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…