I’m a little late picking up on this story, but on May 25th Congressman Ron Paul introduced legislation that would make the first time home buyer tax credit permanent, and would extend the credit to people whose homes were destroyed by a natural disaster. From the press release:
“Renewing the first-time home buyer’s credit will help Americans purchase a first home with their own money, instead of having to rely on government-funded or backed programs. The other sections of this legislation were inspired by conversations my staff and I had with constituents who had to purchase new homes because Hurricane Ike destroyed their prior homes. The first-time homebuyer’s tax credit could be of tremendous value to these people, yet the law denies them the credit because they are replacing destroyed homes. My bill not only reinstates that first-time homebuyer’s credit, it also corrects that oversight.”
I am not entirely clear as to whether the permanently extending the tax credit would really create significantly greater demand for housing. Home sales really only ramped up in the final months before the expiration of the tax credit. It seems as though it was the transitory nature of the credit, not the existence of the credit that really prompted people to act.
Additionally, the economists at the Brookings Institute estimate that the tax credit cost taxpayers $43,000 for every person who would not have bought a house without the tax break. A very expensive stimulus indeed.
It is also somewhat curious that someone who claims to be against government intervention in financial markets would introduce a bill like this, but I digress…
As of right now, it is not clear what chances this bill has of getting passed. What do you think about the possible re-institution of the tax credit? Good policy, bad policy, or otherwise? Let us know in the comments section below.
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spinnikerca
June 9, 2010 @ 6:31 pm
He is against income taxes. You forget that part. And he would be offended that you consider people keeping the money they themselves earn as ‘costing’ taxpayers, who didn’t earn it, anything.
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