The Truth is Complicated, Virginia

Dear Graham Negative –

I am 8 years old. Some of my little friends say there is no Santa Claus, because if he was real, rich kids wouldn’t get better presents from him than poor kids. It seems like they have a point – my family is poor, but I have been very virtuous my entire life. The kids on the other side of town who come from rich families always get better gifts, even though they are not at all kind. Since the toys are made by elves rather than purchased with money, this inequity doesn’t make sense at all.

Papa says “If you see it in Segues and Non Sequiturs, it’s so.” Please tell me the truth, is there a Santa Claus?

Virginia O’Hanlon
115 West Ninety-fifth Street

Yes, Virgina, there is a Santa Claus. Your little friends are naïve. However, the truth about the apparent economic inequities associated with toy distribution to wealthy vs. poor households is complicated.

For many years Santa Claus refused to respond to inquiries about this issue, offering instead a terse “Ho, ho, ho!” or “Merry Christmas to All, and to All a Goodnight!” However, according to a spokesman for Santa Claus, the chorus of critics hammering away on the subject called for a more detailed response, which I received via fax, and which I am happy to share with you here.

It seems that the villain in this situation is The IRS.

For many years, gifts were distributed according to merit, rather than household income. Unfortunately, some unscrupulous individuals eventually hit upon the idea of using Santa Claus’s magnanimous and economically just gift-giving as a subterfuge to launder illicit (and untaxed) income.

For example, an individual reporting meager income and paying little or no tax would not normally own a summer home on Malibu Beach, unless they also had income they were not disclosing. Income tax evasion cases were frequently initiated to uncover the financial truth in these suspicious circumstances. However, attempts by IRS investigators to determine the source of funds used to purchase valuable real estate, private jets and luxury cars for these crooks often came to a dead end when investigating agents were confounded by a simple explanation offered up by the accused: “Santa gave it to me for Christmas.”

Although this explanation seemed unlikely, especially given that many of these individuals were known to be more naughty than nice, it was impossible to disprove. Santa’s gift-giving list and naughty/nice register were (at that time) afforded the same legal protections as attorney/client privilege and doctor/patient confidentiality. Further complicating matters was the fact that the United States had no extradition treaty with The North Pole, and Santa could not be compelled to testify in these cases, even as a hostile witness.

As a result cases were dropped, and tax cheats continued to live beyond their verifiable means.

What changed? This is where it gets murky. Meetings were held over a period of years, and a cooperative agreement was reached between Santa and the IRS.

According to Santa’s office, a non-disclosure agreement prevents them from providing details beyond these simple facts:

1) Santa now has access to the 1040 form filled out by every US taxpayer
2) Selection and distribution of toys is now based upon the reported income of adults living at each home
3) Each year, the IRS provides gift-giving guidelines to account for new toys and changes to the tax code.
4) Santa’s cooperation with the IRS is strictly voluntary.

As to why Santa would enter into voluntary cooperation with the IRS, the spokesperson had no comment. However, one employee told me off the record that Santa’s decision to cooperate coincided with the development of increasingly accurate surface to air missiles and an “accidentally leaked” Star Wars Missile Defense System memo which identified Santa’s Sleigh as a potentially hostile projectile. “He had a couple of near misses, which he interpreted as a warning. ‘There’s a missle out there with my name on it’ he told me once, after a few too many spiked egg-nogs.”

So, Virginia, take heart: Santa would love to give you gifts that are every bit as cool as the ones rich kids get; he just doesn’t want your parents to suffer through an audit.

Merry Christmas.