NET WORTH AND ASSETS CONTRIBUTE TO FINANCIAL DISCRIMINATION OF SINGLES-Part 2 of 2

Posted on August 17, 2016 by ffswpadmin

NET WORTH AND ASSETS CONTRIBUTE TO FINANCIAL DISCRIMINATION OF SINGLES–Part 2 of 2

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice).

When politicians, government and the wealthy continue to perpetuate myths that net worth and assets are too difficult to calculate or should not or cannot be included in financial formulas, this continues to make it possible for the wealthy to maintain their wealth and impossible for singles and the poor to maintain or increase their financial well-being thus resulting in financial discrimination and poverty for these groups.

The following three examples show how inclusion or exclusion of net worth and assets perpetuates the myths proposed by financial analysts, politicians, government and the wealthy.

EXAMPLE #1

Affordable Housing (services)

One assistance program in Alberta is Community Housing which is a subsidized rental program. It provides housing to families and individuals who have a low or modest income. Program funding comes from the federal, provincial, and municipal governments.To qualify, applicants must be Canadian Citizens, independent landed immigrants, or government sponsored landed immigrants. Assets and belongings cannot exceed $7,000. Assets include, but are not limited to:

bank accounts
investments (excluding RRSPs)
equity in property
equity in a motor vehicle (assessed by reviewing the value in the most current Canadian Red Book)

EXAMPLE #2

Legal Aid Alberta (legalaid)

Financial Eligibility Guidelines – If income falls within the amounts listed below, person(s) may be eligible for legal representation and to have a lawyer appointed. Representational services are not free. Repayment will be discussed if a lawyer is appointed. Legal Aid’s Financial Eligibility Guidelines allow the following eligible monthly income for family size of 1 – $1,638, 2 – $2,027, 3 – $2,885, 4 – $3,120, 5 – $3,354 and 6+ – $3,587.

An example of this is an actual court case going on at the present time. Legal Aid has refused to assist client’s claim of defence for an estimated $25,000 in legal fees. Legal Aid says client still has a large amount of property ($500,000 mortgage free), $34,000 in savings, tax free savings account (TFSA), and GICs and mutual funds worth another $21,000, plus $570 a month in old-age security payments with monthly expenses of $1,660. Legal Aid does not give coverage to individuals with assets in excess of $120,000. Legal Aid states: “client would be left with well over a half a million dollars in assets even after payment of legal fees.”

EXAMPLE #3

Family Tax Credits (tax-credits)

June 11, 2016 Financial Post Personal Finance Plan “Farm Plan Risky for Couple with 4 kids” shows how plethora of tax credits works for this family, Ed 32 and Teresa 33, stay at home spouse have four children ages 5, 3, 1 and newborn. Government employee Ed brings home $2,680 after monthly tax income. Net worth is already $502,000 including $200,000 paid for house. Non taxable Liberal Canada Child Benefit for four children will be $1,811 per month bringing income to $4,491 per month. (From ages 6 to 17, Canada Child Benefit will be $1,478 per month).

LESSONS LEARNED

These three examples show how the inclusion or exclusion of net worth and assets benefit the wealthy and families more than singles and poor families. In Example #1, to receive housing assistance only $7,000 is allowed in assets. Really, that is it? Compare that to Example 3 where a family already having significant net worth will receive benefit upon benefit upon benefit in addition to Family Tax Credits. In Example #2, this could be said to be a good case where financial fairness has prevailed. This client has plenty of net worth and assets to pay for $25,000 legal defence. When the Legal Aid income scales are analyzed, it is apparent they have at least used some form of equivalence scales (finances). Hallelujah, here is one example where a family unit of two is not assessed at a value times two of that of family unit of one!

CONCLUSION

This post is just another example of the blatant hypocrisy and upside-down finances that financial analysts, politicians and government, and families perpetuate by not including net worth and assets in all financial formulas across the board whether they are local, provincial or federal or of a service type such as Legal Aid. The blatant financial discrimination of singles and the poor continues while the wealthy get to write their own ticket to wealth by paying less and increasing wealth.

(This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice).

FINANCIAL POST PERSONAL AND FAMILY FINANCIAL PROFILES STAR RATINGS-Part 2 of 2

Posted on July 10, 2016 by ffswpadmin

FINANCIAL POST PERSONAL AND FAMILY FINANCIAL PROFILES STAR RATINGS-Part 2 of 2

(These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.)

(six-reasons-why-married-coupled-persons-are-able-to-achieve-more-financial-power-wealth than singles)

(Andrew Allentuck from the Financial Post oversees the personal and family finance profile evaluations. Anyone can submit their financial profile to the Financial Post for analysis by a financial planner. Some of these cases have been used in this blog. It is helpful to know the background behind these financial analyses. In Part 2 of 2 the following information outlines the top ten questions that the Financial Post receives regarding these financial profile evaluations. The blog author’s comments re questions are entered below some of the questions.)

Financial Post, December 22, 2012 “THE TOP 10 FAMILY FINANCE QUESTIONS OF 2012 (financialpost)

‘….In hundreds of letters to Family Finance requesting assistance and commenting on the problems folks face in paying their bills, 10 top issues emerged:

Debt…a 1.0% interest rate increase on a home equity line of credit will turn a $100,000 interest-only loan floating at 3.5% or $3,500 to a heftier $4,500 a year…
Tax shelters Inability to make the most of RRSPs, RESPs, TFSAs and, for those who qualify Registered Disability Savings Plans (RDSPs) spurred many readers to ask how they could sock away more money and which choices in the alphabet soup of these plans would be most tax efficient.
Downsizing Family transition from children to empty nests and the need to raise cash for retirement spending came up in more than half of our cases. The amount of money that can be raised or the amount of debt that can be liberated depends on the market price of home or cottage. Where prices are very high – think Vancouver, Victoria, Calgary and Toronto – readers sensed that they could take a profit over cost, especially if they had owned the home for many years, pay debts and have cash left over for a smaller home or for renting….’

Comment: The unfortunate truth is that many seniors (married or coupled and widowers) living in their expensive big homes do not want to downsize. Many financial assistance programs have been implemented included house tax assistance and renovation assistance. Many singles and poor families, however, do not have the ability to own big expensive homes. Singles are told they can move or go live with someone if they have problems with housing. It is primarily only wealthy families that have cottages or second properties, motorhomes and other expensive toys.

‘Children Couples and those expecting a first child wrote in dozens of cases to ask what is the cost of raising a child. A 2011 study by the Manitoba Department of Agriculture suggested that a child born in 2010 would set its parents back by $191,665…..’

Comment: Some statistics give a figure of $250,000. To 18 years of each child, this amounts to $13,889 per year and $1157 per month. It is difficult to understand why parents (beyond replacing themselves with two children) would have three, four, five children when they know they won’t be able to support themselves and their children within the parameters of their budgets and salaries. When it is known that there is a world population explosion and the earth will not be able to sustain this population explosion, why would responsible parents have more than two children?

‘Boundaries It is one thing to know the statistics of child-rearing expense and another to manage it. Readers asked many times how much they could afford to give their kids for RESPs and for activities while at home. It was common to find cases in which parents, strapped for money, spent $400 to $500 a month for sport yet could have cut down on hockey and put enough money into RESPs to qualify for maximum government grants. Indulgences included foreign travel with parents and money for cars for teenagers. When the parents wound up strapped for cash, it was clear that they had failed to set boundaries on what they would spend and what they might ask their older children to earn to support their sports, hobbies and travel.’

Comment: Straight from a financial person’s mouth-married or coupled families with children often don’t set boundaries in reality to what they can afford. However, singles are often told they spend too much and are selfish even though they don’t have the same financial income and assets as married or coupled families with children.

