In an interview with The Tyee, economist Joseph Stiglitz urged Canada to enact a “very progressive tax” on property as a way to mitigate growing inequality.
“If you have a $50 million apartment, the property tax on it should be very large,” Stiglitz told The Tyee. “Some of the revenues could go to help subsidize lower-income people to live in the city.”
Stiglitz is one of a number of economists who worry that the global real estate market is pricing local residents out of their own cities to make room for the wealthy. It’s not an empty fear; in cities like San Fransico, skyrocketing housing prices and the associated gentrification have become a source of social and political tensions, according to a Huffington Post report.
And with wealthy foreign investors buying homes in some of Canada’s hottest markets, residents of those cities are finding it harder and harder to afford new homes. Stiglitz said the trend of foreign investors snapping up Canadian homes was “very disturbing. … It’s the same phenomenon happening in New York. We attributed it maybe to Russian oligarchs buying multimillion-dollar apartments … making it unaffordable to live in the city.”
That’s why he’s urging a progressive property tax.
“There are very significant benefits to creating communities with diversity, diverse incomes and other forms, that cannot exist if we price ordinary people out of our cities,” he told The Tyee.
The price gap between different types of homes is also rising as home prices spike, according to the Huffington Post. In Toronto, the price gap between an average condo and an average detached single-family home widened by almost $100,000 in the past year. If the trend continues, the Huffington Post reported, many Canadian condo owners would never be able to afford a single-family home.
A Nobel Prize-winning economist says soaring housing prices in Canada are causing growing inequality. His solution – hike property taxes for the wealthy.