Wealth vs. Income

co-authored with Jens von Bergmann & cross-posted over at MountainMath

Wealth and income are different things. Wealth is measured in terms of assets minus debts at any given point in time. It can accumulate or deplete over a lifetime and across generations. By contrast, income represents some variation of how much money one makes over a given time period (usually a year). Most people get this on some level. But since both income and wealth deal with people and their money, the terms are also often used interchangeably. So it was that the CBC yesterday reported that “B.C. budget 2020 promises new tax on wealthy to help ensure future surpluses” despite the actual new tax being a tax on high-income individuals.

Here the difference matters for two reasons:

  1. it matters because wealthy people aren’t always high income, and high income people aren’t always wealthy, and
  2. it matters because a wealth tax is quite distinct from an income tax, and in this headline the two are blurred together (fortunately the article clarified).

With wealth taxes in the news (and in multiple Democrats’ platforms in the US), it’s important to separate out wealth taxes from income taxes. Here in Vancouver, as we’ve noted before, our property taxes actually do a pretty good job of taxing wealth.1

In this post we’ll focus on our first point: just how well do wealth and income line up together? Underneath this is also the question of how to measure wealth and what to include as income, we will just go with the standard definitions from StatCan’s Survey of Financial Security to answer this question for family net wealth and family income. The data allows us to divide up the Canadian population into equally sized quintiles (fifths) by net wealth and by income. What overlap do we see? The data also allows us to break out sub-areas of Canada, including the Atlantic provinces, Quebec, Ontario, the Prairie provinces, and British Columbia. So let’s run those too!

First let’s look at how income quintiles break down by wealth quintiles, as assessed all across Canada. How many families in the lowest income bracket fit into each wealth bracket? Are they all the lowest wealth bracket? Nope.

wealth-v-inc-1

 

We can see a clear relationship between wealth and income. But only about half of lowest income families in Canada fit into the lowest wealth category. The same is true on the other side of the distribution. Only about half of the highest income families fit into the wealthiest category. Moreover, there are wealthy (highest quintile) and poor (lowest quintile) households in each and every income quintile. Counter-intuitive as it may seem, there are clearly poor high income folks and wealthy low income folks. Not very many, but at any given point in time they definitely exist.

Let’s look at some of the provincial differences, remembering that we’re using Canada-wide quintiles. Looking at raw numbers, it’s quickly evident that some provinces (Quebec and Atlantic Canada) are disproportionately lower-income, while others (the Prairie provinces) tend toward higher income. Ontario and BC are more inbetween. Looking at what percentage of each income quintile fit in each wealth quintile by province, the general pattern of a correlation between wealth and income is evident in all provinces. But looking more carefully, a few differences jump out, especially between BC and the Prairies. In BC, each income quintile has a higher proportion of families in the top wealth quintile than one might expect – including the lowest income quintile: wealthy low income folks. In the Prairies, by contrast, each income quintile looks less wealthy than one might expect. In each case, despite the correlation between wealth and income, there are also people showing up in each category.

Flipping the chart around, we can look at how many families in the highest wealth bracket fit into each income bracket. Only about half of the wealthiest families in Canada are in the highest income quintile. There’s even greater diversity in BC, where only about 40% of the wealthiest are in the highest income quintile.

wealth-v-inc-2

Let’s pull out BC from the rest of Canada and run the numbers matrix style. If there were a perfect correlation between income quintile and wealth quintile, then we’d see a bright diagonal line filled with 20% of families in each of the five diagonal cells, surrounded by twenty cells with 0% of families. If there were NO relationship between income quintile and wealth quintile, we’d see each of our twenty-five cells filled with roughly 4% of families. What we see is somewhere inbetween. For Canada as a whole, we see strong evidence of correlation at the margins (for highest and lowest quintiles), but the middle looks very mushy. For BC, we see a strong relationship between being in the top income quintile and the top wealth quintile. But everything else looks mushier than expected. In effect, BC stands out for its generally limited correspondence between wealth and income.

wealth-v-inc-3

What throws off the relationship? Many peoples’ wealth represents savings over one or more lifetimes. So age matters, as does inheritance. Immigration can also affect patterns, with different results evidenced by program (e.g. investor), time in Canada, and wealth accrued in country of origin (Vancouver’s far from the only place where rapid escalation in prices have made millionaires of home owners). Asset inflation also matters, and BC’s rapid appreciation in real estate wealth surely plays a role in its weirdness. As a reminder, capital gains accruing to primary residence don’t show up in income statistics, but they definitely represent wealth. We could cap current exemptions on this enormous tax break for home owners, taxing these capital gains more like income. But we could also just levy an overall wealth tax. Returning to a theme, taxing wealth is distinct from taxing income.

All of which is to say: wealth and income are not the same thing. And it matters. Especially in BC!

As usual, the code for the analysis is available on GitHub.

