Remember when a reader asked, earlier this year, if we had seen the death of the “Friday Rant” blog feature here on Toronto Realty Blog?
I had honestly never considered that until a reader posted, and yet I am, looking for a dance partner, but with no place to dance…
The “Monday Morning Quarterback” feature has always, in case you’re not familiar with the term, been meant to explore a topic after the fact.
And last week, many of us spent time exploring and abhorring an idea that our esteemed Prime Minister, Justin Trudeau, seems to be in favour of:
A tax on home equity.
It almost feels like this is why Monday Morning Quarterback exists, and in this case, I’m glad we had a week or two to cool down, otherwise I have no idea what I might have written in this space.
If this is the first time you’re hearing about this “home equity tax,” then I’m happy to have met you here today. However, my fear, as is often the case with bad political policy, is that many people made their way through the last two weeks without hearing about this at all.
And that’s how governments get away with this crap; too many people aren’t paying attention.
Democracy.
What a crock.
At least “dictators” admit what they are.
Two weeks ago, our esteemed Prime Minister, Justin Trudeau, appeared as a guest on the Generation Squeeze podcast with Dr. Paul Kershaw.
Ah, yes, “Doctor” Paul Kershaw.
With a Masters in Communism, perhaps?
I have been following Dr. Kershaw’s work for several years now, first because it made for great comedy, but now because it scares the living hell out of me.
As with most folks who find themselves on the extreme left, Dr. Kershaw seems to lack any understanding of macroeconomics. And his ideas for new public policy, as is the case with so much of what the Liberal government has introduced over the last decade, are measures guaranteed to backfire and produce counter-intentional results.
But let’s start small, shall we?
Consider this term:
Unhealthy home prices.
What does this mean?
What does it mean to you, to me, to him, or to her? To different people, that is.
Who determines what is unhealthy? And how? Why?
The term “unhealthy home prices” appears in multiple sections of the Generation Squeeze website, and while a financial analyst could refer to a stock price as “unhealthy” based on underlying fundamentals, there could be a case for somebody to refer to “unhealthy home prices” in a way that has nothing to do with the intrinsic value.
Instead, it could have to do with the concept of “fairness.”
Let me introduce another term to you, and one you need to get familiar with as we head into the 2025 federal election:
Generational fairness.
Ah, right!
So that’s what “unhealthy” refers to.
It’s not based on a concern that prices are too high, relative to demand, limited supply, increased immigration, and the lack of future supply on the way, but rather it has to do with the “gap” widening between the haves and the have-nots.
“Unhealthy.”
It’s unhealthy for a person of means to gain more means.
Now I understand…
If you want to listen to the entire podcast with Dr. Kershaw and Prime Minister Trudeau, HERE is the link.
But you can gain all you need to know simply by taking a hard look at the caption that accompanies the podcast link:
Prime Minister Justin Trudeau sat down with Gen Squeeze Founder Paul Kershaw for a live show with our supporters and allies in Vancouver. They delved into the 2024 Budget’s focus on “Fairness for Every Generation,” as well as housing, child care, climate change, deficits, and the challenge of protecting healthy retirements without sacrificing the wellbeing of younger and future Canadians.
Do you see what I see?
It’s a fallacy.
“…the challenge of protecting healthy retirements without sacrificing the wellbeing of younger and future Canadians.”
Do you see it?
It’s seeing the forest through the trees.
If you don’t, just start giving away everything you own, because we are approaching the day when somebody is going to take it all.
We need to “protect healthy retirements,” right?
That’s always been a goal of ours. We respect our elders. We understand the life cycle. We know that once a person has worked, presumably from age-18 through age-65 or thereabouts, that they have earned the right to benefit from the fruits of their labour.
Except, well, not anymore.
While you wouldn’t think that “healthy retirements” have anything to do with “the wellbeing of younger and future Canadians,” it seems that to Dr. Kershaw and Prime Minister Trudeau, they do.
Because we’re being told that in order to provide for 20-somethings or people who have yet to land upon our shores, we need to first take from those who have spent a lifetime working, paying taxes, abiding by the law, and acting as functioning members of society.
I laugh, I really do.
“…the challenge of protecting healthy retirements without sacrificing the wellbeing of younger and future Canadians.”
Who says this is a challenge?
It’s almost as though Dr. Kershaw & Prime Minister Trudeau are saying, “We will protect your retirement by only taking a portion of it.”
That’s protection, alright.
It’s like the mob showing up to your store and forcing you to give them a monthly envelope full of cash for “protection” that you don’t need, from neerdowells that don’t exist.
As I said, I’ve been following Dr. Kershaw for years, and this idea of his isn’t new.
“Would A Surtax On $1-Million Houses Stall Home Prices? This UBC Professor Thinks So”
Toronto Star
January 6th, 2022
This article is over 2 1/2 years old, but I remember reading it vividly.
It’s just so……classic.
The way to solve ANY problem in Canada is to introduce a new tax.
Need revenue for the Liberal government to waste and spend? Introduce a new tax!
House prices too high? Introduce a new tax!
Foreign buyer tax, flipping tax, speculating tax, short-term rental tax, capital gains tax, and now, how about a home equity tax?
There was limited coverage of this in the media last week, unfortunately, but I didn’t really expect NOW Magazine, BlogTO, or the Toronto Star to pick apart the absurdity of the Trudeau/Kershaw podcast love-fest.
