So, the home buyers tax credit is in the news again and it's becoming quite controversial...
Proponents would like to see the program extended well into next year and have the credit expanded to $15,000 (or more), removing the first-time home buyer requirement which, by the way, really didn't restrict this to new home buyers at all, just those who hadn't owned a home in the last three years.
The most cogent argument against the government providing expanded subsidies for its citizens to buy property in a sinking real estate market is that the cost per incremental home sale would jump to, by some estimates, almost $300,000.
You see, most people who took advantage of the first tax credit would have purchased a home anyway, so the government expense per "incremental sale" tends to soar.
However, since the total cost of the current program and the proposed new one would only be in the tens of billions of dollars, rather than the hundreds of billions or trillions of dollars that Congress has become accustomed to while dealing with banking bailouts and federal budget deficits, it's hard to imagine that anything other than a huge public outcry will prevent the program from surviving well into 2010.
In an effort to offset some of the negative press about the program - its relatively low "bang for the buck" and allegations of fraud in the hundreds of millions of dollars that include claims being filed for those who don't qualify, most notably by a four-year old - the National Association of Realtors and the National Association of Home Builders have joined forces, taking out a full-page ad in yesterday's Wall Street Journal claiming that extending and expanding the wildly popular program would do the following:
- Create 350,000 new jobs
- Inject more than $28 billion into the US economy
- Generate $12 billion in additional tax revenue
It's hard to argue with how nice it would be to create that many jobs and provide such benefits to both the US economy and government, however, it also would have been nice to have some sort of note in an advertisement that cost upwards of $250,000 as to how those figures were determined.
A simple asterisk with a reference to a white paper or website would have made the numbers much more convincing, particularly in light of figures being provided by those who oppose an extension.
Then again, why shouldn't we just trust the home builders and realtors?
The arguments for extending the home buyer tax credit program are universally the same.
