One day last week I drove out to the Kingswood subdivision off Hammonds Plains Road, just beyond Bedford. Kingswood is the epitome of suburban sprawl; thousands of ritzy houses, some of them worth a million dollars or more, are plucked down on half-acre to two-acre lots along cul-de-sacs and roads stretching perhaps 10 kilometres into what was previously an undeveloped forest.
Kingswood is the kind of place frowned upon by urban planners and environmentalists. There are no schools, no grocery stores or other businesses, no fire stations, no parks. Nor are there bike lanes or sidewalks, and for good reason: It’s pretty much impossible for residents to get anywhere without a car. And so most of the houses have two- or three-car garages. Some have four- or even five-car garages.
I went to Kingswood for research. I wanted to see how an arcane and complex proposal at City Hall, called “tax reform,” plays out in the real world.
“Tax reform” does a lot of things. One thing it does is shift much of the residential property tax burden in HRM off homes in the urban core and onto homes out in the suburbs. A lot of urban homeowners think this is a fine idea. “I’m really, really, really tired of subsidizing the people who live in huge homes in the suburbs and drive two cars (more when their kids grow up),” explained one “tax reform” advocate in an email. “Most of these people make more money than I do. They are a drain on our collective resources… It costs as much as three times more to service a house in Kingswood or Fall River as it does a home that is on a 40×100-foot lot in the city.”
So I went to check it out. At random, I picked a Kingswood street named Lake Mist Drive, and wrote down the addresses of all 10 houses on the street.
For comparison’s sake, I drove a little farther out Hammonds Plains Road, turned up Pockwock Road and followed it to the community of Upper Hammonds Plains. A sign greeted me: “Founded 1815: proud of our African heritage.” The houses are small and weather-beaten, but well-maintained. They are mixed with a handful of home businesses, a car repair shop, a sawmill. Lawns are cut, ditches cleared. Emmanuel Baptist Church stands as sentry to a row of houses leading to the community centre. I selected 10 of the homes, and wrote down their addresses.
Later, using assessment information provided by the county and tax information provided by the city, I calculated what would happen to the two neighbourhoods under the “tax reform” proposal—the results are that residents living in suburban sprawl of Kingswood will be rewarded with a huge tax cut, while residents in the modest old black Loyalist community will see their taxes more than doubled (see the case study sidebar “Neighbouring suburban communities”).
| Case study: Neighbouring suburban communities | Kingswood | Upper Hammonds Plains |
|---|---|---|
| Market value of average house | $542,020 | $107,380 |
| Current city and provincial tax | $5,908 | $876 |
| City and provincial tax under “reform” | $3,311 | $1,532 |
| City’s share of current taxes | $3,813 | $560 |
| City taxes under “tax reform” | $1,216 | $1,216 |
| Change in city tax | $2,597 lower (-68%) | increases $656 (+117%) |
| Note: The “average house” is an amalgamation of 10 houses. See story for methodology. | ||
Note that residents of both communities will pay the same city tax, $1,216, even though homes in one community are worth more than five times that of homes in the other.
City council may vote to begin the process to implement “tax reform” as soon as next Tuesday. If the plan is adopted, then, yes, some of the tax burden will be shifted off the urban areas and onto the suburbs, but the tax burden will be shifted within the suburbs as well, with the results in Hammonds Plains—high-priced homes getting tax cuts, modest homes seeing tax increases—repeated throughout HRM: Oceanfront mansions in Portuguese Cove get tax cuts, Spyfield residents get tax increases; high-end Cole Harbour houses get tax cuts, modest Forest Hills Park homes get tax increases; half-million dollar Bedford houses get tax cuts, Sackville tract homes get tax increases.
And that pattern would hold in urban areas as well: most homeowners on the peninsula get tax cuts, most Dartmouth homeowners and apartment dwellers get tax increases.
“Tax reform” is a good-government-sounding moniker designed to disarm opposition before it can materialize—how could anyone be against “reform”? As the proposal was being prepared for next week’s council vote, city staff upped the terminology to an Orwellian extreme—documents given to councillors now flatly declare that the new tax proposal is “the best possible tax system.”
But I’ve been reporting on the city tax issue for over two years and, recently, have conducted an extensive analysis of the “tax reform” proposal. From that work, I conclude that the words “tax reform” are a misnomer purposefully employed to mislead the public. To draw attention to that duplicity, I put “tax reform” in quotation marks.
In fact, my analysis of hundreds of homes and apartments throughout HRM shows that, far from being the “best possible tax system,” the proposed tax system will slash millions of dollars off the tax bills of high-value properties and make up the lost revenue by increasing taxes on modestly priced houses. Further, contrary to the claims of “tax reform” supporters—and as the figures from Kingswood attest—the new system will reward suburban sprawl with tax breaks, and raise taxes for those living in compact, transit-friendly communities.
Worse still, “tax reform” appeals to the very worst of our instincts, putting narrow short-term self-interest of some individuals over the long-term good of the community as a whole.
“Tax reform” is a disaster in the making. And yet, just 10 days before Christmas, Halifax council is poised to make that disaster happen.
The road to ruin
Tax issues in HRM have always been complicated and contentious. HRM was created in 1996 by combining the cities of Halifax and Dartmouth, the town of Bedford and the mostly rural Halifax County. Those earlier jurisdictions had different levels of taxation, and provided different kinds and levels of services. Bringing them together into one system caused immense distrust, as residents of each former jurisdiction thought they were being taken advantage of by residents of the other jurisdictions.
