In an effort to jump-start the ailing housing market, Sen. Johnny Isakson, a Republican from Georgia (and a former real estate professional) has introduced legislation that would beef up the tax credit for first-time home buyers. Under the terms of his bill, which was introduced Wednesday, the size of the credit would expand to a maximum of $15,000 from the previous cap of $8,000, and it could be taken by anyone who buys a primary residence, instead of only by first-time home buyers. The bill would also remove the income limits that had prevented individuals making more than $75,000 a year from claiming the credit, which would be available for a year after the date of the bill’s enactment.
While I FREQUENTLY disagree with Isakson on a number of different issues, I believe he is on the right track with this one. This gives lower-income and lower-middle income the ability to buy a house and accumulate some wealth. It is direct help to the people on the ground, not a bail out to the real-estate industry. I should note that Obama originally offered to plan, and Isakson is now trying to expand it.
Go Team!
1 comments:
This is a horrible bill. Horrible for poor people, horrible for fixing the economy, and horrible for fixing our long-term budget deficits.
These tax credits cannot be claimed at all by renters, who are as a whole far poorer than owners, due to their financial instability. Also, this tax credit, like most tax deductions, is worth more for the rich (people buying bigger houses) than the poor (people buying small houses). It is worth 10% of the value of the house, so people who buy less than a $150,000 house would get less than the full value. Also, think about who will have the financial wherewithal to be buying a house in this market- it will largely be people who already feel financially secure: the people who least need help in this downturn.
Second, the last thing our real estate market needs right now is for us to artificially re-inflate the bubble. This is effectively taxing all Americans to pour money into a real estate market that is in the process of correcting itself back to long-term norms. Given a choice, there are much more efficient ways to spend these tens of billions of dollars to adjust our economy to the new reality.
Finally, the cost of this bill. We already offer $85 billion a year in mortgage interest tax deductions and $30 billion in property tax deductions. These policies already vastly distort our progressive taxation system at the expense of renters and small-home owners. This bill Isakson is pushing would cost an additional $30 billion per year when we should be looking at every possible opportunity to improve our long-term fiscal situation.
So in short, no. This is not a progressive move. And it helps the "lower-income and lower-middle" only with a far larger giveaway to the higher-income and on the backs of all future taxpayers, who will have to service our enormous debt.
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