Scarborough 2020: vision and hindsight

I moved to Scarborough in 1978 and bought a house. I remember that my property tax bill was added to our mortgage payment and that it was easy to remember:

It was $100 a month or $1,200 a year

In 2020 terms, that $1,200 a year would now be $4,410 a year.

My latest tax bill for the year 2020 – just got it in the mail – came in at $3,650

If my taxes had really gone up with inflation over the long haul, I would be paying about $760 more per year.

Multiply our one household by about 220,000 Scarborough households by $760 a year and you would have extra yearly revenue of $167 M dollars

That’s in Scarborough alone. And it’s not chump change.

But just because our present policy is to allow taxes to go up with inflation, it doesn’t mean that we have caught up.

Not by a longshot.

So can I afford an extra $760 a year?

I think so.

Just one $2.00 coffee a day and that’s $760.

So let’s remember that $167 M would pay for a lot of transit, a lot more community safety and a lot more housing.

But we have chosen not to have that over the long haul.

And it will be hard to catch up.

But why talk about that $167M in lost revenue in property taxes?

We should talk about it because the low tax experiment that started in California in 1973 with Howard Jarvis[1] was supposed to make us better off.

And Scarborough bought into that low tax revolution.

For years we practiced austerity.

We set taxes low.

We became the lowest tax jurisdiction in Toronto as part of East Toronto.

We bought into the idea that if the money was in our own pockets instead of the pockets of government, we would all be better off.

So there should not be any problem in asking the following question:

Is Scarborough better off for having pursued a low tax agenda for decades?

And make no mistake – I own a detached house – 110 foot lot by 30 – on a nice street in the north of Scarborough.

And don’t forget that my property taxes at $3,650 for 2020 are a lot lower than Pickering and Markham where it’s not unusual to be paying over $5,000 in property taxes for a similar house.

So I am better off, right?

There is more money in my pocket?

I have more money to spend?

Wrong!

My home is worth less on the real estate market. Lower than Markham where similar homes are just 400 meters away.

My grass on the medians is cut less often.

There are no hanging plants on the hydro poles.

But the dollars are back in my pocket and my life is better?

No!

I am worse off. The experiment did not work. I am not doing better even though that was the promise.

“Less government – lower taxes”

That money is ‘your money’ and the government is taking it out of your pockets.

Justin has his hand in your pocket.

And just look at the waste!

And look at the seniors that can’t pay.

But I am a senior: my OAS is indexed – my CPP is indexed – my pension – luckily – is indexed. My tax credits are indexed.

Still I get that some seniors have a hardship paying tax increases.

The solution there is to offer them tax mitigation. But that certainly does not mean that everyone’s taxes should be kept down because a minority of seniors has trouble paying.

We should tax the ones who can afford it and help those who can’t – not just keep everyone’s taxes low when most can afford to pay more.

And yes – that goes for seniors.

Now before I go into my next topic, I just want to remind us again that lower taxes were supposed to be good. Scarborough would be better off. It would lead to prosperity.

But it hasn’t.

We have lost employment between the two previous censuses – 2006-2016

We have the highest rate of working poverty at 9.7%

We have the highest rate of people receiving social assistance at 10.6%

We have the lowest rents

We have the lowest property values

We have the lowest labour force statistics at 65% of working age adults.

Lower taxes were supposed to mean that we would become a powerhouse.

But that didn’t happen.

Lower taxes meant that we had the fewest services and the lowest level of infrastructure.

Now let’s turn to something quite unexpected…………..

Gray Crawford – Budget Chief – who spoke at the SCAN Budget Forum in January.

His staff member presented the Budget and then he said something very predictable:

He said that he was a ‘low tax’ sort of person.

I hope I have that right. The essence was that he believed in low taxes but also that sometimes taxes had to be raised. He was for that.

He noted that he wasn’t always against all taxes all the time.  

But then Gary Crawford said some things that I found not to be at all predictable.

He began to make some personal comments.

He said that his family was like the “Brady Bunch’.

For those of you who recall the TV serial, the Brady bunch was a family where there were kids from 2 families – A large blended family of 6 – it ran from 1969 to 1974.

I found this odd – this is a cold night in January with a bunch of community activists. Why were we hearing about the Brady Bunch from Toronto’s Budget chief?

But he went on. He told us about his daughter who would not be able to afford a house and who is working for low wages.

Because of her situation, he told us that he knew about struggling and how he did not have answers for his daughter and how he understood how people might be frustrated.

But then he went back to his narrative and told us how he was a ‘low tax’ type of guy.

I am not suffering. I have lived experience of privilege. I understand how Gary Crawford grew up in the age of easy resources, low house prices, cheap student loans, cheap transit and long years of ever improving life in Scarborough.

But I don’t get how he can reconcile his daughter’s woes with his steadfast allegiance to low taxes.

In 1981, Reagan first said government spending would become a burden on future generations through the accumulation of debt that those generations would be obliged to pay. He was right in that he kept on spending and did not raise taxes or new forms of revenue.

But Reagan turned out to be dead wrong on taxation.

And Canadian governments piously followed Reaganomics.

We don’t tax the unearned returns in owner occupied dwellings. We don’t tax inheritances and we don’t tax financial transactions while taxing capital gains at one half the income tax rate. This created a housing bubble, an inheritance bubble and an investment bubble.

These bubbles were created by the  ‘failure to tax’ that makes homes unaffordable, creates huge disparities among younger families and permits the well to do to sprint ahead of the ‘rest of us’ with little wealth to invest.

The younger generation is taught that they have been burdened by debts, deficits, and income inequality but the real burden was and is the failure to tax the very elements that created both unaffordability and inequality in the first place. When you place taxes on some things and not on others, just what should we expect over the long haul? We should expect price inflation in things that are not taxed and low growth in things that are. And that’s exactly what happened.

But this is not as clear as it should be.

If we had placed very modest levies on inheritances, transactions (Tobin taxes), incremental capital gains, and profits in owner occupied dwellings, there would be no deficits, a small debt burden, affordable homes, less frothy markets and therefore almost no intergenerational inequality.

The delicious irony is that the same families who opposed fair taxation in the past are composed of the same people who must now bankroll their sons and daughters to purchase the same homes and lifestyles that they fought to make unaffordable in the first instance.

So let’s pay for things. Let’s raise revenue. And let’s help Gary Crawford understand why he is now in the position of having to help his children. And let’s allow our City to thrive.

Js- Feb 4/20


[1] https://en.wikipedia.org/wiki/Howard_Jarvis_Taxpayers_Association