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The Big Give: How Owners Got Rich, and Renters Didn’t

These nine graphs show how government widened the wealth gap between Canadians who rent, and Canadians who own a home.

Christopher Pollon, Christopher Cheung and Chris Wood 22 Feb 2017TheTyee.ca

Christopher Pollon is an independent journalist, a contributing editor to The Tyee and a member of the Tyee Solutions/Housing Fix reporting team.

Christopher Cheung reports on affordable housing for the Housing Fix.

Chris Wood is Tyee Solutions Editor.

2016-17 funders of the Housing Fix are Vancity Credit Union, Catherine Donnelly Foundation and the Real Estate Foundation of B.C., in collaboration with Columbia Institute. Funders of special solutions reporting projects neither influence nor endorse the particular content of our reporting. Other publications wishing to publish this article or other Housing Fix articles, please contact editor Chris Wood here.]

In 1984, the average Canadian who owned a home was about $104,000 richer than the average renter.

By 2012, the average Canadian homeowner was worth $824,000—the average renter just $120,000 (in constant dollars). That’s a seven-fold increase in wealth gap between owners and renters over 28 years. It’s doubtless even wider five years later. In Vancouver, roughly half of households are in each camp.

How did one half of Vancouver get so much richer than the other?

While it’s clearly not the only factor, decades of federal and provincial favouritism in tax spending have in effect pumped billions of dollars into the accounts of Canadians who own their homes, while dribbling a comparative pittance into the pockets of renters. And some of the biggest perks have gone to the very richest of Canadians. Nearly 90 per cent of the $43.6 billion in benefits lavished exclusively on home owners in this decade alone were accounted for by the exemption from capital gains tax for profits earned on the sale of a principal residence.

These graphs follow how federal tax favours have helped make Canadian home owners an awful lot richer, while renters’ savings have inched up. A future article will look at how we might restore a fairer balance.

851px version of Art-02-2012-Wealth-Gap.jpg
#2. Back in 1984, renters included a fairly broad mix of society -- rich, poor and in between. On average, homeowners had net assets of $121,000; renters on average (including those in some form of assisted rental) had a personal net worth of $16,000; over the decades that followed, the wealth gap would widen dramatically.
582px version of Art-03a-1980-Fed-Breakdown.jpg
#3. By 1980, nearly 95 per cent of the money the federal government was spending to support the housing market was going to people who owned homes. Just over five per cent was allocated to private renters. Source: Robert Dowler.
582px version of Art-03b-2008-09-Fed-Breakdown.jpg
#4. By 2008/09, the imbalance in federal tax spending had eased—a tiny bit. By now only 93 per cent was going to homeowners, while renters received 7.4 per cent. But Ottawa was still directing nearly $6 in benefits to every home-owning household for each $1 dollar it gave renting households. Source: Frank Clayton.
582px version of Art-04-2008-09-Ont-Breakdown.jpg
#5. Provincial governments also favoured owners over renters. Ontario’s homeowning households received 6.6 times the shelter-related benefits that its renters did in 2008/09. Overall, owners got 95 per cent of the benefit of provincial direct and tax spending. Source: Frank Clayton.
851px version of Art-05-2005-Wealth-Gap.jpg
#6. Small wonder that by the mid-‘00s, the wealth gap between renters and owners had reached $549,000.
851px version of 2009-Fed-Program-Breakdown.jpg
#7. Tax-free profits on the sale of a primary residence aren’t the only extra break homeowners get. Source: Frank Clayton.
851px version of Art-07-2011-Programs.jpg
#8. The federal bias in favour of homeowners starkly benefits the rich over the poor. The poorest fifth (quintile) of Canadians by income received just $2.2 million in benefits from one of three major tax breaks for homeowners in 2011; and nothing at all from the other two. The richest one-fifth of Canadians received a combined $2.7 billion in benefit—a staggering 1,224 times as much as the poorest one-fifth. Source: David Macdonald
851px version of Art-02-2012-Wealth-Gap.jpg
#9. After 28 years of lavish tax benefits to owners and minimal assistance to tenants, by 2012 (the last year for which we could find numbers), the average Canadian home-owner worth $704,000 more than the average renter.

Sources:

#1. Government of Canada, Ministry of Finance. 2010-2017 Report on Federal Tax Expenditures - Concepts, Estimates and Evaluations.

#2, #6, #9. CMHC. “Home Equity and Net Worth by Tenure and Age Group, Canada 1999, 2005 and 2012 (2012 constant dollars)”; 1984 numbers, CMHC, “Concentration of Wealth Through Ownership”.

#3. Dowler, Robert G. Housing-related Tax Expenditures: An Overview and Evaluation. February 1983, Centre for Urban & Community Studies, University of Toronto.

#4, #5, #7. Clayton, Frank. Government Subsidies to Homeowners Versus Renters in Ontario and Canada. August 30, 2010.

#8. Macdonald, David. Out of the Shadows, Shining a Light on Canada’s Unequal Distribution of Federal Tax Expenditures. The Canadian Centre for Policy Alternatives. December 5, 2016.

Many of the numbers in the statistics and reports above were rounded. In addition, the Tyee also rounded some numbers in the visualizations for clarity.  [Tyee]

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