Thankfully, the Financial Post gave us this:
“Tax On Home Equity Is Latest Proposal In Liberals’ Bogeyman Approach To Housing”
Financial Post
July 9th, 2024
From the article:
There were a number of reports last week about the prime minister and finance minister meeting with a government-funded think tank to discuss a variety of issues involving “generational fairness,” one of which was the introduction of a home equity tax.
This particular think tank, Generation Squeeze, seems to think that one of the ways to enable the youth to afford a new home is to go after older people who have worked hard historically to save enough to buy a home and pay off their mortgages. Such older people’s homes have often benefited from decades of capital appreciation.
“Gen Squeeze believes that it’s time to protect real shelters, not tax shelters. It’s unfair to sustain a system in which the hard work Canadians do every day in their jobs is taxed more than the wealth homeowners gain from rising prices while they sleep and watch TV,” it says on its website.
“The first step is putting a price on housing inequity by adding a modest surtax on homes valued at more than $1 million. This surtax will apply only to the top 12 per cent of high-value homes; the vast majority of Canadians won’t pay a penny more. But it will help slow down home prices so earnings have a chance to catch up, demonstrating allegiance to the Canadian dream that a good home should be in reach for what hard work can earn.”
The think tank’s website is full of the usual left-wing victimhood messaging, but it’s quite clear that older Canadians are the apparent problem.
It’s hard to disagree. Is it not?
I understand if you’ve just moved back with Mom and Dad after polishing off a hard-earned, three-year degree in “the history of systemic oppression of toes.”
But for those who haven’t spent the last decade being indoctrinated by people like Dr. Paul Kershaw and others who have turned post-secondary education into something utterly unrecognizable, I would think that yet another tax in Canada, to solve a problem that this government created and/or exacerbated, is a “hard no.”
Oh, wait, you’re not convinced that this government has done a poor job with the economy?
Then it’s a fantastic time to introduce one of the best articles I’ve read in a major newspaper this year:
“The Trudeau Liberals Have Eroded All Five Pillars Of Prosperity”
Financial Post
May 28th, 2024
Written six weeks ago, this article should be printed and tucked inside encampments all across university campuses.
From the article:
Canada’s standard of living is in decline, both in absolute terms and compared to our southern neighbour and other wealthy countries. A Fraser Institute analysis shows that real GDP per capita was lower during the pre-recession period 2016-19 than in any similar period since 1985. As of the last quarter of 2023 it was below its value for 2019:Q2. It’s no surprise that 44 per cent of Canadians now say money is their leading source of stress.
What explains Canada’s dreadful performance? As set out by Arthur Laffer, of Laffer Curve fame, prosperity has five pillars: restrained government spending, low taxes, minimal regulation, sound money and free trade. The Liberal government has rejected, undermined or neglected each of the five. Our weak record and disheartening prospects have not been caused by external forces but by dysfunctional government policies.
Let’s review the litany of debilitating missteps, starting with the size and role of government. The federal public service reached over 274,000 employees in 2023, an increase of 40.4 per cent since 2015. A bloated bureaucracy drains resources from the private sector, reducing economic efficiency. In the last eight years, the depletion has been rapid. Federal spending swelled from 12.8 per cent of GDP in 2015 to 16.1 per cent in 2023. Federal debt more than doubled, from $612 billion to a staggering $1.4 trillion — over $143,000 for a family of four. Interest now costs Ottawa $47.2 billion a year, rising to $64.3 billion by 2028-29. This is fiscal profligacy writ large.
Tax increases discourage economic growth. The Laffer curve demonstrates that taxes set too high can actually reduce tax revenue. Out of 61 US jurisdictions and Canadian provinces, the top three personal marginal income tax rates are imposed by Newfoundland and Labrador, Nova Scotia and Ontario. Nine Canadian provinces rank in the top 10, all are in the top 15, and Canada ranks fifth out of 38 OECD countries. Corporate income tax rates are also higher here than in the U.S., the U.K. and the OECD on average. High taxes damage affordability, reduce competitiveness, discourage innovation and entrepreneurship, accelerate capital flight and weaken productivity. The proposed increase in the capital gains inclusion rate for both individuals and companies and the phase-out of accelerated capital depreciation will seriously exacerbate those negatives.
Since 2015, intrusive regulations have proliferated across the economy, imposing burdensome compliance costs that are particularly harmful to small and medium- sized enterprises. The resource industry, which accounts for 19.2 per cent of GDP and 58 per cent of merchandise exports, has been targeted by draconian regulation deliberately designed to block energy projects. The result is an opportunity loss in the hundreds of billions of dollars and mounting.
A stable money supply is critical for economic stability. To cope with out-of- control government spending, the Bank of Canada expanded the money supply dramatically, pushing it to $3.6 trillion, 83 per cent more than when the Liberals took office. As a result, in 2022 inflation hit a 40-year peak of 6.8 per cent. Consumer prices are now 27 per cent higher than in 2015. Rising prices disproportionately affect low- and middle-income Canadians, who are also vulnerable to hikes in interest rates, including mortgage rates up 50 per cent from 2015. In aggregate, total mortgage payments could rise by as much as $4 billion this year.
Free trade had been a cornerstone of Canada’s economic policy for decades, promoting growth and prosperity. But last year Canada lost bragging rights as America’s biggest trade partner to Mexico. Instead of pursuing our comparative advantage in natural resources, Liberal policies purposely stymie the development and export of oil and gas. In a memorably inane comment, the prime minister claimed there was never a strong business case for liquified natural gas. The government should leave the assessment of business cases to business.
