Congress working to extend the first-time home-owner tax credit

Victor Joecks

The closest thing to eternal life on earth is a government program. And in the case of the first-time home-owner tax credit, it may be growing.

The latest idea under discussion is a credit worth up to $8,000 for first-time homebuyers and up to $6,500 for homeowners looking to trade up to a bigger primary residence and who have already lived in their current home for five years.

To qualify for the full credit, however, homebuyers must have adjusted gross income of less than $125,000 ($225,000 for married couples filing jointly).

In addition, the credit would only apply to homes sold for $800,000 or less. Contracts to buy a home must be signed by April 30, 2010, and the deals must close by June 30 in order for a buyer to qualify for the credit…

Critics, while acknowledging that the credit has helped to generate additional home sales, say it has been poorly targeted and therefore not cost-effective.

They point to estimates that only 10% to 20% of the nearly 2 million homebuyers who will have gotten the credit by Nov. 30 bought solely because of the tax break.

In other words, a large majority of homebuyers who benefited from the credit would have bought their homes without it.

By one economist’s estimate, the government may have spent $43,000 for each sale that occurred strictly because of the credit.

In a position paper published this week, the liberal Center on Budget and Policy Priorities said making the credit available to existing homeowners would not help stabilize housing prices or reduce inventory.

Unfortunately for those who care about sound fiscal policy, Nevada’s entire Congressional delegation has already expressed support for this idea. Congressman Dean Heller especially ought to know why this is bad policy.

Government shouldn’t pick the winners and losers. And you shouldn’t support something just because the government happened to pick you as a winner this time. Over time, everybody but the house (government politicians and bureaucrats) is going to lose.

We live in Nevada, for goodness’ sake. We’re supposed to rip other people off using this logic, not get suckered in ourselves.