Taxing the Family Home



Why base public policy decisions on mawkish sentimentality about the family home?

When a politician or political commentator asks the question "will you tax the family home?" they are only interested in how a policy change will affect home-owners. The interests of renters have no standing; they have been omitted from the discussion.  At current rates of home ownership in New Zealand, discussions that invoke the family home leave out half of all households

Tenants pay more tax than home owners
When a landlord pays tax on the rental income they receive, the burden of cost for paying that tax falls on their tenant.  The landlord is like a shopkeeper who makes a GST return to the Inland Revenue Department: they are responsible for paying the tax, but the money is not coming out of their own pocket.

Homeowners don't pay rent, so they don't pay the same amount of tax as renters.  Some jurisdictions recognise this and require homeowners to pay tax based on their imputed rent. Homeowners are made to pay the same amount of tax that a person renting the same property would.

New Zealand doesn't tax imputed rent, so homeowners get a tax break that renters don't.  That's the main advantage of owning a "family home". So should we tax the family home?  Yes we should, if we want to make home owners pay their fair share of taxes.

The family home is a crayon drawing
The phrase "family home" invokes feelings of, or about, financial security, community stability, personal identity and social status. They are the feelings you had about a house you lived in as a child.  They are the crayon drawing of a six-year-old, who has only known one home.

And crayon drawing is stuck to the door of a fridge by that child's parents, who want to provide their family with stability, security, and all the other goods or satisfactions that we associate with home ownership.  And good on them for wanting all those things.

Why should renters be denied these benefits of having a family home? Consider the recent story about a family that had rented a state house for over 50 years, then received a 21-day eviction notice, as reported by Radio New Zealand:
The living room wall is patchworked with photos of late family members and wooden 21st birthday keys.
It is a home well-loved and well-lived in. Looking out from the kitchen window are old lemon and peach trees, which Ms Morris said marked where the placenta of each child in the family was buried.
She said moving away would devastate the family.
This house was their family home, until a bureaucrat suddenly and arbitrarily decided otherwise.  The tenancy agreement held by the family matriarch lasped when she passed away.  Despite the family's need for secure and familiar housing, which was arguably greater than the gransmother's, they were to be evicted.

Renters are second-class citizens
The truth is that New Zealand's tax and welfare systems treats renters as second-class citizens, and that treatment is supported by social attitudes.

If you do not own a house, you will not enjoy the social and economic benefits enjoyed by home owners.  You are taxed more highly, and the laws of our country allow you to be subjected to the whim of your landlord - public or private. You don't deserve equal consideration.  You are a lesser person because you rent.

We need a new word to describe this attitude: rentism - like sexism or racism - the existence of systemic bias against a group of people, supported by widespread social attitudes.

People who rent do not have a "family home".
The phrase "the family home" is a rhetorical device that deliberately plays on people's emotions in order to privilege the interests of one group of New Zealanders, against the interests of another.

Invoking the "family home" appeals to the desire most people have for comfort, security and stability, evoked by the crayon drawing. But when it is deployed in discussing tax policy it represents only the self-interest of homeowners as property investors.

In our current political discourse, when a journalist or commentator asks "Would you tax the Family Home?" there is supposed to be only one acceptable answer: "No, of course not", because the question is loaded with the sentimental affect of that crayon drawing.

But strip away the sentiment and you expose the reality of the rentist society we live in. What that question really means is: "Will I, and people like me, continue to enjoy the social and economic privileges that I possess as a home-owner, at the expense of people who rent?"


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