Barriers to interprovincial trade, a related problem, have continued to elude meaningful progress despite repeated promises. The Montreal Economic Institute estimates that removing those barriers would yield an average increase in Canadians’ incomes by 5.5 per cent, or $1,800. According to the IMF, it could boost GDP by $80 billion.
The government’s score for supporting the mainstays of prosperity is zero for five. Rather than correcting course, Justin Trudeau seems increasingly disconnected from reality and fixated on maintaining a perfect losing streak. Doubling down on big government, high taxes and hostility to resource development will do the trick.
You don’t agree that this government has done a poor job?
Try reading the above one more time.
Okay, you got me. It’s a trick. It’s literally the definition of the word “impossible,” because you’d truly have to be missing something to read the above and not conclude that this government has driven economic prosperity into the toilet.
But what if we combined the government’s undoing of the economy with the idea of yet another new tax being introduced in an effort to “help,” among other things, the economy, the real estate market, and the future of Canadians?
I’m a visual thinker and I’m picturing a tire fire. Except this one has people watching while eating popcorn.
More from the Financial Post article:
A home equity tax proposal is consistent with the bogeyman approach to housing issues that our current government, supported by left-leaning think tanks, has taken.
First, it was foreigners that were the problem. Accordingly, Canada introduced a ban on foreigners purchasing Canadian real estate (this ban was recently extended to the end of 2026). In addition, it was those foreigners who were “underutilizing” real estate, and so cities such as Vancouver, Toronto and others introduced a form of empty homes tax, and the federal government followed suit in 2022 with its Underused Housing Tax debacle.
The second bogeyman was those flippers of real estate, so the government introduced the ridiculous and duplicative flipping tax in 2023.
The third bogeyman were the evil short-term rental owners and operators who operate in an area that bans short-term rentals, so the government introduced a ridiculous and dangerous rule to deny expense deductions to such people.
And, now, it’s those darn older people who worked hard throughout their lives to acquire and pay off their homes and had the good fortune of capital appreciation.
Housing supply is a multi-faceted and complex societal issue. Continually introducing tax rules to go after people who are the perceived problem is simply politics — and poor politics at that — at the expense of good policy. For example, our country’s housing issues are directly tied to increased and uncontrolled immigration, so our immigration policies need to be amended.
This is what I have been saying for years, only my list of groups that the government has blamed goes further and includes real estate agents, mom-and-pop investors, and even institutional investors who are “commoditizing” real estate.
The government has blamed anybody and everybody, and every “solution” is another tax.
But even if you want to deny the poor job this government has done with the economy over ten years, and even if you want to deny that new taxes aren’t a solution to the housing crisis, then can we go back to this idea of “fairness” for a moment?
If “fairness” refers to an attempt to equalize the assets, wealth, and net worth of every Canadian, then yes, this is a “fair” proposal.
But barring the above theory, let’s just call this what it is, at the most basic level: theft.
This is yet another attempt by the government to steal from their constituents, and this time, it’s the elderly.
And the hilarious part of this is: it’s not only the elderly.
As blog reader, Ace Goodheart, pointed out in the comments section of Friday’s blog, Dr. Kershaw and Prime Minister Trudeau are pitching the idea of a home equity tax as a way to somehow even the playing field between seniors who have “unfairly” profited through their years living on this earth and a generation of young people who need a financial boost to live comfortably.
But nothing in the proposal or podcast discussions talks about an age limit.
Soooo…..isn’t this home equity tax a tax on every home owner?
Ah!
That’s what it is!
It’s not about taxing old people. It’s about taxing all people!
You bought your first home in 2018 at the age of 38-years-old. You’re selling your home in 2024 to move to New York for a new job.
Guess what?
You owe the government six years’ worth of the “old person tax.”
Except you’re not old. You’re not a senior. The concept of “generational fairness” shouldn’t apply to you.
But that’s exactly my point.
The home equity tax is likely a weighted gamble that more young voters in favour of the tax will vote Liberal in the 2025 federal election than old voters who will be affected by the tax, except this tax actually affects all voters who own homes.
It’s absolutely comical.
For Generation Squeeze and/or the Prime Minister to pass this tax off as “generational fairness” while not addressing that any 20-something who buys and sells will also be paying the tax is yet another smokescreen.
But once again, even if you want to deny the poor job this government has done with the economy over ten years, and even if you want to deny that new taxes aren’t a solution to the housing crisis, and even if you acknowledge that this isn’t really a tax that redistributes wealth from one generation to the next, then can we talk about the concept of “fairness” in an overall context?
Let’s say that you’re the 38-year-old who bought a house in 2018 and is moving to New York for a new job in 2024.
You paid $1,000,000 for the house and you’ll be taxed 0.2%, or 0.5%, or 1%, or whatever the flavour of the week is. But let’s say it’s 0.5%, or $5,000 per year, so you’re going to write the government a cheque for $30,000, plus interest, and compounded yearly.
Oh, but you also paid $32,950 in provincial and municipal land transfer tax when you purchased.
Oh, and you also paid $5,500 per year in property taxes for the six years that you were there.
Oh, and every single penny you spent on the house itself over six years came with an additional 13% in HST.
Shall I go on?
How in the world is this “fair?”
The federal government is paying $47.2 billion dollars every year just on the interest payments on the federal debt. Even diehard Liberal supporters have to raise a red flag and suggest that maybe, just maybe, this government has spent too much money, and spent it on the wrong things?
But now the government is going to right its own wrongs by further taxing home-owners, and all the while, passing it off as “generational fairness.”
