The Isakson Tax Credit falls short
Written by Benaiah on April 2nd, 2008Republicans are feeling the heat from Democrats on the Hill and their constituents back home. Caving in to the pressure Senator Isackson (R - GA) is proposing a one time tax credit for new home buyers and homes in foreclosure.
Senator Isakson has introduced legislation (S. 2566) that would provide buyers of either a newly constructed house or one that is in foreclosure or default with a one-time, $15,000 refundable tax credit. The bill would apply to purchases made between February 28, 2008, and March 1, 2009. To qualify, newly constructed houses would have to have been built on or before September 30, 2007. Owner-occupied structures in default or foreclosure must have been in default prior to March 1, 2008, even though the actual sale would take place after that date, although there is no such restriction on foreclosed structures owned by a mortgage company or its agent.
Why is this a bad idea?
The proposal suffers from the following weaknesses:
* As a general principle, an explicit federal subsidy for the purchase of certain homes is both bad tax policy and bad housing policy.
* This subsidy rewards those who have been the most irresponsible. It would benefit homeowners at any income level who either irresponsibly borrowed all of their home equity or took out a loan that they could not repay but hoped to profit from by reselling the property in a rising market. However, those who have made the effort to pay their mortgages on time would not be assisted at all, regardless of their financial circumstances.
* Homebuilders who ignored signs that the market was slowing and built houses in hopes of finding a buyer would get assistance in selling houses that should not have been built in the first place.
* Responsible homeowners who must move for a new job or for family reasons would suffer because the sale of their homes would not qualify for a tax credit, while those of their less responsible neighbors would qualify for one. The potential plight of responsible homeowners could be cited as a reason to expand this credit to all home sales, thus increasing the cost to all taxpayers.
* Since the credit is refunded only after the end of the next taxable year, the money would not be available at the time of purchase. In practice, this limits its effect to those buyers who have the money to make a purchase up front; i.e., upper-income homebuyers.
* By applying the credit only to homeowners in default before March 1, 2008, the bill leaves out those homeowners whose mortgage interest rate will reset after that date. This provision may be intended to reduce incentives for default, but it is so poorly written that it essentially rewards those who were irresponsible early while excluding those who were victims of circumstance after that date.
The natural urge is do something, doesn’t matter what that something is just do something so the people back home think you are doing something. That was a lot of somethings. My point is that Republicans need to stand on their conservative principles and not pass a bill just to pass a bill. If they are going to give a tax credit they need to give it across the board and not restrict it as Senator Isakson has done.
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AM
You confused “principal” with “principle”. In your comment to which I responded earlier you confused “your” and “you’re”.
I again ask how you can expect anyone to consider your ideas seriously when you are unable to communicate them in English at a level we expect from 6th graders. Poor grammar is a good indicator of low IQ, which in turn is a good signal that your analysis is uninsightful.
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PM
I am dyslexic. I also confuse my numbers and I often double words. Particularly pronouns and articles. But if you want to insult my intelligence based on a disability feel free.
You have once again shown yourself as a royal ass.
The changes have been made. On several occasions when you have used this stupid debating technique you have also made grammatical errors. Oh wait you called them a typo.
Keep this crap up and you will be banned for being a troll.
I ask you, outside of the protected bubble of academia who takes you seriously?
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PM
Would you like to have a serious discussion about “learning disabilities”? With 7.5 years of teaching experience in the University classroom to date, I can share with you my assessment of this phenomenon, as long as we can do it in a depersonalized way.
If you’re going to view any remark I make from my own experience as a personal attack, then the discussion should probably not take place.
This is sort of like when Larry Summers made his now-infamous remark, and it suddenly became a personal insult to every woman far and near.
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PM
Learning disabilities? What debate is there? We still have liberals, therefore we have people with learning disabilities.
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AM
You do not debate. You insult and deflect. I too work in academia and I deal with people like you everyday. You are educated far beyond your own comprehension.
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AM
Notice that Michael and Dave used the word “debate”. I used the word “discuss”.
The ringleaders on this blog haven’t matured out of high-school debate club mode. Sometimes, people like to consider ideas and their implications without “arguing” and even (gasp) consider ideas that fall outside of their own rigid opinion sphere.
Your own dogmatic adherence to your opinions (e.g. reflexively blaming “liberals” and “the environmental lobby” for anything) creates a wall that prevents you from thinking critically about things that fall outside of your own belief paradigm; most loudmouth liberals have the same problem, of course. Sadly, I don’t think there’s much you can do about this. My experience is that this is pretty inate, or at least set early in childhood.
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PM
I don’t agree with the arguments in this article. I feel like more strict lending guidelines with incentives to reduce foreclosures from both sides is the right thing. “Letting the bubble burst” is not a solution. That effects millions who bought their home with the right intention yet now stand to lose equity at an unprecendented rate. Backsliding the value of the nation’s homes benefits no one. I do find it interesting that most of this thread (everything in blue) was copied word for word from another author on another site, yet that author was given no credit for his words and thoughts. Shame, shame.