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  #41  
Old Posted Jun 9, 2020, 10:17 PM
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Originally Posted by theman23 View Post
Yeah, I was gonna say. Most millennials will be planning for retirement before they end up with any inheritance.
The inheritance is the retirement plan for some.

In Vancouver, if you're under 40, I'd imagine assistance from family is a stronger factor in determining home ownership (including condos) than income alone.
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  #42  
Old Posted Jun 9, 2020, 10:18 PM
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Originally Posted by wave46 View Post
It is also dependent on how long the Baby Boomers last.

If they had kids in their 30s and make it into their 80s and 90s, that Millenial windfall doesn't pay off until they are in their 50s or 60s.

Not exactly genius level life planning.
And open to a shock if the government (re)turns to inheritance taxes.
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  #43  
Old Posted Jun 9, 2020, 10:26 PM
swimmer_spe swimmer_spe is offline
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Originally Posted by wave46 View Post
If there's slack in the construction industry, sure, stimulus makes sense.

If there isn't, you're just bidding up costs for things. A construction company working flat-out and who can't get workers it needs (remember the labour mismatch) can't really take on more work.

If we're talking about funding for retraining, maybe it makes sense.

Otherwise, might as well pad EI or something like that - it'll help more than trickle down economics via already employed people.
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Originally Posted by someone123 View Post
Construction is a decent industry for quickly hoovering up semi-skilled labour though. If you were a server in a restaurant you can't quickly switch over to working as a nurse but you could quickly learn to do a bunch of construction tasks.

We are going to see a reallocation of labour in 2020, and somewhat different demands for infrastructure in 2021 compared to what we had in 2019.

The pandemic has potential to provide the "activation energy" for a bunch of positive changes that might not have happened in a more static economy. We were not using our current technology to its full potential before; people were commuting and travelling a lot more than they needed to, for example. I would like to see a radical reimagining of how people and goods get around in cities. More drones, more small electric vehicles, more self-driving vehicles, and more people working near where they live.
People in the service and tourism industry could be lower level construction workers, and still make the same if not more than they did before.

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Originally Posted by p_xavier View Post
Good article on the subject. Basically do nothing could also be an option.
https://www.macleans.ca/economy/econ...epayment-fund/
Doing nothing is what is happening right now. However, you can bet that al major political parties are coming up with their ideas as to how to look fiscally responsible to their base.

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Originally Posted by ssiguy View Post
Never was there a more apt time for a thread on taxation.

The reality is that Canada's financial situation is rather poor. Yes Ottawa's debt level is still manageable but when combined high provincial debt, things are much worse. The economy could take years to fully recover especially tourism and real estate and God knows if oil will ever recover. The reality is that our taxes are going up.......way up. The issue is how we raise them and I think a once taboo subject is going to be a real debate, a wealth tax. Most Boomers are sitting pretty due to their wealth in real estate but as they start to die off, the younger voters {who are vastly poorer} are going to start to demand the services and especially standard of living that their parents and grandparents enjoyed.

I can see an inheritance tax and especially a substantial real estate transaction tax especially on properties over $1 million and secondary homes. This would also have the advantage of weaning Canada off it's unproductive real estate fueled economy. I also think we will see things such as OAS becoming income based and not just flat across the board. Hopefully Ottawa {and the provinces for that matter}also starts to get rid of it's politically motivated niche tax write-offs and choice business subsidies.
A wealth tax may be the easiest method, but it will upset those who make the money. We could see those making over $100,000 seeing much higher taxes, more inline with the 1950s. That was above 70%

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Originally Posted by CityTech View Post
I'd like to see a suite of broad temporary tax hikes (GST, income tax, business tax) that aim to raise $50B a year and expire after six years. That would raise $300B, enough to pay off COVID debts.
The GST was supposed to be temporary. Over 20 years later, it still exists. I would argue that saying it is temporary is the only way that they can make themselves electable.

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Originally Posted by ssiguy View Post
I think the days of the Zoomers & Boomers considering themselves the untouchable Patricians of society are finally coming to an end. They have enjoyed the highest wages, standard of living, and wealth accumulation in history and have used it to their political advantage exceptionally well. Now of course they are starting to kick the bucket and younger people are starting to get pissed off at governments treating Boomers with kid gloves while they struggle to pay rent and pay off their student loans.

I think many new taxes are going to be aimed at this very spoiled demographic as their political power starts to {finally} come to an end.
I am curious as to how that would work. Most are pensioners. Many are selling the family home and cashing in, but taxing that will make the market become even more of a sellers market.

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Originally Posted by Truenorth00 View Post
The uber wealthy have more liquid assets than the rest of us. That enables tax avoidance that normies can't even imagine. That will not change unless there's a global change in attitude on taxing the very wealthy. Should be noted that Europe has moved to crack down on tax havens.