Nobody has sympathy for the $3,000,000 homeowner, right? But why should that Canadian, after paying $20,000 per year in property taxes, be forced to pay an additional $30,000 per year in home equity tax?
For what?
I mean, honestly, I just can’t with this crap anymore…
“Ottawa Considering Buying Hotels To House Growing Number Of Asylum Seekers”
The Globe & Mail
July 3rd, 2024
We’ve completely lost sight of the role and purpose of government, and it’s not just your tax dollars that are paying for the fantasies of every politician who wants to be canonized, but now it’s also coming on the backs of private citizens who just want to live their lives in peace and enjoy what’s left of their rights and freedoms.
Too many people are throwing their hands up and saying, “I don’t have time to think about things like this.”
In the meantime, Dr. Paul Kershaw is spreading his good word in the mainstream media like this:
“Our Kids Think We’re Rigging The System Against Them”
Paul Kershaw – Special To The Globe & Mail
July 5th, 2024
From the article:
“Previous generations are rigging the system for their benefit and making it harder for my generation.” That’s what 54 per cent of Canadians age 18 to 29 believe, according to new Leger polling. Most also think “politicians are more interested in promoting and protecting the interests of older generations than people my age.”
First of all, just consider the ridiculous confirmation bias here. Ask a bunch of 20-somethings if the government is promoting the interests of seniors over their own, and what do you expect them to say?
Oh, the audacity, youngsters cry! How could something like this happen to us?
I mean, maybe that’s because seniors spent a lifetime working, paying taxes, contributing to society, and abiding by the law, while many of you are protesting on college campuses while demanding vegan food and filtered water be delivered in time for your evening seance.
But all kidding aside, maybe it’s because so many of these young Canadians spent four years away from home, during the most impressionable years of their lives, being indoctrinated by the Paul Kershaws of the world.
The most important thing I ever heard during four years at university came from a professor who told me:
“You’re responsible for your own fate in this world; nobody else is. Your life will be what you make of it, and you won’t get there unless you out-hustle and outwork everybody else. Work, grind, learn, think, create, innovate, improve, and don’t ever stop for a moment to wonder if there’s an easier way.”
That’s what I was taught.
Today, we’re teaching Canadians of all ages to blame somebody else. Expect somebody else to do the job or pay the price.
Did anybody attend a Grade-8 graduation last month?
It’s incredulous.
Telling a room full of impressionable 14-years-olds, “You’re special. You’re important. You’re unique. You’re going to have everything you could ever want. This world is perfect and it’s ready for you.”
Why should we expect 20-somethings not to feel as though they’re being short-changed out there?
But all attempts to “better” their futures, by taxing the now, are having disastrous results.
Our federal government has disincentivized innovation, invention, and creation of industries, businesses, and jobs, through its short-sighted public policy intended to increase immediate tax revenue.
As we all personally witnessed the civil war brewing south of the border over the weekend, it should be a reminder to us all that we must find some sort of middle or common ground.
What our government does, moving forward, is going to have economic and social ramifications for years to come that could change the shape and trajectory of our country.
All we need is rationality, logic, and common sense. That’s it. It’s just so simple.
As much as I would like to think that Prime Minister Trudeau’s comments on the Generation Squeeze podcast were simply tongue-and-cheek and the by-product of two out-of-touch egomaniacs riffing, I shudder to think what this country will look like if this dangerous direction in public policy continues to go unchecked…
Anwar
at 7:43 am
Outstanding, David. In a world where more and more people are afraid to say what needs to be said, you never disappoint.
Izzy_Bedibida
at 8:19 am
Great points. This is a tax on seniors. Mom, and all of her friends in the “widow’s club” are all worried about this tax, what it means to the estate, and they feel targeted by it. Most of them live comfortably, but non of them are the multimillionaires Trudeau and the gang claim them to be. All because they have lived in their houses for decades.
Once more seniors find out what this tax really means, there will be a big uproar over it.
In my case I would be hit by the same tax for similar reasons if I sell.
Peter
at 9:01 am
Here’s a concern:
Donald Trump wins in November and Justin Trudeau and the Liberals spend the next year painting Pierre Poilievre as a pseudo-Trump, using scare tactics and fearmongoring, promising that we’re just a bloody ear away from chaos here in Canada as well.
This is the only way that the Liberals have a hope in hell so I am going to assume this will become a reality.
Adrian
at 9:21 am
You don’t need to worry because there’s no way he wins the next election. I agree that there’s been a ton of mismanagement but I will say it’s not fair to blame the liberals for overspending during the pandemic and the resulting inflation. Every major economy did the same thing and all have the same problem.
The reality is that boomers benefited from economic conditions never to be repeated in our lifetimes! You can call that “unfair” or realize that’s just life. There’s no tax in the world that will bring back housing prices that we experienced 30-50 years ago. But the public doesn’t want to accept that and thus all this ridiculous talk of increasing affordability while maintaining housing prices. Talk about doublespeak!
Not the David Who Runs This Website
at 3:30 pm
I’d love to think that he won’t win the next election, but Canadians seemed to be afraid of anything new, so, I’m predicting that he will be re-elected yet again, and again, until Canada literally comes apart, which it will soon.
I’m 63 and it’s completely wrong to say that I’ve benefited from economic conditions, because I haven’t at all. I’ve never been able to own a home and while I do have some savings, it’s nothing spectacular. I’ve struggled like everyone else to maintain a job and put money aside. I have no plans to retire because unless I want to live in a tent, I can’t afford the very basic lifestyle that I currently have unless I keep working till I’m disabled or drop dead.