‘Limits to portfolio growth
Understanding risk
Insurance Virtually every reader has insurance for his home and car, but life insurance is another matter. A third of our readers need more insurance than they have to cover to risk that the single breadwinner in a family could die prematurely. Another third have inappropriate coverage with costly whole life that builds cash value slowly, or universal life they (and many financial analysts) can’t understand. The remainder need to adjust their coverage up or down with how their lives have changed. The math within life insurance is complex, the tax breaks that life insurance can afford are valuable, and the protection against many creditor claims life insurance can provide are precious, but few readers understand how intricate a product life insurance is.’

Comment: Life insurance should be made mandatory for all married or coupled family units, just like home and car insurance. Life insurance should replace all boutique tax credits directed towards widowers as they are now technically ‘single’. Ever singles and divorced persons do not get benefits that widowers get and are, in fact, helping to support widowers with these benefits. Also, education on term insurance as the most cost effective insurance needs to be promoted.

‘Retirement age A generation of readers grew up aspiring to retire at age 55. Two-thirds of the letters to Family Finance raise the question of how they can get enough money to retire then or a little later. Today, the mid-50s goal is so 1980 – before the crashes of the dot-coms, 9/11 and the 2008 debt crisis. In fact, few readers have sufficient capital to make it to 55. Instead, working another decade to 65 or even 67….is necessary. Working longer not only allows more savings, it postpones the time that retirees have to start drawing down their capital. Working longer also provides a reason to get up in the morning, maintains associations, and even sustains credit ratings. Full retirement at age 55 is an idea whose time has come and gone for most.’

Comment: Again, straight from a financial person’s mouth-married or coupled family units seem to believe they can retire early after having received multiple family tax credits, and then be able to pension split without paying very little for these credits. Many singles have to work longer while paying to help support married or coupled family units and the multiple tax credits they receive. Singles receive very little of these tax credits.

‘Make a budget Many requests to Family Finance ask for help making a budget. Readers regard having a set of rules as a key to meeting savings goals for their kids and retirement. Where cash is tight, a set of rules for the road is surely a good idea. Just thinking about what categories of spending should have various allocations each month is helpful. Mundane it may be, but writing a budget can be a first step to sound family finance.’

Comment: Everyone should have a budget. In addition to family budgeting, parents need to teach their children about budgeting, the Rule of 72 and what the real costs are for items like expensive sports activities. If singles are thought to be spendthrifts and selfish, maybe it is because their parents never taught them anything about finances. Or, maybe it is because married or coupled family units with children don’t even to try to understand what it costs single persons to live once they leave home. More married or coupled family units with children need to educate themselves on all the benefits they receive, how little they are paying for these benefits and what it is costing other family units like singles to support these benefits that they, themselves, do not receive.

CONCLUSION

It would be helpful if all citizens learn to take responsibility for their own financial well-being instead of looking to others to support them in the form of government tax credits. The present upside down financial situation of giving to the wealthy (particularly married or coupled or family units with children) while making them pay less needs to be reversed so those who truly need assistance receive this assistance (poor singles and poor families with children). It is absurd that the wealthy are accumulating huge inheritances like TFSA accounts without paying taxes on these accounts. It is absurd that the wealthy parents want to leave huge inheritances for their children, but do not wish to give up assets like big houses while receiving tax credits such as house tax financial assistance and pension-splitting. It is absurd that governments do not take into accounts assets as well as income when handing out tax credits.

(This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.)

BOUTIQUE TAX CREDIT INCONSISTENT AND FINANCIALLY DISCRIMINATING (Part 1 of 2)

Posted on June 16, 2016 by ffswpadmin

BOUTIQUE TAX CREDIT INCONSISTENT AND FINANCIALLY DISCRIMINATING (Part 1 of 2)

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.

Revisions were applied to this post on June 19, 2016.

(Preface: Every political party has introduced tax credits to give financial benefits to certain members of the population more than others. However, during the reign of the Conservative party under Prime Minister Stephen Harper, a plethora of tax credits were introduced. This led to coining of the phrase ‘boutique tax credits’. Much of the following information has been taken from the ‘Policy Forum: The Case Against Boutique Tax Credits and Similar Tax Expenditures by Neil Brooks’ (brooks). The Neil Brooks discussion provides an excellent overview of why boutique tax credits are so wrong and discriminatory. While many families, especially poor families do not benefit from boutique tax credits, ever singles also do not benefit from most of the tax credits. If there are any negatives to the study it is that financial discriminatory impact of tax credits and expenditures for ever singles and to some extent single parent with children family units is not fully recognized).

The author of this blog has long thought that boutique tax credits are financially discriminatory to singles. However, we cannot even begin to articulate what Neil Brooks has so eloquently stated in his article. The entire article is worth a read including the footnotes which provide excellent information on many commentaries and studies of this topic. For this post, we attempted to condense the PDF from 68 pages to 8 pages, for example, by eliminating the many footnotes – see condensed version at the end of this post. Blog author’s comments have been highlighted in blue).

This has been a very difficult post to write in terms of length as there is so many excellent points that have been made by Neil Brooks in his study, so be forewarned that the condensed version of the Brook;s article is eight pages long).

PROBLEMS WITH BOUTIQUE TAX CREDITS (AS IDENTIFIED BY BLOG AUTHOR)

SUMMARY OF TAX PROBLEMS:

Problem 1 – Conservative boutique tax credits purposely target traditional family values (single income families). Boutique Tax Credits initiated by the Progressive Conservative Party under Stephen Harper purposely target traditional family values. The party never gives a definition of traditional family values or who is included in the traditional family. They talk about the family unit as ‘essential to the well-being of individuals and society’. A reflection of their belief in the importance of the role of the traditional family in society, another objective was to privilege single-earner families through the tax system (page 76). (Blog author’s comments: Ever singles are generally not included in these boutique tax credits).

Problem 2 -tax expenditures introduced by the Conservatives of Boutique Tax Credits were targeted at relatively narrowly defined groups of potential Conservative voters (page 67). Finance Minister’s budget moved to put the finishing touches on building a new Conservative coalition through a series of tax cuts, rebates and other subsidies aimed at select segments of the voting population (page 73). By enacting these tax expenditures, as opposed to across-the-board tax cuts, the Conservatives were able, at a much lower cost, to favour middle-class families with children, middle-income and well-to-do seniors, and other much more narrowly targeted groups ( page 77). (This is what this blog author calls ‘selective’ democratic socialism).

Problem 3 – Tax Credits and Expenditures ignore traditional tax criteria that apply to technical tax provisions, namely, equity, neutrality, and simplicity (page 69).

Problem 4 – Conservatives were “pleasing their electoral base with . . . dollars in pockets for boutique programs rewarding wealth and socially conservative values (page 69). An example is pension splitting where wealthy married/coupled persons benefit the most, poor and married or coupled persons with equal incomes benefited to a lesser extent.(Blog author’s comment: Ever singles and divorced/separated persons are not able to use this tax credit).

Problem 5 – Tax Expenditures Can Serve as a Bribe to Potential Voters (page 77) By enacting these tax expenditures, as opposed to across-the-board tax cuts, the Conservatives were able, at a much lower cost, to favour middle-class families with children, middle-income and well-to-do seniors, and other much more narrowly targeted groups.

In 2011, the average taxpayer with an income between $100,000 and $150,000 paid $3,633 less in taxes. The average taxpayer with a very modest income of between $20,000 and $25,000 saw only $475 back in the same period. These numbers are before the impact of the new Family Tax Cut and the doubling of the Child Fitness Tax Credit – both of which are likely to accelerate the same trend. (/canada2020). (Blog author’s comment: Poor families and ever singles including seniors are least likely to benefit (senior-singles-pay-more).