Then the real estate market heated up. Increasing housing prices were matched by increasing tax assessments, and therefore increasing tax bills.
In south end Halifax, assessments rose 20 percent and more each year. Of course, as the value of their houses went up, south end residents became much wealthier as well: to the extent that they had equity in their houses, south enders could use their houses as collateral for loans to send their kids to college and start businesses, and their new high home values mean much larger future inheritances for those fortunate children. But those potential pluses were offset by an immediate minus—they had to pay the higher tax bill every year.
Many south enders felt that their larger tax payments were being used to subsidize services being delivered in the suburbs. Suburban residents didn’t see it that way—thanks to the overheated housing market, suburban tax bills rose by large amounts every year too, albeit not quite so much as in the south end.
By 2005, the lingering distrust from amalgamation and the roaring real estate market prompted south end business people to call for “reform” on the entire tax system. Traditionally, property taxes in Canada are based on the value of one’s home—the more expensive your house, the more you pay in taxes. The “reform” movement, however, wanted to ditch that system and replace it with a system that bases taxes not on the value of property, but rather on the cost of services.
Responding to those demands, on October 3, 2006, then-councillor Sheila Fougere, who represented the Connaught district, put forward a motion at council to “rebuild the foundations” of HRM’s tax system. The motion was seconded by south end councillor Sue Uteck, and passed on an unrecorded voice vote. By January 2007 the Tax Reform Committee was formed, and given direction to explore how to switch from the existing assessment-based system to a fee-for-service based system. The switch was to be “revenue neutral”—that is, the new system was to bring in the same amount of total tax money as the existing system.
The effort got off to a bad start, with charges that city staff had rigged a series of “public consultation” meetings such that dissident voices were minimized and ignored, and that only a pre-approved “reform” agenda would move forward. “Those meetings were designed not to hear the public,” Dartmouth councillor Gloria McCluskey declared at a city council meeting.
Still, the “reform” effort continued unabated. The Tax Reform Committee met over 30 times over the next two and a half years. Citizens for Halifax, a group formed by south end business people to influence the 2008 municipal elections, made “tax reform” one of its primary issues. And Fougere based her unsuccessful bid to replace mayor Peter Kelly in large part on a pledge to overhaul the tax system.
In May 2009, south end resident and professional pollster Don Mills published the results of a survey that asked respondents a single question: “Would you personally prefer property taxes to be based on property value assessments, or to be based on the cost of the services actually received by the property owner?” Those questioned were given no indication how such a change would affect their taxes, nor were they asked what would constitute a fair tax system, how the cost of services should be calculated or if issues of economic justice should enter the equation.
Like HRM’s 2007 public consultation meetings, Mills’ poll seemed designed to elicit a pre-determined response. Sure enough, fully 60 percent of respondents said they favoured a tax system based on the cost of services delivered, and the highest support—68 percent in Sackville—came from those living in an area that will see a tax increase under the “tax reform” proposal, suggesting that in fact respondents were not fully informed.
But Mills’ poll is now held up by “reform” proponents as proof that residents want such a change.
| Case study: An extremely regressive tax system by design | David & Margaret Fountain, Young Avenue | Bill & Helen Zebedee, Clement Street |
|---|---|---|
| Market value of house: | $4,040,300 | $149,700 |
| Capped assessment: | $3,379,900 | $145,500 |
| Present tax system | ||
| City tax bill: | $28,695 | $1,235 |
| Tax per $100 of capped assessment: | 84.9 cents | 84.9 cents |
| Tax per $100 of market value: | 71 cents | 82.5 cents |
| Under “reform” proposal | ||
| Services charged: | all urban | all urban |
| Tax bill: | $1,316 | $1,316 |
| Tax per $100 of market value: | 0.03 cents | 87.9 cents |
| Note: Tax figures reflect only the city’s portion of property tax bills, and do not include the provincial and supplemental educations charges, which remain the same under both scenarios. |
The shell game
The Tax Reform Committee took seriously the charge to build a tax system based on the cost of services. But the “reform” movement has taken on a life beyond that mandate, and committee members, councillors and “reform” proponents in the community have added a number of levels of complexity to the argument—including environmental issues, a concern for low-income residents and the desire to reward those who, for lack of a better term, are considered to live virtuous urban lifestyles.
I have no way of judging the motives of “reform” proponents. No doubt many, perhaps most, are sincerely interested in building a fair tax system. But as I delved into this issue and explored the various arguments, it became increasingly clear that proponents’ notion of fairness reflects their own biased perceptions.
Quite simply, for “reform” proponents a “fair” tax system means primarily one that reduces taxes on the owners of high-priced homes. Full stop.
The aim to reduce taxes on high-priced homes is the pea in a rhetorical shell game. All the other arguments—about the environment, about low-income assistance and so forth—are moves of misdirection to get the broader public to take its collective eye off the pea.
The immense complications of the arguments are themselves part of the set of feints used in the scam. But, if we examine them one at a time and look at what the “tax reform” proposal actually does, we can more clearly see what the true aim of the game is.
Hidden subsidies
According to Mills’ poll results, people in HRM want property taxes “based on the cost of the services actually received by the property owner”—no one should be subsidized by someone else. But if we built such a system, the very first thing we’d have to do is to nearly triple property taxes.
As city budget documents show, if you add up all the residential taxes collected in HRM and compare it to the cost of all the services delivered to residential properties, you’d find that the costs are 2.7 times higher than the amount residents pay in taxes. The difference is made up by commercial property taxes.