I strongly suspect that they won’t stop with just a home equity tax. They will come after your total assets at some point. I’ve was told by my late father to save my money because I will live a long time. I am in great health and could live to see 100, but I’m starting to think that I don’t want to be alive when in the near future, no one is allowed to have any savings or possessions at all.
I’ve come to see that most Canadians are the most passive, gullible fools on the planet. So passive that they make the proverbial sheep look fierce by comparison.
JAS
at 9:38 am
If you look up Professor Kershaw on Rate my Professor you will see that not all the young people that take his course are buying his nonsense.
Andrew
at 10:51 am
Maybe it’s time to consider France’s electoral process?
In 2021, Justin Trudeau “won” with 32.62% of the popular vote. Conservatives had 33.74%. Should a Prime Minister be chosen by less than a third of the people?
USA suffers from a two party system but they also benefit.
Although maybe the NDP and Liberals merge and they’re in power forever.
I dunno. I give up. 🤷♂️
Vancouver Keith
at 6:20 pm
Counting the total of the NDP, Green and Liberal vote, you’ll be over 50% in almost every single Canadian election in history. The total right wing vote never reaches 50%, and the Conservative vote has held power at less than 40%. Bring in proportional representation, and the Conservatives would almost never be in power, barring finding common ground with the Liberals. Maybe under a Chretien style Liberal government.
Ace Goodheart
at 1:06 pm
Watch the Liberals spend money. I have been doing this, and what I have seen is illuminating. During COVID, for example, I watched as companies who had Liberal connections obtained massive payments of “COVID money” and then turned around and spent the money in ways that had nothing to do with the pandemic. For example, a private ski resort built a new ski lodge and added chair lifts. Members only. Borrowed tax money.
Have a look at the companies who benefited from the millions spent on “arrive Canada app”. The people running the companies actually worked for the Liberal government.
The Libs are not only a tax and spend government, but they are feathering their own nests. They are doing it out in the open, and not even hiding it. No one seems to want to report on it. You have to do the digging yourself.
I still remember the head of a charity that shall not be named, telling all of us openly in the media that the Prime Minister just called him up and offered him a billion dollar contract and of course he said “sure”!
No tender process. Just call him up and offer it directly, he’s your friend after all.
When these people come after your house, it is time to vote them out. There is no way that any of this money will ever get back into the hands of young people who want to buy houses. Not a penny collected will ever see the light of day. If they figure they can get 5.6 billion a year by stealing people’s home equity from them, that is just another 5.6 billion for the Liberal spending machine to give out to their friends and associates.
I think honestly this is the last straw with this government. They need to get voted out, the sooner the better.
Bryan
at 2:07 pm
Let me start off by saying I think this proposal is both horribly burdensome to the huge swath of people who are house-poor(regardless of age… perhaps even more so for young people who have just barely made it into the market), and also very unlikely to be effective in any way shape or form on promoting “generational fairness”. I think its bad for the economy, bad for the elderly, bad for the people it is trying to help, and bad for me personally. Just bad. Don’t tax equity, it’s dumb. People don’t live in the S&P500 which is why primary homes (for now) are exempt from capital gains (this also, to answer David’s question, is why no one complains about expensive stocks like they do expensive housing). But home equity itself is going to be taxed? Are we going to start taxing stock portfolio values too? What if the price of peanut butter goes up after your trip to the grocery store and you still have the jar in your pantry?
With that out of the way, I do think we need to have at least a baseline agreement on the fact that there is a “problem” with the disparity in affordability seen across different generations. I am not sure how David can say that 20-somethings feeling they have been shortchanged is because they have been indoctrinated by evil academic institutions, when I remember him suggesting on this blog that if you want your unborn kids/grandkids to be able to afford a condo in the city in their lifetime you should buy it for them now. The trend is obvious. For people born in the 50s home ownership was no problem. Born in the 60s/70s? A bit tougher but doable! 80s and 90s? Hard to very hard depending when. 00’s and 10’s? No way… and maybe never again? That’s not good, right? One could argue that people don’t have an inherent right to own a home, but we as a society have defined the Canadian/American dream in no small part based on the idea of owning a home with a husband/wife and kids, 2 cars in the garage etc etc. Tough to turn around and say “but it doesn’t count if you’re under 20, suckers!”. This is what most people mean when they talk about generational fairness, and there are a lot of non-stupid ways to address this issue (build a million times more homes, start putting higher paying jobs in places with cheaper housing so people don’t need to choose between living where they can afford and having a career, make it possible for people to get to their high paying Toronto jobs from further away where its cheap to own etc). In order to get to those non-stupid solutions though, we need to collectively move past the argument of “Back in my day it was hard too. Young people are just whining/dumb/indoctrinated/communists.” vs “Old people have ruined the economy and are not allowing young people to succeed because they are greedy. Punish them with more tax!”. *Heavy sigh*
Ace Goodheart
at 3:44 pm
Partially agree.
Back in 1980 my parents bought a house for 77,000.00 with a 19% mortgage. At the time, my father earned $11,000.00 per year and my mother earned $6000.00 per year.
That house was far from a luxury pad. It had no dishwasher, no air conditioning, three small bedrooms and a driveway that fit two cars.
We owned one TV, a 14 inch RCA that got eight channels by way of a rotary antenna mounted on the roof. When it rained, the antenna wire got wet and the TV reception disappeared. We would just wait until the wire dried out, then we could get a picture again.
