Pucker up and cough it up suckers, time to pay the bill

The Liberal MP who first floated the concept of taxing home owners’ equity has been involved with CMHC and the controversial University of British Columbia left wing group now researching the issue with a $250,000 grant since at least 2018, PitBullmedia.ca has found.

Back in 2018 Spadina–Fort York Liberal MP Adam Vaughan wrote a policy paper following a town hall designed to spur discussion around how to slow the red-hot Toronto housing market.
His idea was to tax the profits starting at 50% if the property was flipped with in a year and then sliding down to a flat 5% after five years of ownership.

MP Adam Vaughan

The Conservatives, of course, immediately played the fear card, warning voters a capital gains tax on their home equity was in the works. Canadians don’t pay a tax on the sale of their principal residences so this is a dramatic tax policy change.

Now the controversy is back, or rather, it appears it was going on stealthily behind the scenes until Blacklock’s Reporter broke the story about a $250,000 grant to UBC’s Generation Squeeze to research ways of levelling the playing field between homeowners and renters. They advocated doing that by ensuring homeowners didn’t “win the lottery” when their equity surged as home prices soared and the way to end using home equity as a retirement investment.

Predictably the news unleashed a firestorm until Ahmed Hussen, Federal Minister of Families, Children and Social Development issued a statement categorically denying that the federal government was looking at ways to tax the equity of homeowners. For some, however, it rang a little hollow.
“The Government of Canada is not looking at charging capital gains on primary residences. This is not under consideration by our Government. Any suggestion otherwise is false,” he tweeted.
He would be correct, of course, the government hasn’t tabled anything of the sort. The pipeline for the strategy, however, is being primed, and that’s the issue here.

When it comes to politicians, no doesn’t always mean no. They said no back in 2019 but Vaughan has been involved with CMHC which gave Generation Squeeze a $10,000 award back in 2018.

There’s a direct link back to the Liberal Party of Canada on this and no denials can squelch the feeling that we’re being set up. Add in long time suggestions from left-leaning think tanks that it’s time to reimposed death taxes and you get the feeling that going to the bathroom is going to be taxed next.
Curiously even CMHC president and CEO, Evan Siddall, denied the CMHC is researching it.
“The suggestion that @CMHC_ca is funding a study on any tax measure is inaccurate and misleading reporting. We are co-funding a Solution Lab on housing wealth and inequality. We do not control the agenda nor the research base, which is a minor component of the protocol,” he tweeted.
Oh, it’s a surprise to him? Not quite.
In fact, Siddall and CMHC have been working with UBC’s Generation Squeeze since at least 2017 18,.
In 2018 they gave UBC professor Paul Kershaw, $10,000 as an award for his ‘Generation Squeeze’ project. Guess who was in the picture at the inaugural event to present the cheques? MP Adam Vaughan.

Coinkydink? Don’t think so.
CMHC doubled down on the relationship with an on-line web seminar the following year in April 2019. Again, there’s no secret that Generation Squeeze is out to siphon home owner equity and use the tax bonus to fund affordable housing, the impact on Canadian retirement plans and the market itself be damned.
When called out by Blacklock’s, Siddall seems to have been taking lessons on subterfuge and obfuscation from the government.
Yes, the CMHC isn’t researching a way to tax home equity but for two years it’s been cozy with a left wing group that see it as a way to “balance the field.”
Let’s look at Generation Squeeze.
Complete with a picture of a bearded hipster (so 2015) it bills itself as “a voice for young Canadians — in politics, in the market, backed by cutting edge research. Together, we’re squeezing back!”

It’s not just a think tank for housing and social issues, it’s a political organization with full intent” “We run people-powered campaigns advancing bold solutions to the 360-degree squeeze. And when you’re too busy to get involved in those, we suit up and advocate on your behalf!”

With 40,000 members, it’s hardly even as big as the Green Party with whom it doubtlessly shares some values such it’s position on Climate Change.
However, as a political action group, it’s tailor-made for the Liberal Party of Canada to get a direct pipeline into a fertile young voter segment, something the party has been desperately cultivating and what led it to get in bed with WE and funnel millions in untraceable money their way.
Make no mistake, this kind of largesse comes with a payback and it goes way beyond some cash for Sophie, Margret and Sasha Trudeau.

So with Adam Vaughan’s socialist manifesto driving the discussion the CMHC seems to have been nudged into bed with Generation Squeeze, tap into those billions of equity, under the guise of shutting down foreign speculators, hitting real estate speculators and greedy landlords and offering millennials, that, oh so important voter segment hope at home ownership and iron-clad reason to vote Liberal next time.

Generation Squeeze is quite transparent, demanding “politicians to take urgent action to ensure housing is treated as a place to call home – not a way to get rich – for all Canadians.”

Owning a home shouldn’t be like winning the lottery, they say, and if you make money on your home, you should pay tax on it like any other income.
The upshot is CMHC gave Generation Squeeze $250,000 to “treat housing as a home, not an investment.”

The project was being organized in July with a call for participants and was to kick off in September.
“We need to make it so that no Canadian relies on gains in housing wealth to feel secure, and we need to rethink the policies that – by encouraging the financialization of housing – push the cost to buy or rent a home even further out of reach,” Co Executive Director Eric Swanson said.
So for the 65% of Canadians who are homeowners and the many more who aspire to home ownership, the message is this: we want to change the rules of the game because we don’t think it’s fair that you got on the property ladder and young people are struggling.
The issue, however, as they will undoubtedly discover, is fraught with peril.