 


  1. And our property taxes are still too low! [return]

Mapping Vancouver’s 1907 Trolley Ride

A couple of weeks ago I took my urban sociology class on a tour of downtown Vancouver. We followed the route of the captivating film of downtown shot from the front of a trolley in 1907. The trolleys! The street life! The bicycles! The horse manure! Well worth a watch.*

Our tour began at UBC Robson, but then we joined up with the trolley film just outside of the former Hotel Vancouver, on Granville and Georgia. From there we proceeded down Granville toward the old Canadian Pacific Railway (CPR) Station, before turning right on Hastings. The trolley stayed on Hastings till Carrall, and so did we. Then, following the film, we jumped down to Carrall at Cordova, and come back Cordova until returning to the intersection of Cambie & Hastings. At that point we parted ways with the trolley film (which speeds off to parts of the West End), and made our way over to Chinatown.

I tracked down old fire insurance maps to accompany our tour, providing an overhead view of the route and its surroundings from roughly 1889, 1901, and 1920. These took a little work to assemble from the City of Vancouver Archives (1899 and 1910-1920) and the Collections Canada (1897-1901), but thankfully pretty much all of the pieces were there (see below)! Here’s the basic overview of the route in animated gif form, tracking through each year, with an overlay from 2020 tacked on at the end. A little crude in assembly, but wild fun!

blog_Animated_1907_Trolley_Route_1891-2020

The maps document how Vancouver grew from 1889 (three years after the City’s incorporation as well as the Great Fire that burned it all down!) through its early years up to 1920 (just after WWI and the great flu outbreak of 1918). A few big patterns are immediately evident. First, old Vancouver was still pretty sparse in 1889, and mostly centred around the old Gastown area (Carrall & Cordova above). By 1901, there were still large stretches of the trolley route relatively barren of buildings, but a booming decade ahead successfully built out the city, ending with a spectacular bust in 1913 (followed by a world war and the terrible flu year of 1918). Second, the CPR succeeded in pulling the young City of Vancouver westward toward the Hotel Vancouver (which it owned) and its sizable property holdings down Granville Street. Vancouver (a.k.a. “Terminal City”) was both the end of the line and the start of numerous speculative real estate fortunes. Third, as the city grew, its old buildings – especially its early shacks and dwellings – quickly made way for more substantial buildings. Before the advent of zoning, the urban core of the city was allowed to grow both upward and outward. Many of the buildings on the maps by 1920 remain in existence (and protected under heritage agreements) today.

Let’s zoom in a bit and follow the trolley along for a little e-tour…

Trolley-1907-1920-overlay

I’ve added flags for some of the fun things to see in the 1907 trolley movie, as well as the 1910-1920 Goad’s map I’ve used as an underlay. In the description below, I’m also timestamping (x.xx) some of the sites in the film. We start outside the Second Hotel Vancouver (5.15), at the end of a block I’ve examined in-depth before! From there we pass the Hudson’s Bay store (still there!) Then I highlight some of the off-Granville features of the map, including the old houses along Howe and Richards streets. Of course many of these houses were actually side-by-side semi-detached houses. Not far away were townhouses, cabins, and an array of other kinds of housing. Rooming houses were also popular, and hotels were not neatly distinguished from apartment buildings. So it is that the Hotel Badminton (on the 1901 map) becomes the Badminton Apartments by 1920. Once surrounded by other churches, Our Lady of the Holy Rosary Catholic Cathedral remains downtown. My first foray into old fire insurance maps took place across Dunsmuir, when I examined historical change in the blocks near Cathedral Square. Next we pass the old turretted Bank of Montreal building (5.32) and then we scoot the map northeastward.

[see Vancouver Archives Goad’s Map: Plate 18 ; Plate 16]

Now the Gothic old Second CPR Station is visible at the end of Granville St. It doesn’t show up on the map from 1920 because it was torn down around 1915, when the new Waterfront Station was built nearby. Before we get there, we pass the Sun Ban Japanese store (5.48), the sign visible in 1907 (colourized-photo from image #4 here). Not far away was the Japanese consulate, showing up on the 1901 map, and indicative of the strong trans-Pacific ties that characterized Vancouver’s early days. The beautiful old post office building from 1905 sits at the corner of Granville and Hastings, and that’s where we turn Eastward on Hastings, swinging around the Birks Clock (5.58), back in action today!

[see Vancouver Archives Goad’s Map: Plate 16 ; Plate 3]

Heading down Hastings, we move into a heavy banking district, passing the Molson’s Bank (6.24) on the left, and what would soon become the Union Bank on the right, now SFU’s Morris Wosk Centre. The streetscape is currently dominated by the Harbor Centre, looming over us as we scoot the map a little further Southeast. Just to highlight how much fun it is to zoom in on the high-resolution archival versions of these old maps, I highlight a few of the buildings off Pender & Homer. Look at those mixed uses! The Ellesmere Boarding House (in yellow) sits above mixed shops and offices. Across the street sits the Hartney Chambers (1909), containing printing, offices, and apartments on the 3rd floor. Behind are more offices, but also a billiards hall and an auctioneer space, with a dance hall above and a bowling alley below. Heading further down the street, Vancouver’s landmark Dominion Building wasn’t yet built in 1907. Instead we pass a drug store connected to an arcade (6.54) before Hastings swings left at Cambie. There’s also no Victory Square across the street, because there had as of yet been no victory in WWI. instead the space was known as Government Square, and contained the old court house (before it moved over to Robson Square, near where we began).