Rainy nights were games nights. We played monopoly mostly (because the TV didn’t work).
We had one car, an early 70s Dodge. The heater did not work, so it was quite cold in the winter. We just bundled up with blankets. In the summer, if you stopped it, you had to wait an hour to start it again (some sort of heat soak problem with the starter). You had to plan your trips. There was a hole in the floor on the passenger side, and if you moved the carpet out of the way you could watch the road pass underneath you.
We didn’t take vacations. Couldn’t afford them. My parents didn’t go out for dinner. The first time I got to drink a coca cola was in grade four, when we found one unopened in the recess playground. Imagine a group of 12 kids all eagerly taking sips from something that our parents would never buy us, because it was just too expensive.
To say that my parents were better off than me is laughable. My kids to go to expensive resorts twice a year. They like to tell their friends about “Mexico” and the other places we have been like they are talking about their bedrooms or their backyards. They know what a “kids club” is and they are comfortable discussing the intricacies of buffet dining, and how to get the toast to go all the way through the toaster during breakfast buffet time. They have been in airplanes many times (I did not fly until I was 25, and went to Europe on a paid ticket student exchange).
To talk about taking homes and home equity away from these people, who went through hardships that are unimaginable to the average middle class kid nowadays, is not just hurtful it is ignorant, disrespectful and just dishonest thievery. These people went through things that our entitled 20 somethings only read about (if they bother to learn and understand the past).
I cannot agree that the parents and grandparents of 20 somethings had it better than they do. That is just unimaginable . All that is, is forgetting the past.
Bryan
at 5:16 pm
I am glad that is the story for you, but the statistics tell a fundamentally different story for most.
Let’s start with wages to level-set. Lets take 1980 (as you chose), today, and 1999(25 years ago) as a midpoint. According to Stats Canada, the average Canadian income in 1980 was $45,000. In 1999 it was $45,500 and in 2022 it was $57,100. So that’s a 25% jump in wages over the last 45 years.
What about house prices? In 1980 the average price of a home in Canada was about $150k. In 1999, that only rose to about $160k. In 2024? $715k! That is a 500% increase in the last 45 years and almost the same in the last 25 years.
What about cars? In 1980 a brand new Buick Regal cost $9,600. In 1999 a “similar” for Taurus cost $22k. In 2024 a Honda Civic is $34k. For new cars we have just a 300% increase in cost then…. don’t even get me started on the fact that a 10 year used Honda Civic is going for $15k as a stand in for that used 70s Dodge you speak about.
This is the statistical truth in almost every single consumer category in Canada. We have seen 300-500% growth in prices since 1980 with a 25% growth in wages. The 3 key exceptions are: interest rates which were high throughout the 80s, low in the late 90s and have grown since to “medium”, consumer electronics (think TVs, and thankfully air conditioning) which have bottomed out in price due to better technology for manufacturing them, and vacationing which has become cheaper due to increased competition. That is not nearly enough to make up for the economic realities outside these 3 categories.
I don’t think anyone born today could(or would) argue that they have it worse than their grandparents, but it is a statistical truth that they have it much more expensive compared to what they earn. Saying otherwise is to me every bit as ignorant as people suggesting punishing the elderly for having a home that has increased in value.
Ace Goodheart
at 7:21 pm
In 1980, the interest rate on a car loan was above 30%. That is why cars were cheaper.
Mortgages were 19-20%. That is why houses were cheaper.
Honestly other than a doctor I don’t know of anyone who was making 45k in 1980. My father’s salary was average for that time. 11,000 per year was considered generous.
1980s cars lasted maybe 100,000km. You had to do the maintenance yourself. You learned to clean a carburetor, adjust points and gap spark plugs. Everyone had a way of parking over a ditch so they could drain their oil.
Keep in mind also, the kids want 4 bedroom houses in posh neigbourhoods in Toronto, fully renovated with high end appliances, fancy kitchens and upgraded everything. If they don’t have a mil or two to buy such a house, it’s a national crisis and we need a new tax.
Our first house was in Bowmanville at the end of a dead end street next to a mosquito swamp. 77k didn’t buy you a lot of house, even back then…..
Swansea Muse
at 7:40 pm
@ACE GOODHEART Agreed re wages. According to the Government of Canada: “In 1970, the average income of a census family was $9,600. By 1980, it had almost tripled to $26,700.” I don’t think my parents came close to those numbers, but managed to raise a family of seven in a 4BR 1 1/2 Bath house that they bought for around $46,000 in 1975.
Bryan
at 8:17 pm
I mean…. I pulled that mean wage off of stats Canada (mean for all employed earners over age 15 excluding zeros on tax returns). I also anecdotally remember it being a lot less but that’s what it says.
Bryan
at 8:21 pm
The interest rate does not make up for the gain in value. How is someone supposed to save a down payment to even move on to paying a mortgage if they don’t already have property? 20% down on $77k is 15 grand. 20% on the average home in Canada right now is $140k!! And that’s on top of the tens of thousands in debt these kids are in out of university.
Vancouver Keith
at 6:39 pm
My dad bought a house in 1961 for $8500 in1961. He was a lab tech for the ministry of forests, an entry level job that paid $400 per month. Three children. In 1966, there was a shortage of teachers, so they allowed people with three years university to get a teaching license. My mom went back to school for a year, and became a teacher without a bachelor’s degree.
