The Givers and the Takers

This week, I once again heard the now-familiar tale of “The Givers and the Takers.”

The Givers, the story goes, are the hard-working people of Toronto. Through their own efforts they have made successes of their lives, bought their own homes and become contributing members of society. It is the taxes on their hard-earned money that sustains this city.

The Takers, on the other hand, neither work nor pay taxes. Yet they have spacious homes and all manner of nice things, courtesy of the Givers. These people live in Toronto Community Housing.

It would be easy to dismiss this rather uncharitable story on moral grounds, and I am itching to do so. But rather than turn to ancient wisdom or a religious text, let me instead turn to a more prosaic modern text: Toronto Community Housing’s Draft 2010 Consolidated Financial Statements.

According to these statements, TCHC paid $104.3 million dollars in municipal taxes. That’s $1,783 per household – not too shabby, considering that around half of these households live in bachelor or one bedroom apartments.

Toronto Community Housing tenants also paid $283.6 million in rents and user fees such as parking, laundry and cable towards their housing costs. That’s more than the net $202 million paid by federal and municipal subsidies. In other words, tenants with an average annual income of $16,200 per year – one-fifth the Toronto average – pay more for TCHC than the City’s 2.5 million citizens combined.

Givers are also Takers

So much for the myths about whether TCHC tenants make a contribution. Now let’s take a quick look at the Givers, starting with my own family.

My parents, now aged 92 and 88, would say they have worked hard all their lives, and so they have. They never lived in subsidized housing, and never drew on welfare or employment insurance. Yet over the course of their lives they received life-changing help through Canada’s housing policies.

In 1958, when my parents’ incomes were too low to buy a house, the Federal Government stepped in with its CMHC assisted mortgage. It was a banner year for affordable home ownership, with loans for over 28,000 single detached homes approved across Canada. From 1957 to 1970 over 265,000 privately-owned houses were created through this program.[1]

My parents bought their house for $20,000, paid their mortgage and raised their children, Thirty-five years later, in the midst of Vancouver’s housing boom, they sold that house for (I believe) $680,000. The $660,000 gain went directly into their pockets: in Canada, proceeds from the sale of a principle residence are not taxed.

For homeowners of my generation there are a host of other subsidies: downpayments funded through tax-sheltered RRSPs; tax credits for first time home-buyers, and grants for renovations and energy-saving measures. And my sister just might owe her rental apartment to the Federal government too, as one of thousands built under the MURB program – one of the largest private housing subsidies in Canadian history.

The difference between the Givers and the Takers

The chief difference between the Givers and the Takers is that subsidies to Givers are invisible — hidden to the recipients, their neighbours and the public.

My parents didn’t think of themselves as “subsidized.” They considered everything they had as their own. Our next door neighbour did not take over our backyard on the grounds that “his taxes were paying for it.” (Yes, this has actually happened to TCHC tenants!)

And as for the public? It took me five minutes online to find information on TCHC’s subsidies. But to write about subsidies to private owners and tenants, I had to resort to family anecdotes and musty housing texts, and still could not calculate the public cost of these benefits — even for my own family.

Here’s another important difference: the subsidies my parents received made them rich. TCHC tenants stay poor.

My parents’ sudden wealth is partly an historical anomaly. The recent US housing crisis tells us that home ownership schemes are anything but a sure bet. Nonetheless, their experience started me asking:

What are the subsidies today that could genuinely vault people out of poverty? And is that what we want? Or do we squirm at the idea of subsidies that do anything except allow poor people to scrape by?

Are hidden subsidies better than visible ones?

How did the Old Age Pension – a program opposed before it was introduced for undermining initiative and frugality – become universally loved when social assistance remained scorned, even when it was given warm names such as Mothers’ Allowance and Family Benefits?

I don’t know the answers to these questions. But I’d like to. Your thoughts welcomed.

[1] Michael Dennis and Susan Fish, Programs in Search of a Policy: Low Income Housing in Canada, (Toronto, 1972), page 264.