taxing times

The Berkshire Mountains in western Massachusetts represent the weathered remnants of a chain that some 350 million years ago would have rivaled today's St. Elias range.

The Berkshire Mountains in western Massachusetts represent the weathered remnants of a chain that some 350 million years ago would have rivaled today’s St. Elias range. Erosion whittled them down so that today their highest peak is just over half as high as our Grey Mountain.

The falling water that carved them down served as the energy source that attracted mills to the region in the early 1800s. The week before last, Eva and I visited the former mill towns of Adams and North Adams, Massachusetts nestled in the Berkshires. We followed the North Branch of the Hoosac River down the valley past large old red brick mills and workers’ row houses.

By the 1850s the textile industry economically dominated the region. The

Berkshire Cotton Manufacturing Company of Adams, Massachusetts, had over 6,500 looms dedicated to the production of cotton textiles by 1917. These looms made it one of the largest cotton textile companies in the world. However the shift to lower-cost labour areas, initially to the American South then overseas, slowly eroded the local manufacturing base.

The last of the merged Berkshire Hathaway textile mills, which gave the financier Warren E. Buffett’s company its name, closed in 1985. The mills that survive today have found alternative uses. The Mass MoCA or the Massachusetts Museum of Contemporary Art, one of the largest contemporary art facilities anywhere, uses a 26-building former mill complex in North Adams.

Governments played a key role in the economic evolution of western Massachusetts. They offered land grants to its first settlers, built the public infrastructure that brought commerce to the area and later provided the tax dollars key to the conversion of mills to alternate uses and bringing in new employment as the market variables changed. Given government’s central economic stimulus role at all levels in places like Adams an outsider like me can’t help but be baffled by the strong anti-government sentiment currently crippling debate and much needed action over a faltering US economy.

Warren Buffett’s opinion piece in the New York Times last week titled Stop Coddling the Super-Rich expressed his concern about the implications of this ideological divide at the highest levels of government. “Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems,” he said. Buffett pointed to the illogic of him as a multi-billionaire paying “only 17.4 per cent of my taxable income—and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 per cent to 41 per cent and averaged 36 per cent.”

As for the anti-tax argument “that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.” Buffett affirms that “People invest to make money, and potential taxes have never scared them off.”

At the same time as Congress has shown its unwillingness to raise taxes on the ultra-rich, the US Internal Revenue Service certainly has no hesitation in traumatizing the up to a million Canadians who are landed immigrants here from the US, dual citizens or green card holders. The IRS’ Overseas Voluntary Disclosure Initiative is scaring many.

A limited ‘amnesty’ which ends on August 31st threatens dire consequences on those who knowingly or unknowingly fail to report their foreign bank accounts. (For more information start with this recent piece in the Vancouver Sun blog and its links http://communities.canada.com/vancouversun/blogs/cayo/archive/2011/08/20/standing-up-to-the-irs-bankers-join-citizens-in-the-fray.aspx )

Taxes are an essential feature of modern life. In wise hands they can foster the collective building of a just, equitable society. Likewise poorly conceived and inequitably applied they can erode our confidence in government and the future.

Michael Dougherty is co-chair of the social justice committee of Sacred Heart Cathedral of Whitehorse. Contact pazypan@yukon.net.