I don't expect much to change. By the 2030s as millennials start getting inheritances, their tune on wealth and inheritance taxes will change substantially. Especially, when that turns out to be literally the only financial break many millennials will have ever gotten in their lives.
It would be nice if we could go after tax havens.I doubt that'll happen though.
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  #44  
Old Posted Jun 9, 2020, 10:38 PM
Truenorth00 Truenorth00 is offline
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Originally Posted by swimmer_spe View Post
A wealth tax may be the easiest method, but it will upset those who make the money. We could see those making over $100,000 seeing much higher taxes, more inline with the 1950s. That was above 70%.
You are mixing up income and wealth. And $100k really isn't that much anymore. It's basically every working professional. 70% taxes for over $100k would guarantee a massive flight of professionals out of Canada. Particularly in tech and healthcare. A 70% marginal tax rate would be a massive jump from the high 30s to low 40s rate today.

https://www.eytaxcalculators.com/en/...alculator.html


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Originally Posted by swimmer_spe View Post
The GST was supposed to be temporary. Over 20 years later, it still exists. I would argue that saying it is temporary is the only way that they can make themselves electable.
Point is nobody buys the "temporary" argument anymore. And the GST wasn't really "temporary". It replaced the VAT regime that was there at the time.


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Originally Posted by swimmer_spe View Post
I am curious as to how that would work. Most are pensioners. Many are selling the family home and cashing in, but taxing that will make the market become even more of a sellers market.
Which is exactly why you see governments dragging their feet on any taxes that would seriously harm real estate prices. And for all the talk about millennial anger, they aren't likely to support taxes on housing once they get real estate either. Nor do enough of them turn out at the polls to really change voting substantially. Though sheer numbers will change that in the next 3-5 years.

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Originally Posted by swimmer_spe View Post
It would be nice if we could go after tax havens.I doubt that'll happen though.
It's also exceptionally difficult. New havens always pop up. Banking on these crack downs to raise revenue or the balance the books is probably not a good idea.
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  #45  
Old Posted Jun 9, 2020, 10:48 PM
WarrenC12 WarrenC12 is offline
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Originally Posted by Truenorth00 View Post
Which is exactly why you see governments dragging their feet on any taxes that would seriously harm real estate prices. And for all the talk about millennial anger, they aren't likely to support taxes on housing once they get real estate either. Nor do enough of them turn out at the polls to really change voting substantially. Though sheer numbers will change that in the next 3-5 years.
I think we need some form of capital gains tax on principle residences. I don't know how this will be politically possible, but even with a lifetime exemption ($1M+), it would make a big difference IMO. Housing should be less of an investment/retirement plan.
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  #46  
Old Posted Jun 9, 2020, 10:54 PM
Truenorth00 Truenorth00 is offline
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Originally Posted by WarrenC12 View Post
I think we need some form of capital gains tax on principle residences. I don't know how this will be politically possible, but even with a lifetime exemption ($1M+), it would make a big difference IMO. Housing should be less of an investment/retirement plan.
The reason we don't impose capital gains on principal residences is to ensure maximum mobility for labour. For example, those of us moving every 3 years in the military would rack up some serious tax bills buying and selling homes every 3 years.

Maybe extend the one year residency requirement to 18 or 24 months. The bigger issue is enforcement. CRA does a shit job enforcing the one year requirement to ensure that people aren't just flipping homes.
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  #47  
Old Posted Jun 9, 2020, 10:56 PM
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Originally Posted by WarrenC12 View Post
I think we need some form of capital gains tax on principle residences. I don't know how this will be politically possible, but even with a lifetime exemption ($1M+), it would make a big difference IMO. Housing should be less of an investment/retirement plan.
The problem with that is that people will then jack up their price, which means housing prices only get higher.

What really needs to happen is the property tax reflect the sale price of the property. This would mean that buying a million dollar home would actually be a bad thing for you and your neighbourhood.
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  #48  
Old Posted Jun 9, 2020, 11:09 PM
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I remember being younger and viewing the Ontario sunshine list with envy, just imagining all the nice things those people could buy with their six-figure salary.

Basically every public servant is now on the sunshine list or very close to it. Inflation alone has made that necessary.
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  #49  
Old Posted Jun 9, 2020, 11:29 PM
p_xavier p_xavier is offline
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Originally Posted by kwoldtimer View Post
And open to a shock if the government (re)turns to inheritance taxes.
They need to. My boomer family are multi millionnaires from Real Estate. Even if I would inherit, they need to tax the wealth.

Quote:
Originally Posted by theman23 View Post
I remember being younger and viewing the Ontario sunshine list with envy, just imagining all the nice things those people could buy with their six-figure salary.

