The Toronto One Percent: Out of Money or Out of Touch?

“Be thankful for what you have; you’ll end up having more. If you concentrate on what you don’t have, you will never, ever have enough.” – Oprah Winfrey How difficult […]

“Be thankful for what you have; you’ll end up having more. If you concentrate on what you don’t have, you will never, ever have enough.” – Oprah Winfrey

How difficult is it to live on $196,000 in Toronto?

Well, according to an article published by Toronto Life magazine – “Almost Rich“, it can be quite a struggle. Here is an excerpt from that article to give you an idea of how unfair life can be:

…the threshold for the top one per cent of income earners is much lower than you’d expect: $196,000, in the latest Statistics Canada numbers. That’s no small amount of money, but hardly the means for a life of leisure. In an increasingly pricy city like Toronto, where we pay a premium for everything from milk to car insurance, $196,000 can seem positively middle-class.

Break it down, and it translates to roughly $10,400 a month, after taxes. For many Torontonians, that $10,400 disappears fast. Thousands go to the mortgage. For those with young kids, daycare can cost upwards of $1,500 a month. There are the car and RSP payments, wardrobe refreshes, utility bills and something to set aside for when the furnace inevitably conks out. Plus the cost of the sushi, pad Thai and butter chicken that we order in three nights a week—because we’re all too tired to cook by the time we get home from work.

This article is not satire – it was written as a serious essay piece by National Post Comment Pages editor Jonathan Kay. The article further profiles five families with household incomes that range from $165,000 to $200,000 per year. One of those families has a “weakness for designer furniture” and spends their earnings as follows:

Monthly expenses|Mortgage payment for a three-bedroom house: $2,500. Utilities: $500. Gas for their Jeep Commander and Ford F-150 truck: $440. (“The Jeep was a mistake. We shouldn’t have bought it; we could have used the extra money for travel.”) Street parking and two parking permits: $200. Home and car insurance: $300. Cleaning lady: $160. Groceries: $1,000. (“We like Whole Foods and try to eat organic as much as we can. We love the new Leslieville store Hooked for fish. For everything else, Loblaws.”) Baby supplies and toiletries at drugstores: $75. Wine: $400–$500. (“We try to get the better $11 bottles, but they go fast.”) Eating out: $400. Home phone, cable, Internet and two cellphones: $280. Dry cleaning: $50. Haircuts, nails and waxing: $170. Gifts: $200. (“You have kids, you spend money on toys for other kids. That’s how it goes.”) Daycare for both kids: $2,500.

Annual expenses | Property tax: $3,800. Upgrades and maintenance on their house: $5,000. Clothes: $3,000. (“When you have young kids you really cut back on stuff for yourself.”) RRSPs and investments: $0. (“Ha! We live month to month. When we have money left over, we go out.”) Savings accounts for the kids: $1,500. (“We put money in on birthdays and special occasions.”) Hockey league fees for Thomas: $500. Gym classes for Suzanne: $900. Swimming and music lessons for the kids: $900.

What’s stunning about this Toronto Life article is that the five families profiled actually agreed to allow the magazine to disclose their names and have their pictures taken

Predictably, there has been a backlash to this article – the comments section in Toronto Life’s website have been incendiary to say the least. The most enjoyable response to this article was a post on Gawker by contributor Hamilton Nolan. Mr. Kay’s response to that post is was published in the National Post’s website.

What can we conclude from this episode? Well, we can ascertain that the inability to distinguish between “needs” and “wants” will cause even high income earners to spend more than they can afford. Secondly, high-income earners are often skilled and hard working, but can also be hopelessly self-centered and superficial. Perhaps increasing taxes on the rich isn’t such a bad idea after all.

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