Californians Get New Tax Credit for First-Time Crib Purchases
April 1, 2010
Note: This blog post was written on April Fool’s Day. Parts of it may not be accurate.
MTV Cribs© has caught the Golden State’s fancy. Thousands of star-struck constituents who want homes “just like Arnie’s” will get some help. Gov. Arnold Schwarzenegger signed a bill last Thursday that awards $400 million in state income tax credits to first time buyers of a state-certified Crib. The $20,000 credit is targeted at taxpayers who don’t know what “variable rate” means.
Dubbed the Crib Credit, the credit takes effect June 1, one day after the federal Crib Credit is set to expire, and on the same day as state tax credits for ivory back scratchers, platinum cookware, and remote-controlled pool fountains. California hopes the Crib Credit will encourage taxpayers to spend their summer months hiring contractors, refinancing floating rate mortgages, and buying junk to decorate their new houses.
Local industry Crib Credit supporters have cut deals with retailers to send home buyers “5% off purchase of $5,000!” coupons starting May 1.
The actual cost of the Crib Credit will not be known for more than ten years, but the state hopes to turn a short run profit through taxes and fees. These include real estate transfer taxes, property taxes, utility charges, credit check fees, and trash collection fees.
The California Department of Animal Care and Control is excited about the bill’s impact on pet licensing revenues. The Crib Credit is expected to generate huge demand for Hollywood style pets, including kimono dragons, chimpanzees, chihuahuas, and tigers.
Regular People Get Ready to Feel Famous
Tax board spokeswoman Denise Azimi told the San Francisco Chronicle that new home credits would “go quickly” because the Crib Credit lets regular people live like P. Diddy.
Citizen surveys confirm this prediction. Suzette G. Harley, mother of two and student at University of Berkeley’s School of Public Policy, twittered: “The Crib Credit will change our lives! I plan on taking out Grad PLUS loans to make my down payment. You should too!”
Ms. Harley’s Twitter page has 30,000 followers.
Mancur Olson Turns in his Grave
Sen. Loni Hancock, D-Oakland, and two Assembly members were the only persons who voted against the Crib Credit.
Sen. Hancock told the San Francisco Chronicle that she was “concerned that this tax credit helps developers and banks more than average Californians. This will do little to create jobs and will temporarily and artificially inflate sales. California faces a $20 billon deficit – this tax credit may force further cutbacks in education, job creation and rebuilding our crumbling roads and bridges.”
No one really knows what Sen. Hancock is talking about, except the Tax Foundation.
The California Building Industry Association and the California Association of Realtors called the Crib Credit “dreamy”.
The Cost of the Credit
Many Californians will not be eligible for the full $20,000 credit because they do not make enough money to have the required state income tax liability. The tax board hopes that insufficient income does not deter these people from applying for the credit anyway.
Tax Board official Carolina Weiss was quoted as saying, “When has insufficient income stopped Americans from living their dreams?”