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The Givers and the Takers

January 10, 2012

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.

10 Comments leave one →
  1. January 10, 2012 4:07 pm

    Oh my… You’ve stumbled on the neocon “makers vs. takers” debate: Maybe it is because my very privileged father (92) and mother (89) are almost the exact same ages as yours, I have largely come to the same conclusions. It’s all an elaborate mythology that surrounds how the mainstream likes to feel about the downtrodden. It is a curious trait of humanity, as Barry Switzer observed in the 1930’s: “Some people are born on third base and go through life thinking they hit a triple.”

    Like you have done, if you perform the real evidence-based forensic accounting, the math doesn’t go in the favour of the well to do. Shall I start counting the cost of the many medical operations and visits to the doctors, the seniors’ discounts, Old Age Pensions, the drug plan, the tax credits and the defined benefit pension plans guaranteed by governments?

    Or should I count the fact that when our folks started to really save when we “kids” left the home in the 1970’s, they invested in markets whose indices went from less than 1000 to over 10,000 (DOW and TSX) in 18 years and then moved to make 50% of capital gains non-taxable. As the Church lady intoned: “How convenient?”

    Fast forward to the last 13 years where the gains have been, in aggregate……..well………nothing – nada – zero!

    In any event, it’s all about stigmatizing who we don’t like and building up who we do like through selective facts – as we say – through ‘decision-based evidence making’.

    For my own account, I paid off my entire student loan in 1974 with half of my first pay-cheque. It was $374 and utterly painless to do. I now have a defined benefit pension but my investments have not been so hot over the last 13 years -I wish someone had told me that I’d have to play volatility as opposed to the markets.

    The fact is that the baby boomers are behind the seniors and the younger adults of today are far behind the boomers.

    The real balance sheet – the real evidence shows that the great reckoning is different than what mainstream public bias would allow. The greatest of all reckonings in literature might be found in Marlowe’s Tragical History of Dr. Faustus. When Faustus meets the 7 deadly sins, let’s recall what Envy said to him:

    “I cannot read and therefore wish all the books burned. I am lean with seeing others eat. O that there would come a famine over all the world, that all might die, and I live alone! then thou shouldst see how fat I be”

    Through willful ignorance, we approach a modern Faustian standard!

  2. John Osmond permalink
    January 10, 2012 5:55 pm

    Old Age Security is embraced for the simple reason that, barring tragedy, the aging process is unavoidable. We do not vilify the old for their longevity; the process is inevitable and there ain’t nuthin’ you can do about it.

    Social Assistance, on the other hand, is seen by many as a handout to people who should be able to “pull themselves up by their own bootstraps”. Unfortunately society has become accustomed to stereotyped depictions of “welfare cheats”, “squeegee kids” and a host of other unflattering images, most of which do not reflect the vast majority of benefit recipients.

    We all require some help at various times in our lives. For most people that support does not come in the form of a government subsidy. Or does it? The federal government provides more than $1.4B annually in tax breaks to the oil and gas industry. That translates to lower prices at the pumps, and it’s generally not people on welfare who are driving cars.

    Post-secondary education is also subsidized. College and university education is seen as a means to an end; graduates will go on to become “productive members” of society. Social assistance and subsidized housing also have the potential to enrich lives. So why aren’t these recognized as an effective use of public money?

    The stigma surrounding those who supposedly “deserve” a break from government and those who are deemed unworthy will not end unless it’s made clear that we all benefit in one way or another.

  3. Dave Snelgrove permalink
    January 10, 2012 7:13 pm

    The Conventional Wisdom is that Seniors fought in a war or two to allow us to enjoy the benefits of freedom, and that we owe them everything we have. The Conventional Wisdom is also that if you are poor enough, it is understandable that you will cheat and steal if you have the opportunity. J.K. Galbraith had more to say about Conventional Wisdom.

  4. January 10, 2012 10:09 pm

    I think that we’re all state-supported, but we’re able to ignore it. Public education, public health – that’s the state. It’s too bad that the state becomes only for “bad people” or some sort of inadequate “other.” But “the state” and/or the “welfare state” benefits us ALL. It’s our own juvenile interpretations of the state and its supports that WE perpetuate that in turn perpetuates dangerous and ultimately unhelpful myths about givers & takers.

  5. KitChapman permalink
    January 11, 2012 9:01 am

    My parents also were able to take advantage of a federal housing program. As a returning vet, my father was eligible to buy a home in the new development in Scarborough. Initially, the street was all returning vets. Needless to say, a few years ago it sold for way more than the purchase price of a few thousand. My father was able to pay the mortgage because he had a university education, again a benefit given to returning veterans. They worked hard but both these government programs gave my parents (and others in similar circumstances) a huge financial step-up as they were establishing their life together. I suspect that at the time these programs had popular support.

  6. EtTuSheds permalink
    January 11, 2012 3:20 pm

    Joy, browbeating those with legitimate concerns about the cost of municipal government services may help you feel morally superior, but it probably won’t yield any more money for social housing.

