Who wants to be a millionaire?

When I bought my home 8 years ago, I felt sick. The woman I bought it from was delighted when we signed the paperwork—so delighted I knew that I had been had.

I hope she’s still smiling now—she’s a wonderful woman, by all accounts—but I certainly no longer worry that I overpaid. According to the MLS, I could sell my house today for more than double what I paid for it; and small, conventional, solid-but-unexciting houses like mine now sell for nearly a million dollars in Weston.

So now I worry for other reasons.

 

House values over time

Let’s be clear: This is bonkers. No normal people can afford an $875,000 home (the average selling price). The mortgage alone would eat about 60% of a typical family’s after-tax income. That does not include repairs, taxes, utilities, or, heaven forbid, daycare or a car.

Of course, some people can afford it: the well off. Weston, with the excellent UPX and connection to highways, will see more upper-middle-class people moving to town as they are driven from the city proper. Doctors, dentists and lawyers need places to live, too, after all, and they’re not the worst thing that could happen to Weston; but middle-class working people, working regular jobs as nurses, daycare providers and project managers, will be priced out. You can expect the neighbourhood to change. I, for one, don’t like the direction.

And make no mistake: we will be in danger. RBC is worried about “unexpected shocks” and “destabilizing developments”. A housing downturn would crush the economy. This should worry everyone.

But I worry about something more local and subtler. The divide between the haves and the have-nots (and have-lesses) is going to widen, and it’s already bad enough.

Most people in Weston aren’t millionaires—not even close—but some of us are, and don’t kid yourself: the wealthy don’t deserve it. The rich (me, weirdly, among them) merely had the good fortune to buy a house at the right time. The implications of this might be hard to take. Inequality probably reduces trust, social participation, empathy, and happiness, capacities I’d say we are already short enough of.

Will it be hard for the daughter of millionaires to go to school with the kids of those frozen out of owning? Will the son of lessors feel lesser? Will they both join student council, run for valedictorian, join the Scouts, and worry about the state of the city? Or might one of them feel just a little more invested, like she has a greater claim on the city around her—while the other feels like the room, the city, is always just a little bit colder, a little greyer?

So yes, I worry.

Of course, there are no easy answers (except the foreign-buyer’s and vacant property taxes). But here’s one nobody wants to hear: an increase in property taxes. Because frankly, if you write a check for property tax, you should fall to your knees in gratitude. You own your house.

And now, our property tax system is simply perverse. The rate on older apartments is 2.5 times the rate on freehold homes. People living in older, high-rise apartments (who are disproportionately poor) actually pay a higher tax rate than millionaire lawnowners.

This is unconscionable.

I propose something simple and fair: the tax rate on all properties, old or new, rented out or owned, should be exactly the same. Lawnowners will pay more, as will those building new developments. Renters in old buildings will pay less.

Will this solve our problems? No. Only interest-rate changes will, and that will be ugly. But taxing equally and fairly will make renting more attractive and buying less so. And it would go some very small way to saying that we are all in this together.

 

 

 

Author: Adam Norman

I am raising my two children in Weston.

5 thoughts on “Who wants to be a millionaire?”

  1. Adam, I do agree that the tax system is perverse. However, you are missing a vital factor. Commercial towers are not very profitable, in fact some have actually been abandoned, value less than nothing. SO the paid taxes, although nominally a higher rate, are based on a low assessment, while our low residential tax rate is based on a crazy million dollar valuation.

    We need to see how much a two bedroom bungalow selling at $1M will pay compared to a 2 bedroom apartment on Weston Rd. BOTH get the same municipal services.

    1. In fact, your property taxes are not based on an absolute valuation; they are based on a relative valuation: each property takes a slice of the total bill based on the property’s value. So if your house goes up in value, and everyone else’s does too, your property tax does not increase. It’s explained very well here:

      http://torontoist.com/2016/12/how-property-taxes-work-toronto/

      That approach strikes me as very fair. What does not strike me as fair is that renters pay more. On what principle could that be based? None that I can see. Even if there were such a principle (perhaps to discourage renting?), I can’t see why new apartments should be charged less. Yet they are.

  2. Adam, this is sane and just: you write so well, and you point out the inequality and its effects chillingly.

    And the same services are not available for apartment dwellers who share public space much more intimately than people in houses. And houses are built on pleasant streets, while apartments are mostly on busy roads.

    It’s true, no one wants to live in an apartment on Weston Rd.
    The property tax is

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