My dad moved up the ladder in his job, and made somewhat more than a teacher at the bottom of the pay scale in his career, and we had two incomes that could raise a family from the late sixties. My parents bought a better house in 1968 in one of the best neighbourhoods in Victoria, Oak Bay for $18,000, then bought a dream house in that neighbourhood in 1972 for $55,000. In 1975, they bought a boat, in 1977 they bought a bigger and better boat, then in 1979 they bought recreational property on Saltspring Island (hippie version of the Muskokas) for $30,000 – two acres, water view. Raising a family of three children.
My dad retired early on his pension at age 53, my mom retired at 59 after 30 years of teaching on partial but fully indexed pensions. They travelled the word in retirement.
They worked in the public sector. Full government worker benefit packages, sick days, 8 weeks vacation for my dad, teacher’s schedule and vacations for my mom. Seniority. Security. Pay rises way above inflation in the sixties and seventies. Two years of university for my dad, three years for my mom. The people that replaced them had masters degrees and have a fraction of their lifestyle.
In 1981 a unionized Safeway grocery clerk in B.C, made $16 per hour, with full benefits and a pension. Double time on Sundays. My in laws came to Canada with six children in 1967, no English. A unionized sawmill worker and a unionized chambermaid with six children. Bought a house in east Vancouver in 1968 for $13,000, paid off the mortgage within seven years.
No on will actually admit just how good workers used to have it in Canada, no one will believe how cheap real estate was and how good the job market used to be, especially for those born in the thirties and forties. Working Canadians have been losing real income and lifestyle since the seventies. Drip. Drip. Drip. Wage increases modestly below inflation, do it for a few decades and you hit a tipping point. Now the pitchforks and torches are out. Kershaw is out to lunch with his solutions, and incorrect in some of his assumptions but the world has changed. Coming of age in the eighties, with 20% interest rates and a lousy job market, we were told to suck it up. We did, and the world did recover somewhat. Now the real estate market defines far too much, and has become economically toxic. Working people used to buy a house and raise a family. Now no chance, and people are surprised that there is resentment . I’m surprised it took this long.
Derek
at 10:21 pm
VK, that’s an interesting post which touches on some deep issues. As manufacturing jobs left us for overseas, unions jobs left with them. The remaining non-union service sector, insurance, banking, financial, temp-staffed death factory jobs / careers are majority non-union. The population came to resent unionized workers, coincidentally now predominantly government sector jobs. What a coup by corporate shareholders and “Bay Street” to eliminate that former bedrock of a better work life.
David Fleming
at 5:16 pm
@ Bryan
Houses in London, England were much more affordable in the 1950’s.
Today, most people aren’t delusional enough to think it’s their right to own a home.
Why is it different in Canada?
That’s the question.
And yes, I do think that post-secondary education has devolved into chaos. Considering my background, and I didn’t want to get into this in an open forum, I look at what’s happened over the last eight months and I can’t believe what I’m seeing. Harvard, UPenn, and MIT deans in congress? I’ll never get over that…
Bryan
at 8:36 pm
David. If only I had the time and eloquence to speak my opinion on the loudest voices coming out of universities right now. There is a reckoning coming for academia but as a guy who spent many years at university and hires a whole bunch of grad school kids these days, I still think that the silent majority feels the way you and I do. I hope they stop with the silence soon.
To me the difference with England (and most developed nations) is the number of job centres. The British don’t need to live in London to have a good career. They can work in Manchester or Liverpool or any of a number of other metropolitan centres with a lower cost of living. My question for you is if a kid graduates as an aerospace engineer (for example) in Canada where can they go to live and work where it is affordable. There are jobs in the Golden horseshoe where they can’t afford to own property. There are jobs in Montreal if you speak french… Or there are a million jobs in the US where they get paid more and pay less for homes. That’s why it’s an issue in Canada. We need people like this contributing to the economy but have created a situation where we aren’t competitive for them in the global market… So the best ones leave. That isn’t the case in Britain. There isn’t some other huge high paying English speaking hub next door with cheaper homes!
London Agent
at 5:31 pm
At what point in history has “generational fairness” been a concern. This is reality and the fact is that you can’t have your cake and eat it too and it is 100% not the governments job to hand it to you on a silver platter. I’ll take it one step further and say that it is extremely irresponsible for the government to ever imply that everyone can have whatever they want. Blame the Liberals that have delivered that messaging to young people across the country for the last 10 years and created the conflict that you outlined above.
Bryan
at 8:40 pm
Oh 100%. Politicizing this issue is pretty much the worst thing they could have done for actually helping it. I worry we have entered the twilight zone where the idea of housing affordability has become the lynchpin of our political discourse and will never come back to the realm of problem solving again.
Mike Hunter
at 3:55 pm
David, I respect your blog but this is a trash article, because your initial premise, that this tax is something our PM “seems to be in favour of” is completely unsupported. I’ve seen nothing which suggests Trudeau has floated or endorsed this home equity tax. He appeared on a podcast with a professor who has suggested this tax as a policy approach. That does not mean the government is considering the idea.
We have enough problems in this country (including with our current government) that we don’t need to invent things to be upset over.
David Fleming
at 5:13 pm
@ Mike Hunter
You didn’t listen to the podcast.
I did.
Jimbo
at 3:09 pm
Is it a home equity tax or a capital gains tax on the sale of primary residence?
Zelda
at 2:57 pm
Sure, let’s just sit by and let this flailing government keep taking and taking and taking…..$$
Perhaps written by someone who has never bought a home?
