

11.7

391

 

 

 

 

 

 

Using traditional measures gathered by the Central Intelligence Agency, the United States is highly productive as are many nations in the “Gray Zone”—countries with more developed economic infrastructure that also have older, aging and indebted populations. However, we face a mammoth debt to our senior populations that is coming due at a time when we have diminished our own fortunes.

In contrast, nations in the “Growth Zone” have not yet achieved comparable productivity levels. These countries consist of faster-growing, younger populations packed closely onto the land where they live. Unlike Gray Zone nations, Growth Zone nations have rising fundamentals and much more time left to prepare to do economic justice for their own, duly entitled cohort of seniors.

Where sanity should prevail, the rage in Paris and now in Washington, D.C. is economists such as France’s Esther Duflo, recently tapped by President Obama to serve on America’s Global Development Council. In a French magazine, Professor Duflo explained one strand of her thinking:

“As a child, I was extremely troubled by the complete randomness of chance that I was born in Paris to an intellectual, middle class family when I could just as easily been born in Chad. It’s a question of luck. It inspired in me a sense of responsibility”.

Professor Duflo and others who advise national governments in the Gray Zone have already done more than enough damage at home. What is so complicated about understanding that “government” by unaccountable elites with unrestrained tendencies to spend far more than they take in and borrow more than we can hope to repay is folly, pure and simple? Like “Professor” Pangloss in Voltaire’s Candide, these geniuses seem to believe that “private misfortunes make for public welfare”.

In the west, we have erected gargantuan, ineffective governments, whose bureaucrats and leaders seem “dedicated” to vague, noble goals, but certainly not to bringing the out-sized costs of their operations into line with their dwindling stream of revenues.

In real life, I would happily trade Duflo for Depardieu though I doubt the actor had the United States on his list as he made his way out of the economic bad joke that modern France has become.

In global reality, there is nothing “progressive” in punishing the most productive among us with taxes and regulations, while also increasing the cost of items each of us needs to exist. Until global government becomes a sad fact, those who can sell their wares to massive global audiences will flee confiscatory national regimes for more welcoming ones.

I have my qualms about Russia overall, but hats off to Vladimir Putin for his simple, flat personal income tax—he has set a bold course that may eventually topple the club of delusional economic deviants who are determined the modern purpose of government is to render each citizen “equal”, no matter how expensive and futile the effort.

France is surely a lost cause economically, yet America has some remaining grounds for hope, perhaps. The latest issue of The Economist pictures our President capped in a beret and decries policies embraced by both American political parties that are sinking this country just as surely as they have swamped France.

To understand how far France and America has moved economically to the left of Russia in recent years, consider these prescient words that Vladimir Putin uttered in the splendor of Davos when he opened The World Economic Forum on 27 January 2009:

 “Excessive intervention in economic activity and blind faith in the state’s omnipotence is another possible mistake.

True, the state’s increased role in times of crisis is a natural reaction to market setbacks. Instead of streamlining market mechanisms, some are tempted to expand state economic intervention to the greatest possible extent.

The concentration of surplus assets in the hands of the state is a negative aspect of anti-crisis measures in virtually every nation.

In the 20th century, the Soviet Union made the state’s role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.

Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state.

And one more point: anti-crisis measures should not escalate into financial populism and a refusal to implement responsible macroeconomic policies. The unjustified swelling of the budgetary deficit and the accumulation of public debts are just as destructive as adventurous stock-jobbing.”

In 2013, does any elected leader seem to know more than Mr. Putin concerning the economic way forward?

For that matter, now do you see why it is relevant to know exactly what courses our political leaders took in college and how their minds were shaped while still impressionable?

Judging the record, Francois Hollande and Barack Obama evidently dabbled at economics at Patrice Lamumba University in Soviet Russia, while Vladimir Putin was busy studying under Ayn Rand!

The smartest of all, but of course, is Gerard Depardieu.



[i] Virginia Pasquali and Denise Bedell published an article online in Global Finance that contained a table entitled “World’s Highest Marginal Tax Rates, 2004-2012. The authors cited the source for their work as KPMG’s Individual Income Tax and Social Security Rate Survey, 2004-2012. Strict comparisons would have to take into account whether individual incomes are taxed locally only or on a worldwide basis, what exemptions and deductions are allowed, what other taxes and assessments are levied inside each nation, among other factors.


This article is the copyrighted property of the writer and Communities @ WashingtonTimes.com. Written permission must be obtained before reprint in online or print media. REPRINTING TWTC CONTENT WITHOUT PERMISSION AND/OR PAYMENT IS THEFT AND PUNISHABLE BY LAW.

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Charles Ortel

Charles Ortel became a lapsed member of the silent majority in August 2007 when he began alerting the public to dangers posed by structural changes in the global economy. Since then, Charles has appeared in the print, radio and television media with increasing frequency. Brass Tacks will attempt to offer non-partisan perspective on factors contributing to the unresolved, burgeoning crisis and discuss potential solutions. Graduated from Horace Mann School, Yale College and Harvard Business School, Charles tries to learn each day.  

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