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Friday, January 25, 2008

Tax credit for buying a home: bonehead idea

Some might say that it's America's fascination with home ownership that has got us into the current financial mess. Others would say, let's get in deeper.

The Chicago Tribune reports

"James M. Weichert, president of Weichert, Realtors, a national brokerage, suggests that one way to stimulate the economy would be to offer a tax credit to people who buy homes. He has been meeting with officials of the National Association of Realtors to discuss a congressional strategy for the proposed tax credit...

"The fastest and most logical way to economic recovery would be to provide an incentive in the form of a tax credit to home buyers to re-energize the housing market..."


One can only imagine the brainstorming session that led to this:

JW: "Hey, what if we make mortgage interest deductible?"

Others: "We already do that."

JW: "Hey, how about if we make ONLY mortgage interest deductible, and not credit card interest or auto loans."

Others: "We got that passed during the Carter administration."

JW: "So we did. How about capital gains? Instead of paying capital gains when you sell a house -- the way you have to with stocks -- let's defer the capital gains so long as you use the money to buy an EVEN BIGGER house."

Others: "We already do that."

JW: "Well, suppose you NEVER have to pay capital gains taxes so long as you stay in a house until you are a senior citizen?"

Others: "Yeah, we got that passed a few years ago."

JW: "Wow. You guys make it tough. What if we made the government pay for part of your house -- like the government would send you part of the money to pay for it, when you pay your taxes."

Others: "So the government would own a percentage of your house?"

JW: "That would be logical, but suppose we think of it as a gift, instead, from your Uncle Sam, to the real estate industry ... I mean the patriotic American people. After all, it's an election year."