Basically every public servant is now on the sunshine list or very close to it. Inflation alone has made that necessary.
Me it was watching CBC shows and Ontarians had cottages at Muskoka, like we had houses that weren't even winter proofed when I was young. It was such a different lifestyle to see between people in Ontario and Altantic Canada.
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  #50  
Old Posted Jun 9, 2020, 11:32 PM
Truenorth00 Truenorth00 is offline
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Originally Posted by theman23 View Post
I remember being younger and viewing the Ontario sunshine list with envy, just imagining all the nice things those people could buy with their six-figure salary.

Basically every public servant is now on the sunshine list or very close to it. Inflation alone has made that necessary.
People still rage about the sunshine list. And when they do I always ask them who they want paid less, the safety engineer at Pickering Nuclear or their physician. They shuts up people pretty quick.
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  #51  
Old Posted Jun 9, 2020, 11:40 PM
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Originally Posted by Truenorth00 View Post
The reason we don't impose capital gains on principal residences is to ensure maximum mobility for labour. For example, those of us moving every 3 years in the military would rack up some serious tax bills buying and selling homes every 3 years.

Maybe extend the one year residency requirement to 18 or 24 months. The bigger issue is enforcement. CRA does a shit job enforcing the one year requirement to ensure that people aren't just flipping homes.
Meh, the US principal residence exemption is quite low: $250k for singles, $500k for families and their labour mobility is greater than ours.
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  #52  
Old Posted Jun 9, 2020, 11:55 PM
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Meh, the US principal residence exemption is quite low: $250k for singles, $500k for families and their labour mobility is greater than ours.
1) USD.

2) A substantial amount of US housing falls inside those thresholds.

3) US housing is subsidized substantially in other ways. Mortgage interest deductions. Government backed mortgage insurance (Fannie Mae, Freddie Mac). Veterans loans.

I'm not opposed to the idea. Just think the idea has to be fleshed out. And tested against the desired policy outcomes.
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  #53  
Old Posted Jun 10, 2020, 12:09 AM
p_xavier p_xavier is offline
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Originally Posted by Truenorth00 View Post
1) USD.

2) A substantial amount of US housing falls inside those thresholds.

3) US housing is subsidized substantially in other ways. Mortgage interest deductions. Government backed mortgage insurance (Fannie Mae, Freddie Mac). Veterans loans.

I'm not opposed to the idea. Just think the idea has to be fleshed out. And tested against the desired policy outcomes.
Which is always suprising because their housing prices is quite lower than in Canada. You would expect the opposite.
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  #54  
Old Posted Jun 10, 2020, 12:20 AM
Truenorth00 Truenorth00 is offline
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Which is always suprising because their housing prices is quite lower than in Canada. You would expect the opposite.
Their population is far less concentrated than ours. Half of Canada's population stays in the 6 largest metros. Heck, 1 in 5 Canadians lives within 100 km of the CN Tower. Not even a third of America's population stays in the 10 largest CSAs. As such, there's a lot more options and far less competition.

We also subsidize housing substantially with CMHC. Nix CMHC and get the banks to carry full freight on mortgages, you'd see lending standards change awfully quickly.
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  #55  
Old Posted Jun 10, 2020, 12:30 AM
Truenorth00 Truenorth00 is offline
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Meh, the US principal residence exemption is quite low: $250k for singles, $500k for families and their labour mobility is greater than ours.
Median listing price in the US a year ago was $226k. 20 states had median prices at or below $250k. And all but 3 states had median listing prices at or above $500k.

https://www.businessinsider.com/cost...-ranked-2018-8

A $250k single person and $500k family exemption would cover the vast majority of homeowners in the US.

For comparison, average home price in Canada is over half a million.

https://www.globalpropertyguide.com/...20respectively.

So our equivalent limits would have to be $500k for singles and $1M for families.
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  #56  
Old Posted Jun 11, 2020, 10:38 PM
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Originally Posted by WarrenC12 View Post
I think we need some form of capital gains tax on principle residences. I don't know how this will be politically possible, but even with a lifetime exemption ($1M+), it would make a big difference IMO. Housing should be less of an investment/retirement plan.
It doesn't actually make much sense and would bring in a lot lower revenue than people think. If you go through the accounting of it people start to see why.