So people on the Halifax peninsula who think they are subsidizing suburbanites are wrong—they aren’t. It’s Burnside and Bayers Lake industrial parks, and businesses in HRM generally, that are subsidizing suburbanites and peninsula residents alike.
Now, there’s a good argument for having commercial taxes subsidize residential services—businesses can’t make money without customers and workers who need municipal services. The Tax Reform Committee evidently found that argument convincing: the very first thing it did was to continue to accept the commercial tax subsidy for residential services. But keeping the commercial subsidy pulls the rug out from under the entire “reform” argument—citing “subsidies,” “tax reform” proponents pit peninsula residents against suburbanites, but ignore the tax subsidies handed to all residents.
The assessment cap
As housing prices increased, the provincial government responded to complaints of high taxation by “capping” assessments—that is, no matter how much the market value of a house increases, its assessment for tax purposes won’t increase more than a set percentage, until the house is sold or renovated, in which case it will be reassessed.
The assessment cap provides stability and predictability to residents’ tax bills, and helps people from being priced out of their neighbourhoods by gentrification.
But “tax reform” proponents point at the assessment cap and say it illustrates how the present tax system is broken. Bruce Fisher, who heads the city’s taxation division, uses the example of a street with five identical houses, each charged a different tax, with a range of 18 percent, thanks to the assessment cap.
Moreover, over time the assessment cap becomes “regressive”—it gives more relief to wealthy property owners than it does to owners of less pricy homes or to young people entering the housing market for the first time.
“Reform” proponents are right—the assessment cap can be regressive, but it also can be progressive, depending on circumstance. But let’s look what happens under the “tax reform” proposal.
Consider two houses in urban HRM: philanthropists David and Margaret Fountain’s Young Avenue mansion and government workers Bill & Helen Zebedee’s modest house on Clement Street in Dartmouth. Both houses are now charged the same urban tax rate and receive all urban services.
The case study chart “An extremely regressive tax system by design” (above) shows how taxes are charged on their respective houses, both now and after “tax reform.” The bottom line is that in terms of market value, the Zebedees now pay a tax rate that’s 16 percent higher than the Fountains’ tax rate; but under “tax reform,” the Zebedees will pay a tax rate that’s nearly 3,000 percent higher than the Fountains’.
“Tax reform” proponents criticize what can be a slightly regressive assessment cap system, only to replace it with an extremely regressive “reformed” tax system.
True costs
“Taxes and fees should be based on objective and factual information, and not subject to opinion or estimation,” reads the final report of the Tax Reform Committee to council, and committee members like to portray their work as an exacting financial investigation of “true costs” of delivery of services to each individual property owner.
The claim is utter nonsense. It’s easy enough to find the total cost of any given public service, but divvying up that cost between various property owners absolutely depends on opinion and estimation, every step of the way, and those opinions and estimations are changed, willy-nilly, for reasons of political expediency.
Consider solid waste collection. When the Tax Reform Committee started examining the delivery of that service, it used the existing districts employed by the solid waste department. The committee conducted a district-by-district examination, and allotted costs depending on the distance the trucks had to travel to the landfill, the availability of a transfer station and other factors.
I happened to stop by the committee meeting that day and later reported that under this system of analysis, the highest solid waste charges would be laid on the residents of North Preston. Subsequent to my reporting, the committee evidently decided that way of reckoning charges wouldn’t fly politically, so they scrapped the entire analysis and instead took the total cost of services, subtracted out the commercial subsidy and divided the result by the number of properties, giving each property a flat $256 charge, no matter where the property is.
So which analysis is the “objective and factual”? Neither. Each is dependent on judgement calls—the very “opinion” the committee derides.
And that’s the case for all the charges. The committee initially wanted to apply a transit charge if a property is within two kilometres of a bus stop—not 2.2 kilometres, not 1.8, and no consideration of hills. Why? Because that was the committee’s opinion as to availability of transit. Council got a hold of that recommendation and changed it to one kilometre. Why? Because that was council’s opinion. Yours might be something else, mine another entirely.
Same with recreation fees, sidewalk fees and so forth. (Under the existing system, there are just three assessment-based percentage fees—an urban rate covering most of the developed region, a rural rate and a suburban rate that covers a small area where the other two meet.)
“Tax reform” proponents sell their proposal as “objective,” but because of the dozens, perhaps hundreds, of judgement calls involved, it is more arbitrary than the existing tax system.
Apartment taxes
Once you reject any notion of social justice or progressive taxation and ignore the biases involved in determining costs, “density bonuses” are a seemingly common sense idea—it costs less to provide service to those residents living closer together than to those living farther apart, and therefore fees for services should be reduced on those living in apartments and condos.
The “reform” proposal spells it out like this: apartment and condo dwellers all rely on the same fire hydrant, so rather than each unit being charged the same $116 fee homeowners are charged, a single $116 fee should be divided by the number of units in the building. Same thing with the $176 “local road” fee. Condo and apartment units will also be rewarded with a 40 percent discount on five other fees—local transit and sidewalks, regional roads and transit and a catch-all “regional services” fee. Only the recreation fee will be charged at a full per-unit rate equal to houses.
This complicated calculation means city taxes on high-end condos on the peninsula are cut drastically. The Bishop’s Landing condo project, for example, is advertising its unsold units at $449,900 to $750,000. Under existing tax rules, the city tax for those units would range from $3,820 to $6,368; with “tax reform,” each unit would have a city tax of just $732.
