“One of the common responses to the first article was that “Boomers worked hard to get where they are. Millennials should too.””
“As the apocryphal Einstein quote goes, “If I had only one hour to save the world, I would spend 55 minutes defining the problem, and only five minutes finding the solution.” We all need to spend the time to understand and define the problem. It turns out that if you care about housing affordability, you also need to care about how the global economy works and what that means for our 20th-century tax system.”
“Absent a revolution in our economic structure, we need to make market-housing affordable once more.”
“Simon Fraser University’s Josh Gordon wrote the most accessible work on the issue of housing in Vancouver. It suggests that lack of supply, zoning issues or even scarce land is not the main problem in urban centres like Vancouver. Gordon shows that Canada’s Millennials are not only competing against their fellow Canadians for housing, they are also competing against a tide of global capital coming into Canada’s housing markets. Where once the housing market was limited by the ability of the local labour market to pay, it is now a globalized commodity.”
“The problem with this particular influx is not just that it makes housing expensive. It breaks the Canadian social contract.”
“At the core of this contract is an understanding that Canada is a society of relatively high taxes and relatively high services. Globalization makes it much easier for significant proportions of the population to collect their social services in Canada and declare their income elsewhere.”
“One example is the Immigrant Investor program, where those wishing to immigrate would make an interest-free loan to government of $400,000 in exchange for landed immigrant status. UBC geographer David Ley has shown that investor immigrants in the Vancouver region represent nearly 10 per cent of the Vancouver region’s population.”
“But a focus solely on investor immigrants leads us down the wrong path. It’s not the immigrant side of the equation we need to pay attention to. It’s the investor side. Those with significant wealth—even longtime Canadians—are too often moving money around the world to avoid taxes.”
“The number of wealthy tax avoiders of all types has reached critical mass. High-end neighbourhoods are no longer populated with taxpayers who help pay for the services of low-income Canadians, but rather are populated with Canadians who are a net drain on the system. This breeds the kind of resentment that Donald Trump rode to power. Policies around foreign ownership aren’t effective in solving the problem—the buyers are Canadians.”
“Economists at UBC and SFU have recommended different proposals for an efficient way of making Canada’s housing less desirable to those who simply want a place to park their wealth. A property surtax is an elegant and legally safer way to reduce foreign capital flows into Canada’s cities than the new foreign buyer’s tax. A one per cent surtax would work like this: if you own a $1 million house, you will receive a surtax bill for $10,000. If you have already paid equivalent income tax, are on a disability pension, or if you are a retiree on CPP, the tax is a full deduction—you’ve already paid, thanks.”
“The above proposals focus on slowing housing investment. They answer the question: How do we solve the housing crisis? But the housing crisis is a by-product of free-flowing global capital. The policy question that addresses this more fundamental issue of concern to all generations is: How do we ensure that Canada evolves its tax system to be fair in an era of free-moving global capital?”
“On a personal level, Boomers need to realize that in all likelihood a Millennial isn’t angling for that promotion after six months because they are special flowers. It’s because they have been told they need to do exceptionally well in their careers to make it up their mountain.”
“They are angling for that promotion because to have what was once an average lifestyle means they need to make a VP salary by the time they are 30. Acknowledge this in your own thinking and your discussion with other Boomers.”