Ultra-luxurious home owners in Vancouver pay peanuts in income tax: UBC study
The owners of the top 5% of Greater Vancouver’s most expensive and luxurious homes pay relatively little in income tax, according to a recent study.
In a study called “The Prevalence of Low-Income Tax Payments Among Owners of Expensive Homes in Vancouver and Toronto,” authors Thomas Davidoff, Paul Boniface Akaabre, and Craig Jones report that “most luxury homes in Greater Vancouver appear to be purchased with wealth derived from sources other than earnings taxed in Canada.”
🚨New study with PhD candidates Craig Jones and Paul_B_Akaabre forthcoming in Canadian Tax Journal 🚨. Key fact: Homes in top 5% of value in Greater Vancouver in 2018: median value of $3.7 million, but median owner paid income taxes of just $15,800. https://t.co/yUodHBZL0B
— Tom Davidoff (@TomDavidoff) October 25, 2022
As of 2018, those homes in the top 5% of value had a median value of $3.7 million. The median owner of those homes paid $15,800 in income taxes.
According to Intuit Turbotax calculator, someone earning $100,000 a year would pay an estimated $21,305 in federal income tax.
The study suggests that establishing minimum income taxes as a function of property value could yield big increases in government revenue while improving overall tax progressivity in Canada.
A fun picture: income tax paid by actual owners compared to income tax at minimum income required to buy with 20% down to meet stress test (at dated 5.25% rate). pic.twitter.com/HgmFPB2zPx
— Tom Davidoff (@TomDavidoff) October 25, 2022
The authors suggest that revenue raised from a minimum income tax of 1% of property value for non-corporate owners could exceed $3 billion in total for Greater Vancouver.
“It will be useful to observe 2021 census microdata to determine if foreign buyer and empty homes taxes served to strengthen the relationship between income and property value, or if further measures are required to do so,” reads the study.
You can read the full study online for more in-depth analysis.