But that simply rewards people living low-impact urban lives, right? Well, apparently some low-impact urban dwellers are more worthy than others.
Consider apartment dwellers.”Tax reform” proponents argue that the owners of apartment complexes pass property taxes along to residents in the form of rent, so if we lower the tax, it’ll result in lower rents. I find that logic suspect, but certainly the reverse is true: if we raise taxes on apartment buildings, the extra charges will most definitely be passed along in higher rents.
On the peninsula, the proposed tax scheme charges some apartment owners a little more, others a little less. The real differences, however, come in Dartmouth: apartment buildings in Dartmouth will see a tax increase of hundreds of dollars per unit. (See case study sidebar.)
The same city council that is considering “tax reform” has, through the years, spent hundreds of millions of dollars developing the Burnside Industrial Park and Dartmouth Crossing, and as a result, thousands of workers have taken up residence in nearby apartment buildings in Highfield Park and the Dartmouth waterfront. These workers live in dense housing projects, have easy access to transit, can walk to work and services, et cetera—in short, they are living the low-impact urban life we supposedly want to encourage with “tax reform,” and yet “tax reform” will surely cause their rents to go up.
| Case study: How “reform” taxes apartments | |
|---|---|
| Halifax Peninsula** | Dartmouth** |
| Quinpool Tower | Marine View Terrace |
| – $96 / unit | + $221 / unit |
| Fenwick Tower | Westgate Apartments |
| + $55 / unit | + $140 / unit |
| SouthPoint Apartments | 96 Highfield Park Drive |
| – $10 /unit | + $198 / unit |
| Ogilvie Apartments | 4 Franklyn Court |
| + $26 / unit | + $258 / unit |
| **Based on 2007 figures. |
Low-income relief
Three years and 30-plus meetings into their investigation, the Tax Reform Committee appears to have realized that the system they were proposing was going to hit poor people, and hit them hard. And so, the committee cobbled together a makeshift “plan” for low-income relief.
Presently, the city provides a tax rebate of up to $750 if household income is less than $27,000. The Tax Reform Committee’s plan, such as it is, will increase the rebate to $1,000, plus a $100 per-child credit, and phase it out as household income approaches $36,000.
Thing is, while the committee spent months figuring the exact cost of, say, all the salaries and fuel for plowing away a snowfall, the low-income relief “plan” was so last-minute, an after-thought, truly, that no one has any idea what it would cost, or how to run it—in its report to council, the committee “hoped” the Canada Revenue Agency will administer it, but it’s anyone’s guess if such an arrangement is practical, or even legal.
How to pay for it? The committee proposes that “a surtax on the top five percent (or less) of homes would help ensure that higher income individuals bear more of the property tax burden. This would offset any increase in low income support.” How much would the surcharge be? No one knows.
Regardless, suppose the entire “tax reform” plan is implemented, including the vague low-income relief plan. Now look at how taxes will change from our present system to the “reformed” system:
Very low income property owners: some additional relief.
Above relief level to median house value: increased taxes.
Median house value to very high value house: decreased taxes.
Very high value houses: vastly decreased taxes, plus an unknown surcharge.
“Tax reform” proponents celebrate an uncertain plan for some small amount of additional low-income relief, but their plan mostly gives millions of dollars of certain tax relief to median to high-end properties, paid for by owners of modestly priced houses.
everyone loses
The most stunning feature of the “tax reform” effort is that it has been taken seriously by our political leadership for three years—besides a few voices in the wilderness, no one much has had the courage to call the proposal what it is: a massive redistribution of wealth.
As my analysis shows, “tax reform” amounts to class war, rich against poor, better off against not-so-well off. That’s not at all surprising; anyone who thought about the suppositions going into the process would have had to know what the results coming out would be—no matter how much you obscure it with rhetorical shell games and misdirection, changing an assessment-based tax system to a per-parcel fee-for-service system necessarily means that owners of lower priced properties will pay more, and owners of higher-priced properties less. It’s simple arithmetic.
If councillors felt peninsula homeowners were paying too much tax, they could have tweaked the assessment charges in various areas—lower them a bit in the urban area, raise them in the suburbs. But instead they gave direction to the Tax Reform Committee to come up with a plan that necessarily shifts the tax burden within the suburbs to less-wealthy people generally, no matter where they live.
It’s not, however, only a matter of economic justice. “Tax reform” is also bad for the city as a whole.
“In the short run [‘tax reform’] is bad for poor people,” Dalhousie economist Lars Osberg tells me. “But in the long run, it’s bad for rich people too, because suddenly there’s downward pressure on the quality of public services.”
Osberg says with a service-based taxation system, the public will only support a level of services to the level affordable by the median wealth of the public—“it’s a great way to mobilize taxpayers to demand fewer services,” he says. “And that’s not what you want to do when you’re trying to get businesses and people to move to town.”
“Everyone,” says Osberg, “ends up worse for it.”
Related Stories
Case studies in “tax reform”
Notes on the figures used in this article
City Councillors’ property tax profiles
McCluskey, Uteck butt heads
Bruce Fisher on The Coast’s tax reform analysis
Taxing HRM
Counting “tax reform” votes…
“Tax Reform” proposal is dead
This article appears in Dec 10-16, 2009.
Well researched, Tim!
Are your council members Too Big To Fail, or do they just think like it?
Tim Bousquet continues to demonstrate why he is required reading for anyone who wants to know what is really happenning in HRM politics.