Problem 6 – It is very difficult to get rid of tax expenditures or tax credits once they are implemented. Political parties are reluctant to eliminate them even if they are discriminatory for fear of losing votes. Also, tax expenditures are extremely hard to repeal, even the truly awful ones, since eliminating a tax expenditure will be framed as a tax increase (page 78). (Blog author’s comments: Will it ever be possible to eliminate the pension splitting from which wealthy families benefit the most? And, who is paying for this?) Neil Brooks calls pension splitting an “outrageous pension income splitting scheme that should be repealed and the revenue used to enrich, or reduce the clawback, of the old age security pensions” (page 122). Reducing clawback will not solve problem of inequality if clawback is not increased for singles and reduced for married or coupled persons through income-testing.

Problem 7 – Tax expenditures that are relief measures transfer income from one group of individuals to another. (Blog author’s comment: Instead of these relief measures targeting lower income individuals and families, many have benefited wealthy families the most. Ever singles benefit the least).

Problem 8 – Psychological impact of tax credits or expenditures (The Public Appears to Favour Policies Framed as Tax Breaks-page 83). people’s psychological biases predispose them to favour tax expenditures, certainly over direct spending programs……label—tax relief versus direct outlay—matters.” These studies are also consistent with other survey results in which respondents admit to have benefited from tax expenditures and yet deny ever having used a government social program.(Blog Author’s comments: The reverse effects of Tax Credits and Expenditures are often not discussed, that is, the anger and financial despair that some citizens feel towards those that are receiving more of the benefits without, for example, application of income-testing principles).

Problem 9 – Tax Expenditures Reduce the Political Pressure for Public Programs (page 84) One of the Conservatives’ major political goals has been to resist the public provision of social programs. Hence, another explanation for the popularity of tax expenditures under the Conservatives is that they were a step forward in implementing a broader political project, a private-sector welfare state.Tax credits for private caregiving work reduce the political pressure for publicly provided long-term care facilities.. …. Supplementing the wages of low-income workers with a tax credit reduces the pressure to offer public service jobs to the unemployed…..The tax subsidization of tuition fees, textbooks, and interest on student loans reduces the political pressure for more direct government support for universities.

Problem 10 – Tax Expenditures Make the Tax System Less Transparent (page 94) and Tax Expenditures Divert the Resources of the CRA and Create Administrative Problems That Damage Its Reputation (page 94)

- Complexity and number of tax credits make them very difficult to interpret and lawyers and accountants become intimately involved in their implementation. As a result attention is directed towards interpretation of these credits instead of tracking abuse of the tax system.
- Many are badly designed (page 96)
- Tax Expenditures Often Do Not Serve Important Objectives of Government Policy (page 97)
- Tax Expenditures Often Do Not Achieve Their Objectives Equitably (page 104)
- upside-down effect of tax deductions
- all tax credits should be refundable.

(Blog author’s comment: Past posts have talked about upside-down financial effects (housing), and tax credits should be refundable and income-tested. To have someone else confirm these facts is reassuring. It would be nice if political parties and governments also realized these facts.)

Problem 11 – Education – Conservatives completely exempted certain scholarships and fellowships from tax in their first budget in 2006. The exclusion of a $10,000 scholarship for a low-income student who has no other income provides that student with no implicit subsidy. However, the same exclusion will provide an implicit subsidy of $2,200 to a higher-income student in the 22 percent tax bracket. If the point of the exclusion was to benefit needy students, this upside-down effect is perverse (page 104)

Problem 12 – Low income individuals and families benefit the least. A credit that can be offset against a taxpayer’s tax liability is of no value to a low-income person who has no tax liability because his or her income is less than the amount of the basic personal tax credit, for example. Hence, all tax credits should be refundable (page 106)…..In terms of delivering subsidies equitably through the tax system, if the primary purpose of a tax credit is to incentivize or assist low- or middle-income individuals, entitlement to the credit should be income-tested so that it vanishes when a taxpayer’s income reaches a certain amount (page 108). Income-testing so that it vanishes when income reaches a certain amount should vanish quicker for for married or coupled persons than singles as it costs more for singles to live than married/coupled persons as a family unit.

Neil Brooks has also stated that analysis of financial formulas such as distributional tables should show beneficiaries by income class, gender, household type, age cohort, and geographical region. This is based on known facts that females and disadvantaged persons based on race likely benefit least from tax credits (page 111). (Blog author’s comments: Analysis of household types is important as ever singles and early divorced singles are likely to benefit the least from all tax credits).

Problem 13 – The proliferation of tax expenditures, such as the boutique tax credits, gives rise to significant rent-seeking social costs. (page 114) and encourages relevant interest groups to lobby for analogous tax expenditures. (page 114). (Blog author’s comments: Powerful lobby groups such as families and seniors often lead to tax credits and expenditures targeting these groups. Ever singles do not have this kind of financial and lobbying power. As a result they are likely to receive less of these benefits).

Problem 14 – Boutique tax credits are useless when they target everyone in a group, for example, seniors. Giving age credit to all seniors benefits wealthiest seniors more as poor seniors do not have enough income to apply tax credits (page 122).

Problem 15 – This problem as been added by the blog author, that is there is a compounding effect to tax credits when they are applied one on top of another for specific groups. An example is when child tax credits are given to married or coupled family unit, who then are also able to use pension splitting credits as seniors. As a result, married or coupled persons with children are able to gain more wealth than ever singles who are not able to use any of these credits.

Problem 16 – This problem has been added by the blog author, that is the so called ‘merry go round credits and expenditures which disappear and reappear. Some citizens can never get on the merry go round because their place in line keep getting pushed back or they are kicked out of the line or they excluded from the lines. For example, there are some parents who have never benefited from any the child tax credits because they had no children during implementation of some tax credits only to have these tax credits abolished when they do have children.

CONCLUSION

(Blog author’s comments: it would seem that a solution to the elimination of Tax Credits and Expenditures with fairness, equality, neutrality and simplicity for all, perhaps, should be to provide three government funded basic rights: healthcare, college/university education, and universal day care).

THECASEAGAINSTTAXCREDITSANDOTHEREXPENDITURESCONDENSED

This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.

GOVERNMENT CPP BAFFLEGAB MORE IMPORTANT THAN FINANCIAL DISCRIMINATION OF SINGLES AND QUALITY OF LIFE

Posted on January 31, 2016 by ffswpadmin

GOVERNMENT CPP BAFFLEGAB MORE IMPORTANT THAN FINANCIAL DISCRIMINATION AND QUALITY OF LIFE OF CANADIAN SINGLES

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.

There has been much discussion lately as to whether the CPP (Canada Pension Plan) system should be changed. The objective of the government is for country to live in a society that takes care of its citizens. The reality is that some citizens are being taken care of more than others, that is the rich and married/coupled persons while singles and low income are being financially discriminated against.

EXAMPLES OF FINANCIAL DISCRIMINATION

TARGETED TAX RELIEF PROGRAMS FOR SENIORS-The Federal Conservative government has a targeted tax relief program where a single senior can now earn $20,360 and a senior couple $40,720 before paying federal income tax. Program claims that approximately 400,000 seniors (or 7 to 8% of total Canadian seniors) have been removed from the tax rolls altogether. This so called tax relief for seniors allows federal tax relief for senior singles equal to $1,697 per month and for senior couples $3,393 per month.

The tax relief for senior singles hardly covers a rent or mortgage payment of $1,200 and $250 for food per month (Maslow’s Hierarchy of Need), but amply covers this amount for a senior couple. For a couple $1200 for rent or mortgage and $500 for food leaves $1693 (or 50% of $40,000) for other necessities and medications and maybe even a nice little vacation all tax free.

It is a well-known fact that singles require more income to that of a married/coupled persons living as a single unit. In Equivalence scales (Statistics Canada 75F0002M – Section 2 ‘The LIM and proposed Modifications’ (75f0002) (equivalence-scales) if singles are assigned a value of 1.0, then couples require 1.4 times for income, not 2.0. $20,360 times 1.4 equals $28,504 ($2,375 per month) (updated November 18, 2017). If the federal government cared about income equality and quality of life for senior singles, it would increase the tax free amount for singles. By not applying equivalence scales to income for senior singles, they lose $678 a month or approximately $8,000 Lost Dollar Value annually in quality of life to married/couple retired persons. (From age 65 to 90, this amounts to $20,000).

