Prospective homebuyers were deeply disappointed when the $15,000 tax credit for homebuyers was removed from the final version of the economic stimulus package and replaced with a much more modest $8,000 tax credit, available only to first-time buyers.
But that $15,000 package may not be off the table just yet. Senator Johnny Isakson, the Georgia Republican who sponsored the amendment, says the credit might yet yet find its way into law as a stand-alone bill. "Quite frankly there is so much outward support for what we did ... that I wouldn't at all be surprised if you didn't see it come back in some form with a Democrat's name on it," he told the Atlanta-Journal Constitution.
While the idea of using such an enormous credit to artificially prop up housing seems crazy, it's actually probably smarter than a lot of other ideas that made it into the stimulus bill. The administrative costs of a tax credit are essentially zero, compared with layers and layers of bureaucracy associated with so many of the other projects that did make their way into the final package.
The tax credit -- which was 10% of the purchase price up to $15,000 -- would have essentially offered Americans 50% of the down payment on a home worth as much as $150,000.
It's expensive, but it does a lot more for ordinary people than tossing money at AIG and Bank of America so that they can pay bonuses. Bring it back!
$15,000 homebuyer tax credit could come back on its own