[see Vancouver Archives Goad’s Map: Plate 3 ; Plate 4 ; Plate 5]

As we follow the turn in Hastings Street, we get a fabulous view of some of the signs and storefronts ahead, including an advertisement for the “Dominion of Canada Assay Office” where precious metals could be tested for purity – hello BC Mining history! We see storefronts for the Vancouver Rubber Company, Westinghouse, and The Province Printing services (7.05). Across the street, though we don’t get a good look at it, is the Flack Block, recently restored (and currently containing baked goods favourite PureBread). Beyond we pass the famous Woodwards Department Store (1903), recently redeveloped as the giant Woodwards complex (2010) (7.22)! From there we pass through a vibrant block (that would eventually host Save-On Meats) capped off by the B.C. Electric Railway Company Terminal at Hastings and Carrall (7.35) – home of the trolley hosting our film. We get a fine glimpse of the brand new turretted Woods Hotel (1906) at the right, recently renovated as the Pennsylvania Hotel, and run by the Portland Hotel Society. We also get a view of more old street advertisements, including for “Knowlton Drugs and Seeds” and “Wo Sang, Merchant Tailor” (7.57). Wo Sang’s shop had ten employees and cleared $18,000 in annual receipts in 1907, as recorded in data collected by William McKenzie Lyon assessing the damages wrought by the anti-Asian riots of September 8th, which occurred about four months after our trolley tour. Chinatown, which shut down for six days after the riots, lay mostly to the right (south) of Hastings.* A glimpse down Hastings beyond Carrall reveals the dome of the Carnegie Library (1903) & Community Centre, near the former site of City Hall, and the spire of the First Presbyterian Church beyond. But we go no further. Instead we jump to Carrall and Cordova, aboard a trolley heading the other way!

[see Vancouver Archives Goad’s Map: Plate 5 ; Plate 6 ; Plate 7]

Heading first up Cordova (8.05), we can see the prominent signage for the Woods Hotel (on the left), as well as the Rainier Cafe & Hotel (on the right), which we sweep around to face as we turn right onto Cordova. It’s still there, and like the former Woods Hotel is also now run by the Portland Hotel Society! As we cruise down Cordova, we get a glimpse of the New Fountain Hotel on the right (8.17). The facade still stands, and will be incorporated into the new building going up behind it.  A little further down we pass a Drug Store and cross Abbott past the first Hotel Metropole on the left (8.31). The old Metropole’s lot would be taken over by the old Woodwards Department Store’s expansion in 1924, and the Metropole would subsequently move across the street to the former Traveler’s Hotel. At the end of the block, we catch sight of the prominent advertising for Cascade Beer, “The BEER without a PEER.” Finally we turn the corner onto Cambie, heading back toward Hastings. Here the advertising for Herman House Co. Real Estate (9.02) becomes especially prominent (you can find them in this searchable old Henderson’s Vancouver directory from 1907!), reminding us that real estate has always been at the heart of Vancouver’s history.

Speaking of which, about six years after the 1907 Vancouver trolley ride, the remaining residents of the Squamish village of Sen̓áḵw, just across False Creek from downtown Vancouver, would be expelled from the city. Fast forward to the present, they’ve won some of that land back, and are moving forward with the most ambitious development Vancouver’s seen in decades, free from the City’s direct control. History keeps coming back.

I’m bookmarking all of the individual map panels assembled above here. Check ’em out for a much more detailed look at local history and change! And please pass along any other resources that might be out there! I’m looking to catch them all…

For Full Route, 1889, see Vancouver Archives Plan of Vancouver (Dakin Fire Map): Plate 8 ; Plate 7 ; Plate 1 ; Plate 2 ; Plate 3 ; Plate 4 ; Plate 11 ; Plate 6 (extra)

For Full Route, 1897-1901, see Collections Canada Insurance Plan of the City of Vancouver (Goad): Sheet 18 ; Sheet 16 ; Sheet 3 ; Sheet 4 ; Sheet 5 ; Sheet 6 ; Sheet 7 (extra) Sheet 17 (extra)

For Full Route, 1910-1920, see Vancouver Archives Goad’s Atlas Vol. 1: Plate 18 ; Plate 16 ; Plate 3 ; Plate 4 ; Plate 5 ; Plate 6 ; Plate 7 (extra) ; Plate 17 (extra)

If  you haven’t had enough of that 1907 film yet, check out this Vancouver Historical Society centennial celebration.

Thanks to the Vancouver Archives and Collections Canada for posting all of this stuff, and to the many other sites (e.g. Changing Vancouver) posting historical information. Yay History!

* Lots of versions of the 1907 film up on-line, but I like this one both cause it’s posted by Library and Archives Canada, and the pacing and clarity are pretty good. Scroll back to ride through Victoria and see some bridges!

** See Paul Yee’s extraordinarily useful UBC Master’s Thesis on “Chinese Business in Vancouver, 1886-1914” for details, esp. p. 40 & 134.