When income for senior married/coupled persons is over $40,000 they again get another benefit, that is pension splitting, which singles cannot use increasing quality of life for married/coupled persons over senior singles. This is a tax benefit piled on top of another tax benefit.

The number of senior ‘ever’ singles (never married, no kids) and divorced/separated persons comprises only about 13 per cent of the population, so how much would it cost to bring the quality of life for these citizens up to the standard of tax relief for married/coupled persons? The answer is ‘not very much’ in comparison to what has been given to married/coupled senior persons.

“Ever” singles are told every day they are worthless and worth less than married/coupled persons even though they have worked 35 – 40 years subsidizing mother/baby hospital care, EI paternal/maternal leave, education taxes even though they have had no children and paid more taxes than families.

GOVERNMENTS IGNORE COURT RULINGS–Re Allowance Program and Credits, (policyalternatives) 2009 Policy Brief, “A Stronger Foundation-Pension Reform and Old Age Security” by Canadian Centre for Policy Alternatives, page 4, states this program discriminates on basis of marital status as confirmed by case brought under Charter of Rights where federal court agreed program was discriminatory, and ruled it would be too expensive to extend program on basis of income regardless of marital status.’ So what is happening? Age eligibility for Allowance will change from 60 to 62 beginning in 2023 with full implementation in 2029. In this democratic, civilized country let’s just ignore federal court rulings and continue a $? million discriminatory program. Article suggests that ‘OAS (Old Age Security) and GIS (Guaranteed Income Supplement) combined should be increased to at least bring it up to after-tax LICO (Low Income Cut Off) for single individuals.’ And why should married/coupled people get discriminatory marital status benefits where unused credits like Age Credits can be transferred to spouse?

Gross financial discrimination for singles occurs when governments choose to completely ignore court rulings. Lost Dollar Value to singles: unable to calculate.

PENSION SPLITTING–It is immoral and ethically irresponsible for governments to deny that pension splitting benefits the wealthy most. For families who can be exempt from paying 10 – !5 percent income tax on $100,000 and maintain the same income level during retirement as they had during their working years, even though they have less expenses during retirement, is financially discriminating to singles who cannot pension split. (This information was revised April 10, 2016 – Lost Dollar Value: From estimate on income splitting, it has been suggested that income splitting would provide tax relief of $103 for income $30,000 or less and $1,832 for income of $90,000 and over or an average of $794 overall. If $800 ($794 rounded off) is calculated times 35 years (age 65 to 90), then Lost Dollar Value will equal $28,000.)
HOUSING-Financial gurus seem to be leaning towards renting instead of home ownership. This creates further hardship for singles and the low income. If young married/coupled persons are being told that they will probably need to rent because housing prices are out of reach, where does this leave singles and low income persons? Trend now is towards tiny houses with composting toilets and tanks for storing water, but the rich don’t want to see tiny houses in their backyards.

Try telling singles and low income person that renting is the better alternative when they pay more per square foot and quality of housing is lower than that of houses for families. If they have problems with not enough income for housing, they are told they should go live with someone. These people ought to try ‘walking in the shoes’ of singles living in one room or communal situations, where because of low income, they don’t have their own bathroom, and it becomes a ‘dog eat dog’ world where others will, for example, steal food because there is not enough money to buy food. (cprn.org)

The housing market (rental and ownership) is financially completely upside down. Instead of the rich and middle class paying more for the greatest amount of square footage, they are paying less for the greatest amount of square footage and niceties associated with that. Singles and low income will be living in hovels, thus violating Maslow’s Hierarchy of Needs principle.

IF MONEY IS THERE YOU WILL SPEND IT, IF IT IS NOT, YOU WON’T–Financial studies have come to conclusions that for people in the lowest income quintile on average have replacement rates of 100 percent, implying their real standard of living actually rises after retirement. This is such a lie and is totally irrelevant to singles and low income persons. If there is a poor quality of life before retirement, there still will be a poor quality of life on 100 percent replacement income for singles that does not meet the 1.4 income equivalent (updated November 17, 2017) to that of married/coupled persons living as a single unit.

CONCLUSIONS

Governments, decision makers, some financial advisers to the government. and think tanks are financially illiterate about the financial discrimination of singles.

It seems to be more important for governments to ensure that upper-middle class and upper class maintain their standard of living than it is to treat singles fairly.

Unprecedented growth in value of houses will result in huge tax-free wealth for families and married/coupled persons to the financial detriment of singles and low income.

Marital manna benefits like pension splitting has created a nanny state where married/coupled persons want it all and once these benefits are in place, it is very difficult to get rid of them. Married/coupled persons have been made irresponsible by their own government. They are not living a lower life style in their retirement. A further question is whether these programs will be financially sustainable.

Assumption that retirement income only needs to replaced at 70 percent, for example, does not hold true for both singles and married/coupled persons, because singles require 1.4 income equivalent to married/coupled persons living as a single unit (updated November 17, 2017). Twenty thousand dollars a year is not an adequate quality of life retirement income for Canadian senior singles.

GOVERNMENTS NEED TO ADDRESS FINANCIAL EQUALITY FIRST FOR ALL CANADIAN CITIZENS REGARDLESS OF MARITAL STATUS, THEN TWEAK CPP.

This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.

TO RENT OR OWN AFFORDABLE HOUSING – THAT IS THE QUESTION

Posted on January 10, 2016 by ffswpadmin

TO RENT OR OWN AFFORDABLE HOUSING -THAT IS THE QUESTION

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.

This post will discuss whether renting or affordable housing are good housing options for single and low income persons.

RENTING AS VIABLE OPTION FOR LANDLORDS AND RENTERS

Rental costs from landlord perspective: A review of financial information shows that in order to generate a 5% annual return on a $250,000 rental property with no mortgage costs, the expenses incurred will be as follows:

What Landlords think they need to make renting their spaces a revenue generating business at 5 percent profit in the Calgary market:

rent charged (2 bedrooms) $12,500

condo fees ($325 X 12) $ 3,900

PT taxes $ 1,500

upkeep (paint, carpet, etc.) $ 1,200

extra cost of wear (kids/pets) $ 1,200

TOTAL RENT PER MONTH $20,300 divided by 12 months = $1,700

This does not include costs associated with loss of income when property is vacant, cost of major upkeep such as replacing appliances, cupboards every 5 to ten years, damages incurred from kids and pets, eviction costs, insurance, etc.

Arguments for and against high rental costs from perspective of landlords and renters

A review of an online article “Calgary Landlords war against the poor?” (landlords) shows pro and con comments on why landlords think they need to charge the present rental amounts and why poor are left out because they cannot afford to pay the present high rental amounts. Arguments are also made as to whether or not mortgage payments should be included in the rental costs; if included, then even higher rents need to be collected.

Comments on the side of the poor and low income include:

‘So then I ask you, where are these people supposed to go? No offense, but the “it’s just business, nothing personal” should have no place when talking about human lives.’
‘Gouging is a very common competent of a working free-market. The right (Conservative and like) just don’t want to admit they’re are (…..) for doing it. It is not about right or wrong. The difference between a renter and a landlord is that the landlord has assets. So even if you are living in a home and renting a condo, having to shell out money for repairs doesn’t exactly cost you as much (in the long run) as it would a long term renter. Because eventually you can sell that property and retire in comfort. It is very hard for a person who is just starting out with nothing to build themselves up to your level It is not that we don’t want to be there, it is just that there may not be as much opportunity for us so called “low-lives” as one may think. So when your entire income goes to shelter, food and clothing, there is not much left to save for any sort of down payment on anything…’
‘You are already making money by charging a tenant the mortgage, the land tax and the insurance. The mortgage part is already profit. An accumulated investment Beyond that, maybe a little more, is gouging. These people can’t see that is wrong. If they could charge a million dollars a month they would.’

