He's at it again:Sen. Johnny Isakson has reintroduced a bill that would give home buyers a tax credit worth 10% of the purchase price of a home up to $15,000. The Georgia Republican unsuccessfully tried to get the credit inserted into the $787 billion stimulus package that went into law in February. Congress instead opted for extending and boosting an existing credit, worth up to $8,000, for first-time buyers. That credit is set to expire Dec. 1.Again, these types of tax credits are inherently unfair. They effectively force other people to pay part of the cost of someone's home. This is an example of how Republicans lie when they say they believe in small government and the free market. The truth is they don't. This plan will add $35+ billion to the national debt in an effort to stop a much-needed housing correction.
The proposed credit wouldn’t have income restrictions, unlike the current one, which phases out for individuals making more than $75,000 and couples making more than $150,000.
The legislation already has co-sponsors from both parties, including Senate Banking Committee Chair Christopher Dodd, a Connecticut Democrat. In February, congressional budget estimates figured that the $8,000 credit for first-time buyers would cost between $2 and $3 billion, while the $15,000 credit would cost an additional $35.5 billion. ...
Before serving in the Senate, Sen. Isakson spent more than 30 years in the real-estate industry.
On the other hand, if you're thinking of buying now in order to get the current $8,000 tax credit, perhaps you should wait for a better deal.
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The funny thing, is when they started the $8K offer, I thought "wonder how much the next one is going to be when this one is a failure"
ReplyDeleteI may wait it out until their 3rd try! What are they going to do, give up on a sinking ship like they did with Iraq? Oh wait.
Actually, that would be the third try. The first try came last year with a $7,500 tax credit for first-time home buyers that eventually had to be paid back (when you sell, I think). After that failed, the second try was a full $8,000 for first-time home buyers that wouldn't have to be paid back. That appears to be failing, as well. According to S&P/Case-Shiller, the rate of home price declines hasn't slowed at all.
ReplyDeleteThe problem, of course, is that a $15,000 tax credit can't help much if a house is $50,000 overvalued.
Would someone shoot me an email when the credit hits $100k?
ReplyDeleteThanks.
And when the tax credit reaches 1.5M$, maybe we can afford that beach house we always wanted...
ReplyDelete"James said...
ReplyDeleteAccording to S&P/Case-Shiller, the rate of home price declines hasn't slowed at all."
James - you should have said with the exception of DC where price declines have slowed.
Case Shiller DC - YOY rate of decline:
Nov -19.47%
Dec -19.60% (peak)
Jan -19.34%
Feb -19.19%
Mar -18.38%
Curious how that would happen here and yet, as you told us, DC will lag the rest of the US in the housing recovery.
How can you call the first-time homebuyer tax credit a failure when most home sales since the tax credit have been first-time home buyers? If you think the goal is to reverse the decline in home values, you are mistaken. The goal is to stablize the market by reducing the glut of inventory from overbuilding. This is why the tax credit was not given to every home purchaser. Existing homeowner purchases don't get to the problem (inventory), it's just house swapping which is not in the interest of the economy for homeowners to get a subsidized upgrade.
ReplyDeleteThe question of fairness in tax policy is absurd. Unless you are in the top 1%, you have nothing to complain about because you are not paying for anyone elses anything, the top 1% is paying your share. The top 1% doesn't make many waves because they are just fine with the current arrangement.
Isn't part of the Republicans' point here that the $8,000 credit phases out, effectively penalizing people who make over $75,000. Whether or not this really has any chance of passing, it certainly exposes Democratic bias against "rich" people, which apparently is now what 75,000 makes one, far less than the $250,000 they led us to believe.
ReplyDeleteYou forgot to indicate that Countrywide Dodd has a interest in seeing the credit get passed. More artificial conditions instilled into the market merely delays the inevitable.
ReplyDelete"The question of fairness in tax policy is absurd. Unless you are in the top 1%, you have nothing to complain about because you are not paying for anyone elses anything, the top 1% is paying your share."
ReplyDeleteWhat a joke. I am a single person paying for your kids to go to public schools and whine about how boring you are as a parent.
Yeah - very little in the tax code is about straight up fairness. There are all sorts of overinclusions and underinclusions. You just have to hope that at the end of the day you get as many overs as you do unders.
ReplyDeleteHey,
ReplyDeleteI'm in the top 1% and I am less than thrilled with the current arrangement, especially the changes that are in the wind. When they are done the top 1% will be around $65K a year.
James is spot on -- an $8K tax credit is still a bad deal when the house has many times that yet to fall.
This is political pandering at its worst. At least they've left principal adjustment out of the picture. Remember the outcry when the mentioned it?
"I'm in the top 1% and I am less than thrilled with the current arrangement, especially the changes that are in the wind. When they are done the top 1% will be around $65K a year."
ReplyDeleteIf we don't like the situation, we can use our power in this democratic society we live in to voice that opposition with our single vote or money and influence. I not sure the hard working masses feel your pain, though. The opportunity to attain massive wealth whether you're born with it, attain it by exploitation, pure luck, or genuine ingenuity, comes with strings attached. If you would rather the burden were shared more equitably, would you also being willing to share the wealth more equitably?
"If you would rather the burden were shared more equitably, would you also being willing to share the wealth more equitably?"
ReplyDeleteAbsolutely. That's why I'm deeply involved in philanthropy with both time and money. Having worked in and with the government I am certain that taxation and entitlements is the worst thing we can be doing.
