Media reports that the Canada Mortgage and Housing Corporation (CMHC) is funding research on a possible “home equity tax” generated considerable buzz over the past week. In response, the Trudeau government was quick to reject the idea and CMHC president Evan Siddall has since insisted that such a tax isn’t part of the Crown corporation’s ongoing agenda.
The swiftness of the government’s renunciation is understandable. The politics of a tax on home equity are self-evidently bad. Housing is the biggest source of wealth for most Canadians, with more than six in 10 families reporting a home as an asset. A home equity tax would thus amount to a broad-based wealth tax on millions of Canadian families.
But it’s also understandable that people believed the initial reports in light of various statements by Siddall over the years about how the so-called “glorification of homeownership” is a “regressive canard,” “plainly elitist” and ultimately “counterproductive economically and socially.” It’s easy to forgive Canadians for naturally assuming that CMHC’s leadership would support a new tax on homeownership.
Siddall’s rhetoric may be unconventional, but his thinking is actually more common in public policy circles than readers may think. There’s a growing view that government policy should cease supporting homeownership altogether. The Economist magazine, for instance, recently described pro-homeownership policies as “the West’s biggest economic policy mistake.”
This is not only wrong in and of itself, it highlights the bigger problem of the limits of narrow economic thinking about what constitutes a good life and a good society.
Opposition to government support for homeownership has grown since the 2008-09 global recession. There’s a sense that U.S. housing policies including, for instance, loose lending rules, nudged people into homes that they couldn’t afford and in turn contributed to the financial crisis.
And that’s fair enough. There’s plenty room for debate about how public policy should best support homeownership. But that’s quite different than whether public policy ought to support homeownership at all.
The idea that government policy should be neutral or even biased in favour of renting fails to recognize the individual and collective benefits that homeownership brings. The evidence is overwhelming : homeownership is positively linked to a raft of economic, social and civic behaviours that are crucial to self-actualization and a healthy society.
It’s really striking, in fact: from family and marriage to crime rates to educational outcomes for children to voting and more, homeownership is a powerful source of stability and opportunity, particularly for low- and middle-income families.
So why are Siddall and others now questioning its case? A big part of the disconnect here lies in competing views about the proper ends of government policy. Is it about maximizing efficiency or a broader conception of human flourishing? Critics of pro-homeownership policies typically prioritize the former. They see homeownership as a poor allocation of capital and an obstacle to labour mobility. Renting is superior because it’s “better to own shares than to own homes” and easier to pick up and move in response to evolving labour market conditions.
This represents an incomplete understanding of how people actually live or want to live. One might call it a thin view in a textured world.
It’s a good (or bad) example of the limits of narrow economic thinking. Its inherent flaw is that it defines people solely as economic actors whose capital and labour ought to be maximized. It fails to treat them as parents, spouses, siblings, workers, neighbours, coaches or community members.
Homeownership confers benefits precisely because it involves planting roots. It’s not just about wealth creation. It’s about much deeper things like stability, identity and obligation.
There’s a reason, for instance, why “home” held such an important place in the thinking of great conservative intellectual Roger Scruton. For Scruton, home was what brought “order and meaning to life.” It provides a sense of familiarity and comfort in a world of churn and change. It gives us rootedness.
Just because these endowments cannot be measured doesn’t mean they don’t matter. They’re crucial parts of who we are.
If there’s one, big-picture lesson from the past several years of extraordinary political and social disruption, it’s that economics is a necessary yet insufficient way to think about what motivates people, families and communities. Our political leaders need a thicker perspective about what constitutes a good life for individuals and a good society for us all.
This applies to a wide range of public policy issues. Especially homeownership.
In Defence of Home Ownership, A very Good Thing by Sean Speer | National Post