So……how should it be done? There’s no doubt that this proposed system is flawed. I assumed they would be smart enough to multiply the assessed value be some factor to take into account those who have almost no services available right through those who who have all. VERY frustrating.
Good article, though. Really informative!
Incredible story.
Tim, your article rests on the false premise that it is moral for the government to forcibly take resources from one group of individuals and give them to another group of individuals.
Real reform would include breaking this altruist paradigm and having the government step out of providing consumer services such as domestic water, sewage removal, mass transit, garbage collection, etcetera.
Until this debate is reduced to essentials (IS IT MORAL FOR THE GOVERNMENT TO TAKE MONEY FROM ANY ONE PERSON AND GIVE THAT MONEY TO SOME OTHER PERSON?), it will never be resolved.
BTW, I say forced redistribution of wealth is immoral, no matter the given rationalizations.
For someone who doesn’t pay much attention to the news, I’m awfully glad to have stumbled across this article. I’m young, have lived on my own for about 3 years, and am still learning about all this “grown up” stuff. Thank you for writing such a great, informative article. This is a real eye opener! So essentially, the “tax reform” is going to make property taxes the same for everyone in the HRM right across the board, regardless of your community, the services you are or are not supplied with (like sidewalks or metro transit service in lawrencetown), or how much space someones unnecessairly large house takes up in the HRM? that is bullshit! so now, on top of the fact that I am already taxed to death on my paycheque, I’m going to be penalized for A: Living in Dartmouth and B: not making enough money to afford an apartment in bishops landing?!?! If I’m wrong about soemthing, please, feel free to correct me, I would love to better understand all of this!
re: Chris Gaudet
Just read The Fountainhead? What’s next Atlas Shrugged?
re: Matthew Luthor
No, not just. I have read the Fountainhead, Atlas Shrugged, We the Living, Anthem and I would say most of Ayn Rand’s non-fiction, plus quite a bit of other Objectivist based writing. Have you?
But really Matthew, do you think that it is moral for the government to take your money and give it to someone else?
There goes Tim again, drawing battle lines and pitting rich against poor in his imaginary “war of the classes”. His convictions are strong, so don’t mind the many fallacies or overreaching conclusions.
Tim aims his article at inflaming the vulnerable. He frames tax reform as an effort to “shift wealth from the poor to the rich”, then proceeds to make a case that confirms his hypothesis using extreme examples that hardly represent the majority of the population.
What’s ironic is that he shoots down the results of a scientifically conducted official survey with valid sample sizes, and then he uses his hand-picked extreme examples ($4 Million home??) to suggest that survey results are, in fact, unrepresentative.
I mean, Really? Are you truly trying to build a case to convince rational people that the government spent all these years trying to figure out how to take $500 from poor unemployed Joe in Spryfield so they can send it to multimillionaire widow Abby in the South End?! All for the sake of making Abby “richer”? Que the rage!
More amusing are the caricatures you use to “help” people contrast what a ‘South Ender’ quintessentially is, as opposed to someone who lives in a “Tim-approved” HRM district. It really helps bring your “us vs. them” argument together.
So, for those of us who aren’t already pre-sold on the idea that “wealth=bad”, tax reform that more closely aligns taxes paid with the cost of services received is always a good thing. If I pay for a big mac, I want to receive a big mac. If all you can sell me today are McNuggets, then please don’t charge me for a big mac. Isn’t that a fair request?
The other false assumption being used in this article is the notion that property value is always reflective of a dwellers income. So, a family living in a $400K home on the peninsula is automatically assumed to ‘have more money’ than a family living in a $200K home in a “Tim-approved” district. Never mind that the peninsula family is in a tiny 3-bedroom condo, while the other family is in a 3-story home with a backyard. The condo costs more, so the peninsula family is richer. It’s simple math really.
(What’s that? The family living in a smaller place has less disposable income because they pay a higher mortgage to live an urban lifestyle? Whatever. That’s details. It was their choice to live there. That’s the kind of dumb decisions that rich people make. Just look at what rich people did to the economy!)
Since Tim only uses the value of the house to determine wealth, it doesn’t matter if the peninsula family are modestly employed with a combined income of under $80,000, or that the family living in the lower-valued home are lawyers with a combined income of $250K annually.
!!News flash!! “Wealth” already has a tax. It’s called income tax. It is applied to income from employment, business, investments, inheritance, and money received from the SALE of property. So, the value of equity in a highly-assessed house IS taxed… but only when the owner ever attempts to access that equity.
This ofcourse makes sense to people who actually know what municipal taxes are meant for. They are taxes designed to help the city deliver municipal services to its residents. These taxes are NOT designed or intended to be a “wealth tax”.
Therefore, insinuating that tax reform will somehow upset the function of property taxes as a vehicle for social equality and redistribution of wealth (when they never actually were that vehicle and never will be), is not only inaccurate, it’s flat out delusional.
If Tim wants to advance his anti-wealth crusade, he should start a campaign to demand additional taxation on wealth via the various existing provisions on INCOME TAX. Please don’t pitch your tent on the bandwagon of property tax reform.
Fantastic work, Tim. The Coast continues to be the best local paper in terms of serious, in depth analysis and reporting.
And it’s always nice when the Objectivists chime in, too. Basing your political beliefs on the novels of Ayn Rand is like basing your political beliefs on the novels of J.R.R. Tolkien. Except that Lord of the Rings is far more realistic than anything Rand ever put together.