Say someone has a house they bought for 300K and selling for a million. You do not get to tax the 700 K since its not a capital gain. You can deduct every expense associated to get to that gain. That would include:

- Mortgage interest
-Property Taxes
-Renovation costs
-Maintenance costs
-Maybe your lawnmower and grass supplies
-insurance
-utilities
-The new driveway, roof, lawn, fence, windows, furnace, AC.
-lawyer fees
-land transfer taxes
-realtor fees


On the above example, say someone bought a home and had that 700K doing the math:

Interest Expense at an average of 5.5% - $260,000
Property Taxes (30 years at 3500 avg) - 105,000
Renovation costs (new floors, kitchen, bathroom over 30 years - 75,000
Maintenance costs - 25,000
House Supplies - 10,000
Insurance - 30,000
utilities - 15,000
Replacing items at end of lifespan - 75,000
Lawyers (buy and sell)- 4,000
Realtor - 50,000
LAnd transfer tax - 10,000
other - 15,000
Total $674,000

Actual Capital Gain is 26,000
At the capital gains rate, the government can tax 13,000 and say they have a rate of 33 % the government collects $4290.

On top of that everyone who goes negative now has a massive capital gain credit they can claim on other investments. Everyone at that point should be a landlord, as they can likely get a loss on main house and use that credit against a gain on the investment.
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  #57  
Old Posted Jun 11, 2020, 10:40 PM
WarrenC12 WarrenC12 is offline
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Originally Posted by Zmonkey View Post
It doesn't actually make much sense and would bring in a lot lower revenue than people think. If you go through the accounting of it people start to see why.

Say someone has a house they bought for 300K and selling for a million. You do not get to tax the 700 K since its not a capital gain. You can deduct every expense associated to get to that gain. That would include:

- Mortgage interest
-Property Taxes
-Renovation costs
-Maintenance costs
-Maybe your lawnmower and grass supplies
-insurance
-utilities
-The new driveway, roof, lawn, fence, windows, furnace, AC.
-lawyer fees
-land transfer taxes
-realtor fees


On the above example, say someone bought a home and had that 700K doing the math:

Interest Expense at an average of 5.5% - $260,000
Property Taxes (30 years at 3500 avg) - 105,000
Renovation costs (new floors, kitchen, bathroom over 30 years - 75,000
Maintenance costs - 25,000
House Supplies - 10,000
Insurance - 30,000
utilities - 15,000
Replacing items at end of lifespan - 75,000
Lawyers (buy and sell)- 4,000
Realtor - 50,000
LAnd transfer tax - 10,000
other - 15,000
Total $674,000

Actual Capital Gain is 26,000
At the capital gains rate, the government can tax 13,000 and say they have a rate of 33 % the government collects $4290.

On top of that everyone who goes negative now has a massive capital gain credit they can claim on other investments. Everyone at that point should be a landlord, as they can likely get a loss on main house and use that credit against a gain on the investment.
I appreciate your example but that's very specific math you have run. If the gains are so minimal, why don't we just do it?
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  #58  
Old Posted Jun 12, 2020, 1:44 AM
Zmonkey Zmonkey is offline
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Originally Posted by WarrenC12 View Post
I appreciate your example but that's very specific math you have run. If the gains are so minimal, why don't we just do it?
What's the point? You tax the top 20 % of homeowners a small amount and give credit to everyone else. The government loses money.

You also have complicated the filing for every homeowner and need a larger team to audit.

If the goal is raise revenue, there are many better ways. Is there a reason you want to tax primary residences?

Capital gains now is almost nothing for the government. It brings in about 4.5 billion of the close to 325 billion in taxes the feds receive. The goal of the government is to get income higher to collect income taxes, which is the bulk of where our government receives money.

Just look at the programs around housing which cost the government money.

-First time buyers credit
-Using RRSP's tax free for home purchase
-GST/HST credit on new home purchases (including rental construction)
-Seniors tax credits
-Renovating tax credits for seniors

Eliminate those credits the government has saved billions. Housing will get more expensive (both rentals and purchasing), but government has more money.
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  #59  
Old Posted Jun 12, 2020, 4:31 AM
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Originally Posted by Truenorth00 View Post
Median listing price in the US a year ago was $226k. 20 states had median prices at or below $250k. And all but 3 states had median listing prices at or above $500k.

https://www.businessinsider.com/cost...-ranked-2018-8

A $250k single person and $500k family exemption would cover the vast majority of homeowners in the US.

For comparison, average home price in Canada is over half a million.

https://www.globalpropertyguide.com/...20respectively.

So our equivalent limits would have to be $500k for singles and $1M for families.
You're comparing median to mean prices which is usually meaningless. What is the median house price in Canada? No way is it over $500K because if it was the mean price would be higher than the $500,200 stated in the article you linked to.
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  #60  
Old Posted Jun 12, 2020, 5:23 AM
Truenorth00 Truenorth00 is offline
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Originally Posted by Corndogger View Post
You're comparing median to mean prices which is usually meaningless. What is the median house price in Canada? No way is it over $500K because if it was the mean price would be higher than the $500,200 stated in the article you linked to.
If I could find better data I would have used it. I don't think these numbers are that far off. But if you can do better, go for it.
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