Over 50% of Americans pay no income tax. This is a dangerous tipping point -- their votes will drive the government deeply into the private sector, ultimately killing the golden goose.
Sorry, I shouldn't bring up politics. With wealth comes responsibility. In my book conspicuous consumption is gosh, and good stewardship is a mandate.
There are countless examples of how hurting the rich winds up hurting the middle class and poor, and it looks like we are going to get another lesson very soon.
How can I say its a failure???
ReplyDeleteCause nobody is buying, foreclosures are still happening, and prices are still dropping. Oh and they want to offer more.
Good for me, I will just wait....and wait...and wait....for the next offer.
"Cause nobody is buying, foreclosures are still happening, and prices are still dropping."
ReplyDeletePeople are buying, specifically, first-time homebuyers. As far as foreclosures still happening and prices dropping, these things need to happen. Those that purchased overpriced homes have to get out, it doesn't make sense for them to bang their heads' against a wall. It's better for them to walk away so that the home can be purchased closer to its actual value.
The stakeholders who suffer most from the effects of the first-time homebuyer tax credit has to be small-time real estate investors renting single-family homes. Demand will sink and these properties will sit vacant, perhaps becoming another wave of foreclosures. I don't know whether this is a good thing or not.
Like everything else that gets subsidized: ultimately the subsidy has the result of driving up the prices. So the buyer will lose out in the end anyways, and the whole incentive is a failure.
ReplyDeleteLet the crash happen and lets get on with this before the govt. drives us to a inflationary depression.
"People are buying, specifically, first-time homebuyers."
ReplyDeleteNot in my area (montgomery county). Its -59% YoY. Its only going to get worse as the interest rates keep going up too.
http://graphs.trulia.com/real_estate/Rockville-Maryland/graph.png?version=154&width=600&height=200&type=qma_sales_volume&city=Rockville&state=MD
http://graphs.trulia.com/real_estate/Bethesda-Maryland/graph.png?version=154&width=600&height=200&type=qma_sales_volume&city=Bethesda&state=MD
http://graphs.trulia.com/real_estate/Gaithersburg-Maryland/graph.png?version=154&width=600&height=200&type=qma_sales_volume&city=Gaithersburg&state=MD
I could keep going and going....but I would rather wait and wait and wait instead.
its a good time to sell!! unfortunately there aren't enough buyers. when the bond market sends interest rates higher and property values lower even some of the more recent buyers will be seen as fools unless they got some great forclosure deal cash. there are a lot of people holding spec properties or can't sell their old house after having moved into the new carring two mortgages. sucks to be you. the stimulus along with the bottom is in hype is trying to allow speculators to get rid of their properties without losing their creditors shirts.
ReplyDeletebonds down real estate down banks down
Anonymous said...
ReplyDelete"Sorry, I shouldn't bring up politics."
Go ahead, bring up politics. I do.
to anonymous at 7:53 p.m.
ReplyDelete"If you would rather the burden were shared more equitably, would you also being willing to share the wealth more equitably?"
I'd be interested to hear what you consider as sharing the wealth more equitably. I come from a poor family. Mom was a nurse. Dad was in the military. I grew up having everything I needed (because there's not much that we really need, if you think about it). But I was smart, got scholarships at private high schools and colleges.. I worked my butt off studying engineering while my classmates studied stupid shit like "communications" and English and did drugs every day.
Now, I'm in my late 20s and am getting paid probably within the top 1% of my age group.
I pay MY faire share of taxes, so in that case, I am certainly carrying my share of the burden in our great country.
And now, you're telling ME that I need to share my wealth more equitably also? What the heck does that mean? Aren't I already doing that by paying MY more than fair share of the taxes?
Now I look at my situation. I've been responsible with money my whole life (except I splurge on travel every once in awhile). I live below my means. I drive a 10 year old car. I live in a small apartment. And now I have to bail out a**holes who CHOSE TO overextend themselves by buying houses they can't afford using money that they don't have and then using HELOC's to buy flat screens and fancy cars ...
I need to now share my wealth with them?
No thanks.
And how exactly am I supposed to cast my vote, when we have a system where politicians in effect bribe their voters? Democracy's great, but it certainly has its limitations.
Maybe it's time for people like me to say "f*** it." If I can acquire a better lifestyle (buy that beach house I can't afford) by not actually working for it and screamloudly enough at Congress when it comes time to pay up, why shouldn't I???
"Now, I'm in my late 20s and am getting paid probably within the top 1% of my age group.
ReplyDeleteI pay MY faire share of taxes, so in that case, I am certainly carrying my share of the burden in our great country.
And now, you're telling ME that I need to share my wealth more equitably also?"
Engineer in his late 20s....what do you make about $50K-$65K? I wouldnt consider that the top 1% nor would I consider the amount of taxes you pay worth complaining about.
Try becoming a small business owner and then start complaining.
from one anonymous to another anonymous.
ReplyDeleteYou're retarded. I said I STUDIED engineering. Actually, my salary alone comes out to about $130K a year, and I'm 28. And then there's income from my investments which has dropped a great deal over the last year ... not much but maybe several hundred a month.
I've never really checked income ranges by age group but I'm pretty certain that puts me in the top 1%.
But whatever. Apparently, only "small business owners" have a right to complain.
I'm also against this 15,00 tax credit (even though personally I would benfit as I just bought)
ReplyDeleteI really don't think this is a good idea. Sure, $15,000 can help a lot, but where in the world are we gonna get the funds?
ReplyDelete