This article is among the most biased I have ever read in my entire life. While I am 100% in favor of the new way of calculating property taxes it isn’t perfect. What about taxing the VALUE of the land a house is on, and not the value of the house? That way people that live on cheaper assessed land will not be charged as much property tax. Also add tax amounts to the properties according to the services they receive. as in set numbers for trash/recycling, snow removal, sidewalks, sewer, water etc. That way people with more services pay more, and the people with more valuable land will pay more. I really hate that because you choose to invest in a bigger house that you are taxed at a higher rate.
In my proposed system, assume we have 2 identical plots of land… a trailer on one plot of land and a million dollar home, on the other plot of land – they both receive the exact same services and both should pay the same property tax.
Don’t tax people higher because they can afford it, they are already taxed at higher rates because they make more money.
Thank you, Tim & the Coast for this informative, eye-opening and jaw-dropping article. I simply can’t believe that this proposal may go ahead. I thought myself a realist to believe that the government has citizens best interests at heart, but now I see that makes me an idealist. I am about to start a letter to my city councillor to express my concerns and I hope everyone else outraged at this idea does the same.
Nice work, Tim. This is a sharp knife straight through the BS flying around City Hall! Your explanation of the low-income relief portion of the Tax Reform Plan is particularly amusing (it’s actually extremely disheartening, but reading quality content improves one’s mood). Property taxation is innately unfair. Anyone (or committee) who says they’ve developed a fair system, and purports it as such, is either ignorant or a liar.
re: Chris Gaudet
Oh dear, “Objectivist based writing”. You do know that “Objectivist” is not an actual philosophy, let alone a basis for economic policy. It was shit that fell out of Rand’s narcissist imagination. The woman was a lunatic and her beliefs, ironically, parallel Marx more than anything else.
I have a theory about people who find moral superiority after reading Rand. I won’t divulge, but it does involve you buying a sports car at 45.
http://www.sciencedaily.com/releases/2009/…
Tim,
Your observations are based on current data and leading you to your own conclusions. To be really fair, show the increases in assessments in taxes over the past few years and you would see that people in the so-called “rich” areas have seen massive increases in taxes yet their incomes are not increasing. My taxes have increased 400% in the past 5 years and we have to work more and more to pay these outrageous taxes, yet we use no more fire, police, civic service than we ever have. Everyone reading this article should ask if they could handle a 400% increase in taxes.
Tax Reform is a Red Herring that detracts from the out-of-control spending in HRM for the past few years. Untendered purchasing, more travel, building $40 million rinks rather than saving Akerley Rink for $700k, and the infamous $3.5 million Commonwealth Games Bid that was never even budgetted by HRM. This horrific mismanagement is coming home to roost. People whose assessments have increased can not afford to finance HRM and the burden needs to be reduced by 1) BIG deceases in spending (and services), 2) de-amalgamate rural areas from HRM, and 3) find a better way to spread out the tax burden.
In a perverse sense, if more people paid more taxes, there would be more people offended by the amount of government waste, they would demand more accountability, and we would get better government.
Thanks for reading,
John
By awesome coincidence my first ever HRM tax bill was waiting for me when I got home. *sigh*
Thanks Tim, I hope to hell this wakes up a few people.
“So, a family living in a $400K home on the peninsula is automatically assumed to ‘have more money’ than a family living in a $200K home in a “Tim-approved” district”
um, are you serious? really? wow.
Tag yourself in a picture of your door and win a Print
http://www.facebook.com/#/album.php?aid=35…
Man, at least issmat is consistent, like a fine set of e-mailed Tory talking points.
It’s always the same, rudeness and ad hominim attacks intead of a well reasoned, constructively critical response that adds to the debate. I wonder if it is the clarity with which we define our beliefs that draws so much ire.
In case anyone who has read these comments wants a balanced view of Ayn Rand, read her works. It really is that simple.
As far as Objectivism paralleling Marxism, that is ludicrous.
The comparison to Lord of the Rings is a littel more apt. Both Tolkein’s and Rand’s most famous pieces of fiction are based on strong characters that show integrity and courage in following their convictions and defending their values against seemingly impossible odds. Where they diverge is in the specific philosohical exposition in Rand’s work, ie Atlas Shrugged.
As far as her many works of non-fiction, they definitely present a well developed philosophy. Go see for yourself.
@ Quinpool: I read the article you linked to and I don’t see how that adds to or detracts from Objectivism or your smears. In all the reading that I have done, I have never seen anything in Ayn Rand’s writing that stays kindness is evil. As a matter of fact she specifically says;
“Do not confuse altruism with kindness, good will or respect for the rights of others. These are not primaries, but consequences, which, in fact, altruism makes impossible. The irreducible primary of altruism, the basic absolute, is self-sacrifice—which means; self-immolation, self-abnegation, self-denial, self-destruction—which means: the self as a standard of evil, the selfless as a standard of the good.
Do not hide behind such superficialities as whether you should or should not give a dime to a beggar. That is not the issue. The issue is whether you do or do not have the right to exist without giving him that dime. The issue is whether you must keep buying your life, dime by dime, from any beggar who might choose to approach you. The issue is whether the need of others is the first mortgage on your life and the moral purpose of your existence. The issue is whether man is to be regarded as a sacrificial animal. Any man of self-esteem will answer: “No.” Altruism says: “Yes.”
-“Faith and Force: The Destroyers of the Modern World,” Philosophy: Who Needs It, 61.
So, does anyone actually want to answer my original question?