One of the last reader comments submitted was the following (it is interesting to note that this comment pretty much shut up any further comments being made):

‘When, by gouging people for the necessities of life such as food and shelter, you contribute to the cost of living being higher than a working person can afford. You force me as a taxpayer in a rather high tax bracket, I might add ,to pay for the subsidization required to keep these people from starving or being out on the street or alternatively imprisonment when they steal to live, or more cops to maintain social order with a starving underclass. I’m tired of deadbeat free-riders trying to shuffle the externalities of their greed onto me. It is time for some controls being placed on the ability of landlords to raise rents. Rental increases being limited to 5% or double to rate of inflation annually, whichever is lower, seems reasonable to me.

Some comments suggested that most people should stay away from the landlord game as it is not a profitable business for the lighthearted.

Landlord profile and Financial Planner Advice

Financial profile of a married couple is as follows: Calgary Herald, December 12, 2015 (and Edmonton Journal) Financial Post “Oil Crash Forces Fix for Couple” (edmonton-journal)

This summary is about Gary, 60 and Wendy, 67, an Alberta couple who grew prosperous with Gary’s work as a petrochemical engineer often earning as much as $200,000 a year doing consulting. However, his work is now history as a casualty of collapsed oil prices. Wendy worked as an administrative assistant earning $24,000 a year before she retired in 1990 (well before age 65, by the way). Their income at the present time is $2,175 a month and is $3,240 less than their total monthly expenses of $5,415. (Part of their income is $590 after expenses from their two rental properties.) They say they need to know if they can survive. The article does mention one child is renting one of their rental properties.

Their net worth is $1,867,238. Their assets include residence $550,000, rental property #1, $460,000, and rental property #2 $430,000. Their investments include Registered Retirement Savings Plan $132,616, USA 401K in Canadian dollars $250,000, Tax Free Savings Account $39,334, non-registered savings/GICs $174,288 and two cars $17,000. Their total liabilities are two mortgages of $186,000 on rental properties.

The profile states the largest problem is that the couple’s income properties, which make up 60 per cent of their invested assets, produce little cash flow. One unit is rented to the couple’s son and its $1,150 monthly rent is below market values. Their other rental property generates $1,300 a month before expenses.

The financial planner makes the argument: ‘When Gary generated an income of $200,000 a year or more, they could afford to ignore investments, rent properties below market value and spend freely’. The financial planner’s recommendation is get rid of money losing rental property, cut expenses and reallocate assets to cut investment costs. It doesn’t seem to matter to the financial planner that this couple has acquired huge financial assets in their rental properties ($700,000+ value).

Conclusions about Renting

Renting income properties from landlord’s perspective is that this is a business and needs to generate a profit even when renting to singles (son in above example)and the poor (many of whom cannot afford $1,700 for rent). In other words, the goal of financial Utopia in a land of ‘milk and honey’ (Alberta) will never be achieved by the landlord with reasonable rents and certainly not by singles and the poor who are renting. Maslow’s Hierarchy of Needs principle for singles and the poor will also be violated when basic needs of shelter as well as food and clothing will not be realized.

UNAFFORDABLE RENT = VIOLATION OF “MASLOW’S HIERARCHY OF NEEDS” PRINCIPLE

For landlords and families who think singles and low income persons deserve only a single room‘ or ‘should live with someone’ they should read the January, 2009 study “Social Housing Waitlists and the One Person Households in Ontario” (cprn.org) on what it is like to live in these housing circumstances. An excerpt from this study reads as follows:

‘many households turn to shelters or make do with what they are able to find in the private market, often spending more than 50% of their income on rent. The focus of this study is one-person households under the age of 65 who make up approximately 40% of the applicants on Ontario social housing wait lists. This cohort has the longest wait times. How does this demographic cope during these waiting periods? What are their housing experiences? ‘

AFFORDABLE HOUSING AS VIABLE OPTION FOR SINGLES AND LOW-INCOME

From “Upside-Down Finances re Housing for Singles and Low Income – Part 1 of 3”, November 13, 2015 post (upside-down-affordable-housing), one example of housing shows condos presently being sold as follows: 1 bed, 1 bath, 1 patio micro-condo of 552 sq. ft. with starting price of $299,900 and $543 per square foot.. Two patio, 3 bed, 2.5 bath, 2 and 3 story 1830 sq. ft. condos priced from $649,900 to $749,900.start at $355 per square foot.

Singles and single parent with children are more likely to buy one bedroom housing. Ripple effects are owners of micro-condos have to proportionately pay more house taxes, education taxes, mortgage interest and real estate fees on less house and less take home pay since these fees are based on price of property, not square footage of the property. When it is sold, will seller recoup buying price?

Financial world for singles and low income continues to be completely flipped upside-down and turned topsy-turvy for housing while the rich and middle-income families pay less and get more.

COMBINATION SINK AND TOILET IN TINY SPACE

As in many parts of the world, parts of Canada are heading for a crisis in affordable housing. Different solutions have been proposed to avert this crisis. One is Attainable Housing, (attainyourhome), for example in Calgary, which allows maximum household income of $90,000 for single and dual/parent families with dependent children living in the home and maximum household income of $80,000 for singles and couples without dependent children living in the home. While this method allows singles and low income to enter the housing market with a low down payment, it does not alleviate the problem of insane upside-down pricing of housing as outlined in the example shown above. Another solution that has been proposed is an affordable housing action plan of inclusionary zoning where a certain percentage of new housing units built would be social and community housing partly funded by government programs, and a certain percentage of new housing units would be affordable rental or ownership housing units built by the private sector. However, developers and the housing associations will argue this will not work (as only new purchasers will be participating) and neighbors continue to have a “not in my backyard” mentality (NIMBY). Tiny house NIMBY mentality also extends to homeowners who don’t want tiny houses near their properties.

Calgary Herald “‘Nothing new’ from housing collective” article, December 16, 2015 (calgaryherald) is a 46 – page document – 18 months in the making – and calls on homeless and housing organizations, the development industry and governments to ‘work together differently’ for at least two years, developing ‘Calgary-based solutions with blueprints for action’ and providing support as required. The mayor, in addition to other parties, is disappointed at how long study has taken and states that ‘time for talk’ is over.

Conclusions about Affordable Housing

There is no affordable housing for singles and low income persons when they are forced to pay more for less space with less income than the rich and middle-class families. Inaction and NIMBY continues to be prevailing principle for Affordable Housing.

Conclusion overall for Renting and Affordable Housing for Singles and Low Income

Options for both renting and affordable housing continues to become more and more out of reach for singles and low income.

So, when both renting and affordable housing are out of reach for singles and low income persons, just what are they to do?

“Eggleton: Canada needs more affordable housing” September 20, 2015 (eggleton) article in the Ottawa Citizen states:

‘I think we all understand intuitively the importance of having decent shelter. A home anchors a person, anchors a family. It provides a foundation for people to move forward toward greater stability in the workplace or higher educational attainment. Health experts also tell us that adequate housing is a key determinant of health and long-term health outcomes’.

This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.

COUNTRY SHOCKED BY VETERANS HOMELESSNESS

Posted on January 7, 2016 by ffswpadmin

COUNTRY SHOCKED BY VETERANS HOMELESSNESS

(These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.)

March, 2015 study has revealed that approximately 2,250 veterans are homeless.or about 2.7 per cent of the total homeless population (homeless-veterans). There is shock that there are homeless veterans and it took five years to track the data. Average age of homeless veterans is 52 years of age compared to 37 years of age for general homeless population. Review of online information reveals that many veterans joined armed forces because of lack of jobs as in Atlantic Canada, and then come back to again no jobs. Age in fifties also makes it more difficult to integrate back into civilian life. Many of these homeless are single or if married/ partnered suffer broken marriages/partnerships because of the mental stresses of service.

