Generation Squeeze price on housing inequity proposal

Alex McFadden summarizes a think tank proposal from Generation Squeeze that would add a surtax on primary residences above $1,000,000: 0.2% annually on values from 1,000,000 to 1,500,000; 0.5% on 1,500,000 to 2,000,000; and 1% on values over 2,000,000. Payment could be deferred until sale and revenue is estimated at $5 billion per year. McFadden stresses this is a Generation Squeeze proposal, not a current government law, and it is distinct from capital gains changes or removal of the principal residence exemption.

He explains the existing context: the principal residence exemption (PRE) has sheltered home-sale gains since 1972 and currently allows primary-residence gains to be tax-free. McFadden notes the 2024 inclusion-rate change (to 66.7% for some gains) did not apply to PRE and that Mark Carney later canceled that hike in March 2025.

McFadden runs four concrete examples from his files to show scale: (1) a 2020 starter bought for 650,000 now ~850,000 pays $0 surtax (under 1M); (2) a family who bought for 800,000 in 2018 now at 1.2M would pay ~400 dollars/year (≈33/month) or about 4,000 deferred over 10 years, versus an $80,000–$120,000 capital-gains hit in alternative proposals; (3) a 2005 Vancouver purchaser bought for 550,000 now at 1.8M would incur ~2,500/year (≈25,000 over 10 years) versus an estimated $200,000–$300,000 under a capital-gains approach; (4) an investor with a 1.4M primary and an 800,000 rental (combined 2.2M) would face ~800 dollars surtax on the primary and $0 on the investment property because investment gains are already taxable.

On politics, McFadden cites polling and actors: 62% of Canadians support a 'price on housing inequity' when framed that way, but only 15% of million-dollar homeowners support it when framed as a surtax. Opponents include the Canadian Taxpayers Federation and 'peer polyev' who said 'we will never allow a tax on a primary residence period full stop'. He notes PMO staff met Generation Squeeze's Paul Kershaw in Nov–Dec 2021, documents obtained by the CTF, and that CMHC funded Generation Squeeze for $450,000 while CMHC publicly says the federal government will not move forward with taxing principal residences at this time.

McFadden's bottom line: the proposal would hit only the top 10–12% of homes and, numerically, is less severe than a capital-gains alternative for many owners, but it could still meaningfully affect high-value homeowners. He advises: do not panic, PRE remains intact today, monitor if your home is over 1.5M, consult a financial planner for tax planning, and avoid making rushed decisions based on headlines. He also mentions the Smith maneuver as an existing strategy homeowners use.