As usual, the wealthy are trying to schtick it to the poor. There’s no way we should stand by and let them get away with this.
Great work reporting this, Tim Bousquet. The Coast is the only place where I could find in depth reporting on this topic…..well done!
I’ll bite, Chris.
There’s a moral right because under your system men are reduced to beasts intent on dominating each other.
Go to India, if you want a Caste system
Mathew, I appreciate that you took the time to answer. Your answer is obviously not a real attempt to involve yourself in an exchange of ideas with me, but rather a another attack, apparently from ignorance, as Objectivism primarily espouses benevolent trading relationships between free individuals who are equal politically, not necessarily economically.
I’m not sure where the caste reference comes in as I never once mentioned wanting a caste based social system.
I do have a new question, specifically for Mathew, Quinpool & chris902;
Why the instant and (so far) undefended scorn?
If any of you actually backed up your statements with an argument or examples showing what you said to be true, I and others would be inclined to at entertain your statements and be able to decide if your reasoning is valid.
Making unsubstantiated and rude comments about the principles that I chose to use as guidelines for my life does nothing to show your intelligence or reasoning skills. If anything, it piques people’s interest in the subject of your irrational hatred.
So, thanks, I guess.
Chris, I had my fill of arguing with “Randys” during my time in university.
“I and others would be inclined to at entertain your statements and be able to decide if your reasoning is valid.”
Notice you say that you will decide if my reasoning is valid. Say it again to yourself.
Feel the arrogance dripping off that sentence?
You do know that many of the old wise men of the now broken financial system are followers of Rand, right?
You’ll grow out of it.
Sorry Matthew, I still don’t get it. If you had you fill of arguing with the “Randy’s” already, why don’t you blast my comments with a practiced, well reasoned argument? It shouldn’t be hard if you have all that experience.
My statement “If any of you actually backed up your statements with an argument or examples showing what you said to be true, I and others would be inclined to at *least* entertain your statements and be able to decide if your reasoning is valid” is hardly an arrogant statement. It’s kinda like in math class when you are asked to show your work, so the person reading your work would know where you are coming from.
It is a simple fact of life that everyone is involved in judging things all the time. The validity of your opinions is no special case. You can say that you feel I’m being arrogant, but I feel I am simply being forthright.
As far as the perpetratiors of the Financial crisis being followers of Rand, once again your statement is entirely false. John Allison, the former head of BB&T is a follower of Rand and one of the very few. His bank was one of the only ones to refuse TARP money from the Fed and when required to take it, his was the first to pay it back. The reason his bank was not affected nearly as badly as others is due to the fact that they used logical judgement to determine who they would lend money to and not federal guidelines.
BTW, using “You’ll grow out of it” only shows yourself to be patronizing and arrogant.
To argue with you, would be like arguing with a furry, nothing on earth is going to change your mind, and it would just be fodder for your mental masturbation.
“As far as the perpetratiors of the Financial crisis being followers of Rand, once again your statement is entirely false.”
Really?
http://video.pbs.org/video/1302794657/
Educate yourself.
First, let me say that I’ve always enjoyed Tim Bousquet’s articles in The Coast, as well as his contributions to CBC’s Information Morning. His depth of coverage of important issues, such as problems with the harbour clean-up, are generally informative and go far beyond the usual snapshots.
Which is why it is so disturbing the way facts are misrepresented in the above story on tax reform. Take the selection of a suburban street for comparison: there is no way Tim picked Lake Mist Drive “at random”. Given his obvious hate-on for Kingswood as the epitome of all that’s evil in suburban sprawl, he surely knows the area better than that. The houses on that street are valued at almost double the neighborhood average, and his comparative description of Lake Mist Drive with Pockwock Road fairly drips with sarcasm and subjectivity. And will someone please provide the evidence that servicing suburban homes is three times more expensive than on the Halifax peninsula, especially as the vast majority of houses in Kingswood do not have water, sewer, or transit services?
“Well researched, Tim!”?? C’mon, give us a break…let’s have a reasoned debate on property taxes based on value versus services, without this slanted journalism that gives the whole profession a bad name!
Re: the Rand debate… http://www.nytimes.com/2009/12/01/science/…
Property tax reform is long overdue and I hope it succeeds but I doubt it will pass.
Politically it would seem like suicide for most councillors assuming there will be many more low assessed properties that must rise to balance the decreases to the high assessed properties. I also assume anyone who faces an increase will be against it and against a councillor that supports such a change.
I voted for Barry Dalrymple because he said he supported tax reform (sort of). The other candidate in district 2, Krista Snow, wouldn’t answer the question.
How can anyone seriously argue against a system based on paying for the services you use? The waste and inefficiency at HRM that causes the need for such high taxes in the first place is what people whould be fired up about… but no…
Tim, you apparently missed the Kingswood Elementary School on Vrege Court so there is a school in that subdivision.
I saw this in a report YEARS ago made in HRM’s Regional Planning Strategy. And yes, going by their calculations of how much it costs to provide decreased services to the ‘fewer people per square kilometer’ in the suburbs versus the higher-density housing of the city core, it IS 3x higher.
But this fits into their plans for ‘social engineering’, along with how they’re manipulating zoning and development. Low to middle-income people (the majority) will be forced economically to move into condos/apartments in the city core areas, which is right where the city planners want them. This leaves the ‘sprawl’ for the people with the ‘excessive incomes’ (or really high mortgages, which will be the devil to support when rates go back up next year) to splurge on. Like this tax system, it seems to suck. But how can you argue with a system that is also ‘greener’, although it takes your dreams of ‘2 dogs and a backyard’ away?