Why should this be shocking when 300,000 Canadian persons or families are waiting for affordable housing ? In addition immigrants are brought into country, given temporary free housing and jobs adding further insult to injury. (In recent news immigrant family,while travelling to Jamaica, found their Canadian-born child is on a ‘no fly’ list – so what is this, immigrant family wealthy enough to have a nice little vacation while Canadian-born persons are homeless or waiting affordable housing?)

The mentality of government, decision makers, businesses and families in this country is to serve only the rich and middle class families while ignoring singles, low income and no income individuals and families. When reading or listening to articles on housing for families, families will always talk about how important their housing is for them in regards to entertaining and maintaining close ties to friends and families. They talk about how their ‘hearts are eternally and inexplicably changed’ when bearing their children, but same hearts appear to become ‘hearts of stone’ when these same children become adult singles, low income or no income persons and families. The greed of business decisions takes over from family values and these disadvantaged persons are tossed out or are considered less important or non-existant in financial formulas and decision-making processes.

Housing is just one example. Those with the money and decision making powers continue the NIMBY mentality where they do not want to see tiny houses or condos in their precious spaces. When tiny condos are built, for example 200 square feet, the purchasers of these spaces are often forced to pay more on less square foot living space and less take-home income than families paying for houses (thus violating Maslow’s Hierarchy of Needs (Maslow%27s_hierarchy_of_needs). One example is a complex in Calgary where the 532 square foot condo is $299,900 or $543 per square foot, and the 1830 square foot condo begins at $649,900 or $355 per square foot. The higher cost per square foot means that tiny space purchasers also will pay proportionately more real estate fees, education fees, house taxes and mortgage interest payments because all these fees are based on the cost of the housing, not square footage. (See November 13,2015 post “Upside Down Finances re Housing for Singles and Low Income” – how is this any different than loan sharking or payday loans?)

Calgary Herald December 16, 2015 article “Nothing New from housing collective” (housing-affordability) (a study going on for 14 months) states:

’Mayor Naheed Nenshi says he’s unhappy with the city’s Community Housing Affordability Collective strategy, but hopeful it’s members now understand the ‘time for talk is over.’

Talk, talk, talk, and study after study without action is just meaningless rhetoric. In this so called democratic, civilized country all persons, whether they are immigrants or Canadian-born, single or married, male or female, low income or no income deserve the same financial dignity and respect such as being included in financial formulas. All individuals deserve a living wage job and a place to live in just like the rich and middle class families.

(This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice).

UPSIDE DOWN FINANCES RE HOUSING FOR SINGLES AND LOW INCOME – PART 3 OF 3

Posted on November 21, 2015 by ffswpadmin

UPSIDE DOWN FINANCES RE HOUSING FOR SINGLES AND LOW INCOME- PART 3 of 3 LOST DOLLAR VALUE LIST AND PSYCHOLOGICAL IMPACT

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to be used as personal or financial advice.

As stated in Part 1 and 2 of this series, one example of financial unfairness is condos presently being developed in Calgary by a developer including 1 bed, 1 bath, 1 patio micro-condo of 552 sq. ft. with starting price of $299,900. Two patio, 2 bed, 2 full bath, 2 story 1232 sq. ft. condos were already sold out so price not available. Then there are 2 patio, 3 bed, 2.5 bath, 2 and 3 story 1830 sq. ft. condos priced from $649,900 to $749,900. Apparently, ultra-deluxe model has master bedroom suite covering entire third 600 sq. ft. floor. The third floor bedroom is bigger than total square footage of $299,900 condo. When price per square foot is calculated, micro-condo is selling for $543 per sq. ft. while three bed condos are selling from $355 to $409 per sq. ft.

Average square footage of Canadian house is 1950 sq. ft. (2010) so how can a developer socially, morally and ethically justify charging $150 to $200 more per square foot for two-thirds less space? “CREB now” http://www.crebnow.com/, Aug. 28 to Sept. 3, 2015, page A5, talks about Calgary developer selling 440 sq. ft. condos in north inner city tower for $149,000 ($339 per sq. ft.) in 2012 and 440 sq. ft. condos in south inner city tower for $219,000 ($498 per sq. ft.) in 2015. Two and three hundred sq. ft. condos are now being sold in Vancouver and Toronto for around $250,000 ($1250 and $833 per sq. ft. respectively). Salaries for low income and singles has not risen to same level, nor has Canadian housing for the middle class and rich ($400,000 and up (except perhaps in Vancouver).

So who is more likely to buy micro-condos? Possibly low income couples, single parent with one child, or environmentally conscious, and probably an individual/single person. Who gets to pay $150 to $200 more per square foot for two-thirds less space? Ripple effects are owners of micro-condos have to proportionately pay more house taxes, education taxes, mortgage interest and real estate fees on less house and less take home pay for biggest lifetime expense. When it is sold, will seller recoup buying price?

To further magnify the issue, lottery in major northern Alberta city has first grand lottery prize of $2,092,000 for 6,490 sq. ft. house ($322 per sq. ft.), second grand prize of $1,636,000 for 5,103 sq. ft. house ($321 per sq. ft.), and third grand prize of $1,558,000 for 5,097 sq. ft. house ($306 per sq. ft.). First house has elevator, games/theatre area, kid’s lounge, gym, and music room. Second house has hockey arena with bleacher seating, lounge and bar. Third house has spa, gym, yoga studio, juice bar and media room. Need anything more be said about the rich? They always get more while paying less and acquiring choicest spots.

As stated in a recent real estate article, Watermark, a deluxe complex in Calgary is selling an ‘inspired’ (so stated in article) 8,644 sq. ft. estate home and its guest house for $3.45 million or $399 per square foot which is less per square feet than 600 square foot condo mentioned above. Article goes on to say that beyond homes, Watermark garners interest with both natural and man-made beauty. It has 17 cascading ponds and more than five kilometers of interconnected walking and bike trails. Then there’s the central plaza with its 1,000 sq. ft. pavilion, kitchen, barbecues, a sports field and NBA-sized basketball court. One family’s daughter is looking forward to booking the plaza and using the outdoor kitchen for her birthday party. The family goes on to state that space between homes and low density was also very important so they weren’t looking into someone’s back yard. This same complex has a show home with 17 sinks.

Another real estate article talks about another family with three children moving from 1900 sq. ft. house to a 2,837 sq. ft. house with price starting from $900,000s. They are moving because they need more room for the kids as they grow. Their new house will provide 567 sq. ft. per person at a starting price of approximately $317 per sq. ft. Yet again other articles state that owners are happy they don’t have condos in their back yard and their children can experience nature from their own bedrooms.

Further advice usually given by married people states singles can live with someone else if they can’t afford housing when they are already living in studio, one bedroom apartments, and basement suites. Senior singles who have lived productive lives while contributing to their country want and deserve their own privacy and bathroom. Many senior assisted living dwellings have in recent years built more spaces for singles who with one income pay more for that space than married/coupled persons. Just how long should shared arrangements go on for (entire lives?) instead of correcting underlying financial issues?

Following examples show dignity and respect for singles (and low income families). Attainable Housing http://www.attainyourhome.com/, Calgary, allows maximum household income of $90,000 for single and dual/parent families with dependent children living in the home and maximum household income of $80,000 for singles and couples with no dependent children living in the home. Living Wage for Guelph and Wellington livingwagecanada allows singles dignity of one bedroom apartment and a living wage income that is 44% of a family of 4 income and 62% of a family of two (parent and child).

