More Bad Ideas for Housing Tax Credits: Credits by Sens. Isakson and Stabenow Incorporated into Larger Subsidy Bill
April 3, 2008
A recent Tax Foundation Fiscal Fact analyzes two new housing credits proposed by Sens. Johnny Isakson (R-GA) and Debbie Stabenow (D-MI). Faced with a choice between the two bad housing credits, the Senate merged the two and added several more unwise housing tax incentives.
“The bill of housing incentives going to the floor of the Senate today is a panicky effort to artificially keep the housing bubble from popping,” commented Gerald Prante, Tax Foundation senior economist. “Would it have been wise in 2001 for the government to have given tech stock investors a huge tax credit for having bought overvalued stock during that bubble?”
Sen. Isakson had proposed a $5,000 tax credit that could be claimed for three years by buyers of homes that are vacant, occupied but in default, or foreclosed on. Sen. Stabenow had proposed a refundable, one-year credit of $6,000 ($3,000 for singles) for first-time homebuyers. The bill sent to the floor includes a $7,000 one-year credit for buyers of homes in foreclosure. On top of that provision, the Senate has added a “standard property tax deduction” of $1,000 for couples or $500 for singles.
“The regular standard deduction currently claimed by non-itemizers is already designed to include a property tax deduction,” pointed out Prante. “If Congress wants to raise the standard deduction, they should just do that for everyone. They’re acting as if renters are living on Easy Street.”
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