The solution for those of that are caught in the middle? Move out of HRM…
Matthew, your point at Alan Greenspan was very predictable.
Yes, he was a follower of Ayn Rand’s. Yes, he became the chairman of the US Federal Reserve.
I would even agree with you that he was in large part responsible for the past 3 credit expansions and subsequent credit contractions, most recently the sub-prime derivative market meltdown.
If you had ever read any of Alan Greenspan’s three essays published in Ayn Rand’s, Capitalism: The Unknown Ideal, you would easily see the disconnect between his original Objectivist thoughts on government and economy, and his actions as chairman of the Fed.
Or, take this man’s word for it. He was there.
http://henrymarkholzer.blogspot.com/2009/0…
“waste and inefficiency” “plan for ‘social engineering'” “it takes your dreams … away”
And this is about municipal taxes. This is exactly why government should not be providing these services in the first place.
The very least I can ask for is to only pay for what I use.
Where is the problem Tim – taxes should be based on services received!
David and Margaret Fountain get the exact same services as the Zebedees so why should they pay more! Both get the same water (and pay the same water rate); get the same electricity (and pay the same power rate); so why should other services be any different. It makes no sense that if I fix up my house and the value of my house increases and therefore my taxes go up?
“besides a few voices in the wilderness, no one much has had the courage to call the proposal what it is: a massive redistribution of wealth.”
No, a massive distribution of wealth is what is going on with the current tax system today — the proposed reform would correct this.
Yes, estimating what share of HRM services are consumed by each property is hard, but reasonable estimates can and should be made.
As for the reform resulting is a demand for fewer services, this would only happen if the services being paid for weren’t desired or worth their price — in which case we should be demanding they be removed or improved.
As an outsider, looking in, I’m appalled at the property taxes on the Penisula, compared to other parts of Canada. I looked at a home off Robie St (on a two acre lot) about 5 years back. It was selling for $795,000 and the property taxes were a shocking $10,000 per year, compared to $2,000, for a small home on the edge of Mount Royal (one acre) in downtown Calgary, valued at about $500,000. There is something very wrong with the tax structure in Halifax, maybe, as someone mentioned above, due to excessive spending……As for Tim’s article above, he fails to look at the current tax situation on the peninsula and compare it to the burbs. There is an obvious miss-match. His point that tax reform is “taking from the poor and giving to the rich” is absurd and clear fear-mongering. A service based system is a more “fair” way to go, although it’s a tough one to administer. Good luck Halifax, with that one! FYI..I just checked taxes on beautiful home currently listed on the Arm, selling for $1.9mm, and they’re coming in at close to $19,000 per year. I’m “wealthy” enough for the house, but not the taxes! That’s just plain scary!
The Halifax tax reform seems to be based on what politicians perceive will maximize the probability of being re-elected, not land value taxation (and would still be skewed by zoning and development charges depress property values of low-density land use and inflate higher density land uses). The article seems to compare changes to property taxes of detached housing and ignore the other types of non-apartment/condo dwelling units (semi-detached, rowhouse, townhouse). I assume Upper Hammonds is an outlier amongst suburbs (being primarily urban originally but increasingly labelled as suburban with little or no change to land use). The urban commercial properties, in general, will be subsidizing the suburban commercial properties, as commercial property values tend to be based more on revenue-streams (at least in Ontario) rather than cost to provide services, a reflection of size of the property and extent that it is segregated from residential uses of the land. So, the suburban commercial properties, which tend to have oversize parking lots (underutilized land) should be paying more in property taxes than a commercial property with no parking lot. Capping assessments are stupid, in general: a valuable property reflects high demand to reside there, so the market pressure (in this case, property taxes) to use the land more efficiently should be greater than a low-value property.
Apartment owners will pass on the lower property taxes on apartments if competition increases from new apartments being constructed (which would occur if zoning, development charges and property taxes made it more profitable for builders to build upward rather than outward). In Ontario, there is provincial legislation which requires apartment owners to reduce rent if property taxes decrease by more than 2.5%. Under equitable land value taxation, the assessment system would become simpler (removal of “improvements” variable in assessments) and not distinguish between different property classes (although the property tax rate might still vary between property classes). The “tax reform” does not seem to have a single residential property category, which would be necessary under equitable land value taxation.
The CAP program holding assessments to the CPI is bogus anyway.
There is an issue on how they calculate those increases. Any gradeschool student will tell you when a price goes from $100 to $125 it’s a 25% increase. That is how the CPI is calculated, ( Current$/Base$-100% ) I checked. It’s only public ignorance that allows the tax depertment to call rise from $100K to $125K a 20% increase. It’s clearly a 25% increase. Using their twisted math I’ve seen properties torn down go from $160K to $20K or -700%. A gradeschool student will tell you that’s really only a -87.5% change.
I’m no bean counter but by dint of common sense one need not be a CPA to figure out that the $60 million for needless Convention Centers, $60 million for libraries at a time when internet is making books, newspapers, research available to everyone , $3 million skating circles with $1 million yearly operating costs, etc,etc has to be paid for by the public. Any one who thought these grandiose projects would be “free” watch too many lotto commercials.
Sorry to rain on your parade of illusions folks but ” The only thing free is Willy” . Write this down, memorize it , post it on your fridge, refer to it before voting any more financially inept councilors,mayors, premiers or MLA’s into office.