    Now you may have actually encountered the tale as reported, but it sounds to me like the caricature that many social activists hold of those simply asking for more careful and controlled government spending. I’m surprised you didn’t include a picture of “Mister Money Bags” to illustrate your target.

    However, if you heard anything even approaching the position expressed, while admittedly hyperbolic, it more likely stems from fatigue and frustration rather than any deeply held grievance about TCHC tenants or costs. (For most people, TCHC isn’t even on their radars.)

    In my opinion, a big source of this fatigue and frustration — what can really get someone’s back up and cause such over-the-top rhetoric — is people like social housing activists.

    Typified by many of the recent deputants at Toronto City Hall, the breed seems to demand more and more money, but refuses to ever acknowledge the already significant contribution of their fellow residents to various societal causes, both directly through private charities, and indirectly via governments.

    It’s like encountering a person doing fundraising, who curses at you for not supporting their cause, and curses even louder if you do contribute but don’t kick in enough.

    Look at your own arguments, which basically boil down to “shut up, because you don’t really pay much at all, and besides you’re just as reliant on the government.” With that attitude, it’s no wonder a motto like “respect for taxpayers” can gain traction.


    Let’s start with your contention about the myth of who pays for TCHC, which I assume is supposed to squelch any further arguments about costs. It doesn’t hold up under scrutiny.

    First, your statistics on average income are contradicted by TCHC’s own web site:

    Second, deducting municipal taxes from contributions to arrive at a net subsidy is patently unfair. The City doesn’t just absorb those property taxes back into their coffers, they expend money to provide services to TCHC buildings.

    Third, you fail to acknowledge the $37.5m in capital contributions recognized by TCHC in 2010. That’s also money contributed by governments, but for assets that are amortized over a number of years. The $37.5m is simply that year’s allocation.

    All in, for 2010 that’s $344m in annual subsidies…a fair chunk of change from the taxpayers, whether or not you agree.

    And that still ignores another major subsidy to TCHC. Correct me if I’m wrong, but at least a portion of the rent paid by residential tenants comes from social assistance. Taxpayers should receive some acknowledgement and credit for that contribution as well.

    We see, then, that governments, and therefore taxpayers, do shoulder a significant burden for the costs of public housing. They already give, and give pretty generously. That’s no myth.

    Does that not earn the taxpayer at least a voice? You may disagree, but deriding them for expressing concerns about the associated costs probably won’t win many converts to your cause.


    Equally unpersuasive is your use of the “subsidy” argument. Claiming false subsidies seems to be the latest activist ploy, and betrays a popular socialist notion: that all earnings really belong to the government, and people should bloody well be grateful for whatever they are allowed to keep.

    There’s a reason you had difficulty identifying and calculating these subsidies: they’re illusory.

    Using such claims to diminish the pride many take in their life achievements is counterproductive, and a bit cruel. Again, it will only serve to undermine your cause.

    (And if it makes any difference, I’m sure your folks paid their fair share for the privilege of using CMHC, just as people do today.)


    With these kinds of attitudes, is it any wonder that a backlash has resulted? People don’t respond well when they are demonized and have their legitimate contributions dismissed via flawed arguments.

    There is, after all, another short tale, more an aphorism really, about flies, honey, and vinegar.

    • January 11, 2012 4:19 pm

      Hurray! Thank you EtTuSheds for jumping into the discussion. This is why I write — to get people talking.

      I’m sorry you found my tone combative. It’s not my intention to attack homeowners. I’m one of them! — and grateful for all the benefits I’ve received through Canada’s housing policies.

      Curiously, I was headed in a different direction from the one you think — not “how can TCHC get more money?” but “would an entirely different approach (inspired but not the same as Canada’s current tax policies for homeowners) be less stigmatizing and more effective?”

      As for your substantive remarks: thanks for the tip about average TCHC household incomes. I got my figure directly from TCHC’s communications department about 2 months ago — not sure which figure is the more current one.

      And you are quite right that TCHC buildings have received capital contributions, most recently federal infrastructure funding. This is where job creation intersects with housing policy. But there are curious quirks too. For example, under some federal programs there was a 10% capital grant paid up front 25 or so years ago, but the 50 year mortgage was set at 8%. So hard to know who is subsidizing whom.

      And yes, many tenants receive some other form of government assistance: the Old Age Pension and to a lesser extent ODSP and OW. The interesting quirk there is that when it comes to social assistance, the City may be subsidizing the Province (see my post on “a painless $100 million).

      I’m not enough of an expert to track all this money. But I do believe that tax policy is a key part of Canada’s housing policy. We need to acknowledge who benefits, and at what cost, and then think whether this is the best way to use the money.

  7. January 12, 2012 12:31 am

    Joy, your assumption that your parents did very well in their housing investment may be incorrect. You have to ask how they would have done with an alternative investment and renting. Given the huge increase in the value of equities, your parents might today be much wealthier had they instead rented equivalent accommodation and invested well in the market. See my 2006 paper Building Assets Through Housing on the Caledon Institute Web site.

  8. March 24, 2012 5:59 pm

    This web site definitely has all of the information I wanted concerning this subject and didn’t know who to ask.


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