A #TaxShift to Benefit the Vast Majority
Why did we write this report?
To restore housing affordability forever, we need to think big picture.
We need to treat housing as Homes First (investments second). We need to dial up the right kind of supply, dial down harmful demand, scale up permanently affordable housing, and rebalance our tax system.
The latter requires a broad #TaxShift that benefits the vast majority of residents: less tax on local income, more tax on crazy housing values, and better investments in young and old alike.
However, a backlash is brewing in places where new housing wealth taxes have been implemented or proposed. Indeed, as we were drafting this report, groups of angry homeowners were mobilizing against B.C.'s increased School Tax on homes over $3 million, even though many of those same homeowners are able to defer said tax and/or have experienced tremendous gains in net wealth.
This report responds by making the case for a broad-based #TaxShift to help young peoples' earnings stretch further, cool the market, and address growing inequalities between renters and owners, and young and old.
Instead of backing away from a #TaxShift, governments need to refine what we have, and go even further.
Key takeaways
- Annual revenue from Canadian municipal property taxation is down $4.4 billion since 1976 (measured as a share of GDP), despite the $2.6 trillion in additional net wealth accumulated in principal residences. This means we lean more heavily on income and sales taxes, disproportionally burdening younger Canadians.
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The tax bill now paid from younger to older Canadians — via contributions to retirees' medical care and old age security — is up to 62% higher than four decades ago, even though windfalls from rising home prices have disproportionately made many older citizens wealthier.
- A broad-based #TaxShift can be designed to protect "house rich, cash poor" residents, create net gain for young people who just clawed their way into an expensive home, and ensures we don't make it more expensive to build new supply.
How you can use this report
- Share the report with your elected officials: if they understand the problem and opportunity for change, they’ll be more willing to act.
- Share the report with your friends and family: if they understand the problem and opportunity, they’ll be more willing to support a #TaxShift, engage in the issue, and open dialogue with peers.