Never mind pissing off those 65% of homeowners who are likely to vote, never mind imposing a tax on home equity as if it were a wealth tax and never mind the political suicide aspect for any government that ran on this as a key platform.
Those alone will make any scheme Generation Squeeze comes up with a non starter and that means CMHC is throwing money down the toilet.

Start to think of the ripple effect. Americans pay tax on the capital gains from the sale of their property, regardless of whether its a principle residence or not. The offset is that the mortgage costs, the repairs, renovation and maintenance are tax deductible.
It’s why Americans tend to not pay off their mortgages. They made that decision decades ago and they’ve come to regret it.
But that’s them, not us.
As it stands in Canada, unless you use a portion of your home as an office to run your business, you can’t deduct squat.
But then you don’t pay capital gains when you sell it. You will pay capital gains on your second home, such as a cottage or ski chalet but that’s a different story and there are ways to get around that.
The impact on the tax structure alone would be massive with people rushing to mortgage their homes to the hilt to extract their equity before it gets taxed and, of course, demanding that if you’re going to tax an asset you must be allowed to deduct the cost of maintaining that asset, including the property taxes, electricity, gas, water, renovations, repairs and maintenance.
Further, when and how does the valuation work?
If you bought a home in say, 1990 in Toronto, for $120,000, invested 180,000 in mortgage payments over 25 years, $100,000 in repairs, renovations and maintenance and $4000 a year in taxes, how are you going to account for all of that when you sell it in 2030 for $1.5 million. If housing prices don’t collapse.
I know of a young couple who are selling their Edmonton home at a loss and being transfered to Toronto. Is the government going to compensate them for the differece?
When does the tax kick in? This would be a generational change and a massive upheaval in traditional investment stragies. You can’t implement it overnight. You may even have to grandfather those who own houses now and those who buy after the implementation date, immediately creating two classes of ownership and distorting the market.
It’s a bureaucratic nightmare in the making.

Meanwhile, the Liberal strategists are still thinking. What if? What if we could, through a convenient front, come up with a way to access those billions from homeowners. Sure would help pay down the trillion dollar debt we’ve run up.
This isn’t a nothing burger here. They’re actively looking and using agencies like CMHC as stalking horses.
The bigger question really, is why is CMHC giving money to a clearly politicized and leftist group for this kind of research. Can you imagine if they gave that money to, say, the Fraser Institute, the right wing think tank every progressive hates?
Why is the CMCH being politicized like this? This is far beyond data research into the housing market. This is about political strategy and it’s offside.
But this is only the beginning. Next, not content to attack the equity in your home, presumably part of the legacy for your kids, they’re going to come after all your estate before your kids get anything.
Canada doesn’t have death duties like the UK where the inheritance tax on anything more than £325,000 is 40% and 36% if 10% or more of the estate is left to charity.

Instead we have income tax on your investments gains as income. The deceased is deemed to have sold all their investments at death and any gains in the value those investments is counted as income. Also, if those funds are held in a shelter such as a Registered Retirement Fund, they are also deemed to be sold at market and count as income.
It can result in a massive final tax income tax bill if there’s no estate planning. Then there’s probate which requires court approval of the will in most cases and fees there start at $5 for every $1,000 of assets up to $50,000, and. $15 on every $1,000 of assets over $50,000.
Still, that’s not enough for folks like the Canadian Centre for Policy Alternatives, the left wing foil to the Fraser Institute, put out a report in 2018 that laid out a plan to tax Canada’s wealthy families.
“Instituting a 45% estate tax on estates valued over $5 million,
in line with the rest of the G7, would add $2 billion to federal revenue.
Eliminating the 50% tax break for capital gains and the 25% tax break on
dividends would raise $11 billion and $5 billion annually while almost
exclusively targeting Canada’s highest earners,” CCPA’s senior economist David Macdonald.
And that sound great. Make the rich pay.
But what if, you dropped that $5 million to $2 million. Between housing prices and RRSP and TFSA and other investments, well, that would open up a lot more people wouldn’t it?
And a lot more tax revenue.
Then there’s a wealth tax. Unlike a property tax or an income tax, it imposes an annual tax on your holdings.
It was common in Europe but only four countries retain it because it is so difficult to administer, usually hitting people who have jewelry, paintings, art and other holdings which have a fluctuating value.
Spain’s kicks in at US$700,000; Norway’s at $172,000. How long do you think that $5 million threshold will hold if Canada brought one in. How quickly would capital and investments flee if it was tabled?
Sure, it’s make the ultra wealthy pay today. But pretty soon they’re coming for you, the middle class voter living in Toronto and struggling to pay down your $1.5 million home in Riverdale.
Look out. The tax and spend Liberal government is coming after your house and your estate. And they wonder why people move money offshore?

1 thought on “Pucker up and cough it up suckers, time to pay the bill

  1. When the Minister of Finance promises not to introduce a capital gains tax on personal residences that doesn’t prevent him from introducing the same tax with a different name. After all, the carbon tax is a species of sales tax at both wholesale and retail levels but it has a different label.

    Given the current minority government status it is unlikely that anything will be done prior to the next election. But I’m old enough to remember when Pierre Trudeau beat Robert Stanfield in an election by asserting that the Liberals would never introduce wage and price controls. A year later Trudeau did exactly that. Give it a year or two after the next election and it would not be surprising to see some sort of tax on principal residences.

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