While singles are living in their small spaces (average size of new studio, one bed and one bed/den new condo combined being built in Toronto is 697 sq. feet), majority of Canadian married/coupled people and families are living in average 1950 sq. foot houses (2010) with large gourmet kitchens, multiple bathrooms, bedrooms for each child and guests, basement, garage, yard, and nice patio with barbecue, etc.

LOST DOLLARS VALUE LIST

For a 700 square foot condo where price is $50 more per square foot than lowest price of largest condo in complex, it can be assumed that the purchaser will be paying $35,000 more than purchaser’s base price of largest condo, if the price per square foot is $100 more per square foot then purchaser will be paying be paying $70,000 more, if the price per square foot is $150 more per square foot then purchaser will be paying $105,000 more and so on. The amount of house and education taxes, real estate fees and mortgage interest will also incrementally increase.

Our Lost Dollar Value List is still a work in progress, but when lost dollar value for real estate is added to the list, $50 will be used as the example as well as gestimate loss for taxes and real estate fees, interest charges based on $50.00 per sq. ft.

PSYCHOLOGICAL IMPACT

There seems to be very little understanding of the psychological impact that decision makers and policy makers have on singles regarding housing.

Many families live in houses where their young children have separate bedrooms, and likewise, there is a trend towards ‘man caves’ and ‘she sheds’ so family members can have ‘alone’ time, but when children become single adults, singles are consistently told that they can live with someone if they have financial problems with housing while paying more.

And, of course, singles never have claustrophobia, so it is okay to stick them in small spaces for which they have to pay more. And singles never have problems with noise, so it is okay for them to live in small units in less desirable areas close to airports and railway tracks, etc. (As one single person moving from one unit to another stated in a real estate article “I was very impressed with the pricing and the fact that they’re doing concrete floors and walls “. Concrete is said to restrict noise. “I work on Saturday mornings and a lot of people like to stay up a little later on Friday and Saturday nights”. With thinner walls, he adds, it is easier to hear “people in the hallways coming and going. It is not the end of the end of the world, by any means, but I am looking forward to something quieter above and below”. But for this person, the decision was less about sound and more about getting something larger, with better specifications and closer to work-moving from 615 sq. ft. two bedroom condo to 715 sq. ft. two bedroom condo. “The bedrooms are a little bit bigger with an ensuite. I really liked that and I liked the fact that it has a washer and dryer so I don’t have to go to the laundromat.”

Singles deserve same standard of living as married/coupled persons, i.e. having washer and dryer in their own home instead of having to go down a dark hall or to basement to do laundry or paying per load at a laundromat.

When reading or listening to articles on housing for families, families will always talk about how important their housing is for them in regards to creating memories for their children, entertaining and maintaining close ties to friends and families, but apparently adult singles don’t have friends and families, so it is okay for them to live in micro condos, some as small as 200 square feet, where it is pretty much impossible to entertain or have friends and families stay with them.

SOLUTION

Singles and low income persons need to become more aware of financial unfairness by taking pricing down to the lowest common denominator, i.e. price per square foot and speak out about the financial atrocities being directed towards them. They need to start questioning why they are being targeted to pay more while getting less. (While it is recognized that it is expensive to raise children, adult to adult it is also unfair to make one segment of the population like singles and the disadvantaged pay more than another segment).

The blog posted here is of a general nature about financial discrimination of singles. It is not intended to provide personal or financial advice.

UPSIDE DOWN FINANCES RE HOUSING FOR SINGLES AND LOW INCOME – PART 2 OF 3

Posted on November 19, 2015 by ffswpadmin

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to be used as personal or financial advice.

UPSIDE DOWN FINANCES RE HOUSING FOR SINGLES AND LOW INCOME-PART 2 OUTSIDE THE BOX SOLUTIONS FOR PRICING OF HOUSING

Part 1 of this series of three articles showed how singles and low income families buying the smallest units in the housing market are forced to pay more for less space while the rich are getting much more while paying less.

From Part 1, information restated here is one example, condos presently being developed in Calgary by a developer in one housing complex includes 1 bed, 1 bath, 1 patio micro-condo of 552 sq. ft. with starting price of $299,900. Two patio, 2 bed, 2 full bath, 2 story 1232 sq. ft. condos were already sold out so price not available. Then there are 2 patio, 3 bed, 2.5 bath, 2 and 3 story 1830 sq. ft. condos priced from $649,900 to $749,900. Apparently, ultra-deluxe model has master bedroom suite covering entire third 600 sq. ft. floor. The third floor bedroom is bigger than total square footage of $299,900 condo. When price per square foot is calculated for units in the complex, micro-condo is selling for $543 per sq. ft. while three bed condos are selling from $355 to $409 per sq. ft.

So who is more likely to buy micro-condos? Possibly low income couples, single parent with one child, or environmentally conscious, and probably an individual/single or divorced/separated person. Who gets to pay $150 to $200 more per square foot for two-thirds less space? Ripple effects are owners of micro-condos have to proportionately pay more house taxes, education taxes, mortgage interest and real estate fees on less house and less take home pay for biggest lifetime expense. When it is sold, will seller recoup buying price?

One could question how this is any different than gouging like loan-sharking, and pay-day loans rather than the welfare of singles and low income.

As in many parts of the world, parts of Canada are heading for a crisis in affordable housing. Different solutions have been proposed to avert this crisis. One is Attainable Housing (attainyourhome), for example in Calgary, which allows maximum household income of $90,000 for single and dual/parent families with dependent children living in the home and maximum household income of $80,000 for singles and couples with no dependent children living in the home. While this method allows singles and low income to enter the housing market with a low down payment, it does not alleviate the problem of insane upside-down pricing of housing as outlined in the example shown above. Another solution that has been proposed is an affordable housing action plan of inclusionary zoning where a certain percentage of new housing units built would be social and community housing partly funded by government programs, and a certain percentage of new housing units would be affordable rental or ownership housing units built by the private sector. However, developers and the housing associations will argue this will not work and neighbors continue to have a “not in my backyard” mentality.

Regardless of the above proposed solutions, outside the box thinking is required for affordable housing. How about the following suggestions?

OUTSIDE THE BOX SOLUTIONS FOR PRICING OF AFFORDABLE HOUSING

Solution 1 – for a housing complex as identified in the above outrageous pricing example, prices should be set where the base price of the unit with the smallest square footage cannot be more than the base price of the unit with largest square footage within the complex. Any changes and upgrades by the buyer would be added to the base price. (In the above example the base price of the 552 square foot condo could only be $355 per square foot to match the cheapest price of the biggest per square foot unit in the complex.

Solution 2 – Charges for house taxes, education taxes, and real estate fees should be based on square footage, not the price of the housing unit. This would provide fairness where fees are based on largest unit and become proportionately less on smaller units. (Added January 7, 2016)

Solution 3– charge a fee such as a carbon tax fee for units greater than a certain number of square feet. For example, allow a maximum size of 2500 square ft. for a housing unit (assumption is that there is no need for excessive amounts of square footage in housing). For anything greater than 2500 square feet, charge an extra fee to the buyer with an incremental increase in the fee for every additional 500 square feet of space. (The rich have been paying less and getting more square footage while using non-renewable resources plus water at an alarming rate, i.e. 5000 square foot log cabin using twelve logging trucks filled with harvested logs and a showhome that has seventeen sinks). The monies collected from these fees could be used to build more affordable housing.

