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March 7, 2018 | RLM

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

It’s hard to defend rich people. So let’s not try. But at the same time let’s admit they’re being hammered.

Mr. Dressup created a new, special, eat-the-rich tax bracket so those making more than about two hundred grand a year now pay at least 50% of their incomes to the government. When he gutted the TFSA contribution by half, the same guy said it was because only the wealthy could take advantage of it. So, pffft. Then his finance minister launched a war against entrepreneurs, doctors and incorporated professionals, proposing to tax their retirement nest eggs up to 72% in the name of “fairness.”

Creating division between ‘the wealthy’ and ‘the middle class’ is now at the core of Canadian politics. It’s how ya get elected. Slag people who have more than the majority (where the votes are). And while you’re at it, punish foreigners. They don’t vote at all.

The war on wealthy is orgasmic in BC. The new coalition Dipper government decided to use the cloak of ‘affordable housing’ to launch an assault on money. The best example is the ‘speculation tax’ equal to 2% annually of a property’s value. At first it was applauded as a poke in the eye of rich offshore Chinese dudes who bought YVR houses, paid no Canadian tax on their incomes, and stuck student-kids in them, irritating everyone. Then it became clear it was also a tax on Albertans, Ontarians and other beavers who owned rec properties in the province – just because they can afford a secondary residence. Now we find out it’s also a tax on BCers who live there full-time, but are rich enough to have a cabin or cottage or waterside vacation home.

In short, it’s a wealth tax. Nothing to do with speculation, increasing the rental housing stock or bringing down stupid prices.

This is starting to dawn on a number of people who cast NDP ballots without the foggiest what it might mean. They didn’t actually vote for Comrade Premier Horgan. They just voted against the last lousy leader.

So the reality is if you live in Vancouver and have a summer place in Kelowna, you’re a ‘speculator.’ If the second property is worth $800,000, that’s $16,000 a year in tax next year – only offset by a credit determined by BC income tax paid. If you make $100,000, the tax bill for the K house will be adjusted to $9,000. Pay up. You’re rich.

As some brave local media types are pointing out, this will devastate some of the Gulf Island communities, where most houses are secondary properties for Van dwellers. It’ll crunch the Victoria condo market, dropping prices and sucking off the equity of neighbours. It sure penalizes families who have owned out-of-town (and unrentable) properties for decades. It means legitimate speculators can flip a property and pay 2% once, but long-time owners who never sell will have to pay the same amount every year.

See what I mean? Nothing to do with pricey real estate. It’s a vindictive money grab in a society where people have come to equate property with affluence. Unfair does not begin to describe it. Meanwhile the societal damage being done is truly unfortunate.

Consider the example given on this blog the other day of the 72-year-old retiree from Ontario with a condo in Victoria she has lived in for the past 12 winters. Now she faces a tax bill of $9,400 a year and protests: “It’s a speculation tax, and we are not speculators.”

Did you catch this response from Maxx, a knuckeldragger in the comment section?:

“Except, they are speculators. Except, they are probably paying Ontario taxes. Why? Because they are cheaper. It’s a dirty strategy and it is helping to price out people who actually live here year round, who pay taxes here, and who are tired of having to compete for property against rich ‘investors’ playing house from other provinces. Not an ounce of sympathy for these people who ‘live here’. When economic distortions get to the point where full-time residents and professional couples cannot buy into a market, something is wrong and granny can pony up the full nut on her 500K vacation condo. Granny is a leading-edge boomer and has enjoyed the cream of peak boomer advantage. That cohort moved through life like a plague of locusts, latching onto wealth and bargain re like low-hanging fruit. She likely owns a gem in Ontario which was obtained for pennies on the dollar.”

This is what happens when policies are based on envy, jealousy and (clearly) hatred. Ethics bow to expediency. The lowest common denominator prevails. Politicians make citizens believe they can be better off simply by taking from others who have more. It leads to bizarre thoughts, false premises and bad laws.

Like the empty house tax – just a local version of the spec tax. It’s being considered by Toronto and is now in place in Vancouver. The dumb idea behind it is that tens of thousands of properties are being ‘warehoused’ by rich people just so they can enjoy equity gains, and therefore kept back from the rental market. By taxing owners 1% annually of the value, they’ll be made to rent them.

Again, a tax on wealthy, like the businessman who lives up-province but keeps a Van condo to stay in four days a week. The place is obviously unrentable for the other three days, so taxing it is illogical. Unfair. Unethical. Unless you believe (like Maxx and his premier) that the crime is having money.

Anyway, we now know it’s a joke. The results are in. It turns out the region has 6,300 empty units, most of them condos – or 73% less than the politicians claimed (over 25,000). Some of those are for rent. Some are for sale. Some are being renovated. Some belong to people away because they’re sick or traveling. The bottom line: there’s no giant glut of empty houses being hoarded by the rich. They made it up.

It’s a slippery slope. If we continue to elect leaders this myopic, who pillage support from the angry and entitled, wealth will migrate.

Then we discover, rich lives matter.

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March 7th, 2018

Posted In: The Greater Fool

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