Excellent blog, David.
Listen to the podcast.
London Agent
at 5:24 pm
I’m confused as to why Generation Squeeze is advocating for more taxes and “squashing housing prices” so that young people can get into the housing market while at the same time destroying what makes owning vs renting so attractive. If this tax were implemented and successful, why then would a bunch of 20 somethings think “great I can finally get into the housing market” when the supposed advantage of owning your own home is gone.
It is so backwards, what else can be said other than this is punitive? If we can’t have it, nobody will.
Any idiot should be able to realize at this point that any extra money this government can generate, it surely won’t be used effectively to create more housing or help young people get into the market.
This country has such a problem with renting (makes no sense) which is why the young, entitled generation of wannabe homeowners feels like they are being shut out. They feel that there is only one way to live in this country while their peers across the world gladly accept that renting offers a ton of advantages over owning.
Perhaps it’s time to acknowledge that we are shifting away from the “Canadian Dream” of home ownership for everyone to a more even split between owners and renters akin to other, older parts of the world.
JF007
at 4:03 pm
My 2 cents…and I think has been expressed by me in the past and by some already on this post…
The obsession with buying a house is what is driving both the demand and frustrations for those who are unable to get in…my folks bought a house after they retired..i bought my first a 2+1 condo on yonge and finch in my mid-30s..david had once posted in a blog how someone he knows bought their first home in their 40s or might have been 50s after spending years renting somewhere in England..so why does a 20 something think that owning a home is their right..why not start with a studio app or a 1 bed and graduate over a period of time to larger accommodation?
We can keep throwing up stats but one stat we should also talk about is how lifestyles and social media has contributed to a consumption culture which means that people are not saving up as well as much as they used to do as we used to do or our parents used to that helped in getting the condo, house etc which we desired and achieved..
As for JT…well i consider myself center right or left depending on topic but i am willing to go all the way to the right to boot him out and liberals and make sure NDP doesn’t play kingmaker anymore..i have no clue what PP’s policies are but him being anti-JT is more than enough for me at this time.
Ace Goodheart
at 7:51 am
This is true.
What I can’t get over about all this, is that this professor is at the most simple level, lying to kids.
You don’t go to school, get a big money job, and then go out and buy a house. That is a lie. Even for a doctor that is not true. You have to build a practice, hire staff, make investments, lots of work before you even earn a dime.
He is lying to kids straight out.
There is no intergenerational responsibility. No old person owes you a job or a house. That is all up to the young person.
Maybe in the 1950s people were doing this. But not in the 1980s (when I came into adulthood ) and not at any time after that.
Hard work and good investing sense gets you stuff. Not communism and taxes. This guy is out and out full on lying to young people.
DAF
at 4:45 pm
AMEN
Marc
at 9:17 am
Usually I think you provide a sound counterpoint to some of the narratives that pervade our mass media but in this case I think you have missed the forest for the trees by focusing on the tax proposal and not on the generational inequity which you yourself need acknowledge is required: “it should be a reminder to us all that we must find some sort of middle or common ground.” Your analysis comes across as an angry, overly-defensive rant. As someone who has benefitted massively from the run-up in home prices, even I am not naive enough to think that my “hard work” is the reason I am now a paper millionaire. Living in a society means we think about the wellbeing of all and the sustainability of quality of life for ourselves and the generations that follow. My generation and the generations before me have utterly failed in this responsibility of delivering on this social contract. So you don’t like the tax and expound on that at length – what is your proposal then?
Ace Goodheart
at 2:46 pm
There is no social contract.
Young folks have done nothing to deserve or to be entitled to anything, and nothing in life is easy, comes easy, or is free.
How a 20 year old came to believe that they were entitled to good high paying work and home ownership as some sort of contracted right, is beyond my comprehension.
The person has done nothing at all. Most of these entitled young folks have never worked.
I would say give up your illusions, get a grasp on cold, hard reality, get working on building your business and your income and assets, and watch for opportunity (it usually comes dressed in cover alls and looks like hard work).
Right now, in the next year, will be the buying opportunity of a lifetime for Toronto condos (they are getting cheaper every day). Houses will follow.
Be fearful when others are greedy, greedy when others are fearful.
Above all, stop whining and feeling sorry for yourself. Allowing a government to tax things and steal from people, won’t make you rich. It’ll make you into a communist. It breeds poverty and decline. Fight against taxes, don’t advocate for them.
There is no social contract in a capitalist country. Please get over yourselves. No one owes you anything.
Dusty
at 3:17 pm
This isn’t a generational fairness tax. It’s a tax on cities, where house prices tend to be higher.
Gord McCormick
at 5:46 am
I would add the Feds already collect a ton of tax revenue from ” CMHC mortgage insurance premiums” (basically, a Federal tax) which, if anything, burden the younger generation or first time home buyer and of course, all the HST collected on every activity involved in housing. Perhaps however, the Feds have lost a lot of that mortgage insurance tax revenue to private sector insurers, and feel the need to tap yet another revenue stream on the housing cash cow.
The CMHC hidden tax has long been one of my least favourite hidden taxes: $10,000-$20,000 in CMHC fees which the Feds get in cash…but don’t worry….the good banks will add that to the buyers mortgage, so they can pay it back with lots of interest over the amortization period of their mortgage….how’s that for “generational fairness”?
Rina Rossi
at 1:48 pm
I hope this tax will not be imposed upon Canadians. We can’t have an election soon enough to rid of this clown . Canadians need to fight against this nonsense !