The following are excerpts from two published articles:

MoneySense, Sept./Oct., 2015, page 17 ‘Two ways to cool white-hot home prices’ (ABBREVIATED VERSION) (moneysense.ca)

“Concern should not be for how much houses cost, but how out of reach home ownership has become for Canadians….Developers motivated by profit have built mostly smaller one and two bedroom condo units…There is also rapidly increasing rental rates due to a scarcity of new rental units….One solution-taxing housing, not income. We don’t currently pay tax on the profit earned from the sale of our primary residence. We do, however, pay progressive tax on the income we earn. Thomas Davidoff, economics professor at Sauder University, uses himself as an example and selling a house in Vancouver for a large profit. ‘I was wrong about the prices, wrong about the future value, and I was still rewarded for my dumb luck’. He compares this to his professional life, where he spent the better part of 10 years completing a bachelor, master’s degree and PhD. Today, he pays the government $0.42 in tax for every dollar he earns. ‘Getting my PhD damn near killed me. Why is my dumb luck rewarded but my hard work penalized?’….He suggests the federal government tax capital gains made on the sale of a property. The tax could also be progressive. More important is what a new tax structure would do to affordability. By taxing property profits, you reduce the number of speculators and real estate investors who help to inflate housing profits. This would be politically challenging, since homeowners are a politician’s biggest voting block….Still, those elected to political office need to take initiative—and put housing affordability for the many before the political aspirations of a few. To do nothing would mean we accept that $1 million for an average home is the new norm in Canada”.

Calgary Herald, September 12, 2015, page F3, ‘Builders frame up the coming year’ (calgaryherald):

“Canadian Home Builder’s Association- Tally Hutchinson, president ‘Our message on affordability is being heard. We still believe there are some large issues on the table that need to be ironed out. One being inclusionary zoning’….This zoning would require the private sector to construct and sell a percentage of units within a development at a pre-determined percentage, below market price….’The issue we have with inclusionary zoning is that it transfers that broader societal obligation of subsidized housing onto a small group of homeowners. We believe these costs should be shared by all members of a community, not just those who are buying new homes for condos. It still is a large issue on the table that needs to be ironed out’.”

The blog posted here is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.

UPSIDE-DOWN FINANCES RE HOUSING FOR SINGLES AND LOW-INCOME-PART 1 OF 3

Posted on November 13, 2015 by ffswpadmin

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to be used as personal or financial advice.

UPSIDE DOWN FINANCES OF AFFORDABLE HOUSING SINGLES AND LOW INCOME-PART 1 of 3

Why does it seem more difficult for individuals/singles and low income persons to purchase affordable housing? For possible reasons why, consider the following scenarios.

One example, condos presently being developed in Calgary by a developer in one housing complex includes 1 bed, 1 bath, 1 patio micro-condos of 552 sq. ft. with starting price of $299,900. Two patio, 2 bed, 2 full bath, 2 story 1232 sq. ft. condos were already sold out so price not available. Then there are 2 patio, 3 bed, 2.5 bath, 2 and 3 story 1830 sq. ft. condos priced from $649,900 to $749,900. Apparently, ultra-deluxe model has master bedroom suite covering entire third 600 sq. ft. floor. The third floor bedroom is bigger than total square footage of $299,900 condo. When price per square foot is calculated, micro-condo is selling for $543 per sq. ft. while three bed condos are selling from $355 to $409 per sq. ft.

To further magnify the issue, lottery in major northern Alberta city has first grand lottery prize of $2,092,000 for 6,490 sq. ft. house ($322 per sq. ft.), second grand prize of $1,636,000 for 5,103 sq. ft. house ($321 per sq. ft.), and third grand prize of $1,558,000 for 5,097 sq. ft. house ($306 per sq. ft.). First house has elevator, games/theatre area, kid’s lounge, gym, and music room. Second house has hockey arena with bleacher seating, lounge and bar. Third house has spa, gym, yoga studio, juice bar and media room. Need anything more be said about the rich? They usually get more while paying less and acquiring choicest spots.

Average square footage of Canadian house is 1950 sq. ft. (2010) so how can a developer socially, morally and ethically justify charging $150 to $200 more per square foot for two-thirds less space? “CREB now”, Aug. 28 to Sept. 3, 2015, page A5, talks about Calgary developer selling 440 sq. ft. condos in north inner city tower for $149,000 ($339 per sq. ft.) in 2012 and 440 sq. ft. condos in south inner city tower for $219,000 ($498 per sq. ft.) in 2015. Two and three hundred sq. ft. condos are now being sold in Vancouver and Toronto for around $250,000 ($1250 and $833 per sq. ft. respectively). In many cases salaries for low income and singles has not risen to same level, nor has Canadian housing for the middle class and rich ($400,000 and up).

How is any of this different than loan-sharking or pay day loans where targeting of the most vulnerable occurs?

Article, “The Micro Units Movement” May 27, 2015 (smartergrowth) states

‘although micro units are cheaper on an absolute scale for buyers, they tend to be more valuable for developer on a per square foot basis. Shawn Hildebrand, vice president of condo research firm Urbanation, says condos under 500 square feet can bring in well over $3 per square foot, while the rest of the market averages around $2.50 or $2.60′.

(Lies, lies and more lies-Mark Twain quote ‘there are three kinds of lies: lies, damned lies and statistics’-it is more than $3). Cheaper on absolute scale? (These tiny spaces are not cheaper for economies of scale.) Why is it okay on any scale to financially rob the poor, low income, young people and singles in what will likely be most expensive purchase of their lives and affecting one of most basic principles of Maslow’s Hierarchy of Needs, that is shelter?

MoneySense, September/October, 2015, (moneysense) ‘Two ways to cool white-hot home prices’ says as much by stating developers, motivated by profit, have built mostly smaller one and two bedroom units. This article also talks about how concern should not be how much houses cost, but how out of reach home ownership for Canadians has become.

Further financial unfairness occurs when individual/single homeowners without children are forced to pay education taxes, but parents pay only fixed rate based on value of their home regardless of number of children. For ‘nineteen kids and counting’ it is possible parents are only paying a few cents a day for their children’s education. Some married/partnered seniors with kids are looking to have education tax payments eliminated from their house taxes. For families with children, logic implies parents should pay education tax throughout their entire lifetime, or individuals/singles without kids should not have to pay education tax ever. However, families don’t seem to be able to apply financial logic of their own finances equally to the financial realities of their single children.

There are many more examples of financial unfairness, but just the above few show how financial world for low-income families and individuals/singles has been completely flipped upside down and topsy-turvy. Have governments, society, and our publicly and privately funded education systems failed us so miserably and family/corporate greed taken over with critical thinking, social/ethical responsible thinking sinking to all-time lows? Since when is it okay under present financial system for families to accumulate wealth and huge inheritances while their low income and single children are not able to support themselves on a day to day basis?

Young individuals/singles not yet married are facing huge financial hurdles because of low incomes, less full time jobs, enormous education debt, and out of control housing costs. Families (parents), governments, society, corporations, businesses to date have failed to provide support and responsibility that is needed to ensure all Canadian citizens are able to financially take care of themselves without financial parental aid, inheritances of parents and without bias of gender, race or marital status.

In this so called civilized, enlightened country of ours, it appears that citizens of value are only middle-income families and the rich while individuals/singles with and without children are being annihilated from financial, political, and everyday living scenes. (Examples are present day TV home buying/renovation programs and married/coupled persons getting free homes in “Home Free” program. Individuals/singles without children have been eliminated from these programs. Why is this so-probably because they no longer have financial wherewithal to be part of this programming, just blatant discrimination or both?)

If families have such high family values, shouldn’t family values and moral social values take precedence instead of being trumped by almighty dollar greed and philosophy of charging what the market can bear and more?

Low income families, individuals/singles and young adults not yet married who can apply simple math and critical thinking skills are in financial despair and angst knowing that they, as the most vulnerable citizens of this country, have been targeted and pawned to pay more for housing than middle class families and the rich.

It is the duty of politicians elected by the people, for the people to represent all Canadian citizens, not just vote getting middle class families. (MoneySense article-‘housing affordability for the many should take precedence over the political aspirations of a few’). To stop gross financial discrimination of low-income families and individuals/singles, talk to your Member of Parliament and mayors about financial unfairness and the upside/down financial world you are being forced into particularly in the housing market.

The blog posted here is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.