Porktown
MyWar
The EITC should be permanent. If republicans actually cared about tax relief for working people with families, they wouldn’t have blocked it in the senate.
Democrats also need to bring back Obama’s first time homebuyer tax credit.
You can quibble over deductions or whatever all you want. But this is the kind of tax policy that makes a HUGE difference for people that are either struggling or just starting out.
I agree on the EITC.
For the first time homebuyer, let me say that I feel for them. Anyone buying a home right now for that matter. I think that first time homebuyer tax credit right now would end up being devastating for most people taking it in the long run though. The housing market is in a clear bubble that will eventually burst, probably soon. Which would end up trapping thousands of younger Americans in homes that aren't worth their mortgages. A $5-$10K credit would be nothing to how much down they would be after interest rate accrual. Which is the case of just about anyone buying a house right now IMHO, minus getting that credit. That program would artificially push values even higher for a while too, from even more demand and less supply. Just about every home in the USA is currently overvalued, following historical trends, due to fall out from the pandemic. Maybe since the pandemic was truly an enormous economic altering event, residential home values may buck historical value trends? Increased remote work possibilities had many people moving to larger homes increasing demand, interest rates rose to stunt inflation, corporations and others buying residential property for investment, especially with the boom of short term rentals. Add that to the aging population, with many elderly holding onto the in demand larger family homes due to what they would get in return if sold. People don't want to sell their homes that they have maybe 10-15 years left of a 3% rate to pick up a 7% rate. I am sure you know the difference in terms of a monthly payment of those rate differences on the same value home. Sure, they may make a killing on their capital gains, but when they look at trying to upgrade, the costs with higher mortgages aren't even close to being worth it. Also factor in that many areas of the country, average homes go over the capital gains limit of $500K primary residence and lose a lot of their profit in taxes. Even in PA, Grandma sells her 4 bedroom home for $400K to get a 2 bedroom. But then finds out that the lovely $300K 2 bedroom ranch after closing fees, realtor, etc. eats up most if not all of her $400K. If she didn't fully own the last home and ending her 3% mortgage to take on a 7%, then she is actually paying more to downsize. The market just needs to sort this out and will eventually. I think a program like this would be throwing gas on a fire, to be completely honest. I would like to see more of a push to banning corporate ownership of residential homes and possibly apartment buildings under a certain size. Limits on short term rental properties (with incentives for those owning to sell). Something that goes at the root of the problem.
Edit (meant to say apartments under a certain size for corporate ownership). I also think the short term rentals would need to be handled on a localized basis. I see nothing wrong with them at vacation destinations, as many already had been. A lake house, beach house, place to stay near amusement parks or other attractions, cabin in the woods, etc. I really don't know what a cutoff could be, but handled locally with help through the federal government on tax incentives. I just know they are factoring into the shortage of residential housing. For incentives, capital gains removed or reduced (since not primary residence) and possibly some form of incentive to sell if at a loss. Those putting up the risk and effort to buy these investment properties shouldn't have the rug pulled from under them.
Maybe. Maybe not.
One thing about the Obama home buyer tax credit is that not all home buyers are eligible, only first time home buyers. So it wouldn’t have a broad impact across all segments of the housing market, it’s more aimed at younger people starting out.
It may also provide incentive for people to buy a house that needs renovation instead of something flipped and more move in ready. That was definitely the case for me when I bought my place in 2009. Between the home buyer tax credit and some energy tax credits, I was able to replace almost every window in the house, get a new furnace and replace all my old knob and tube wiring at basically no out of pocket cost. To be fair, I did a lot of the work myself, but that cash helped ALOT with the cost of materials. I can honestly say that I don’t know if I would have ever bought a house if it wasn’t for that program, and it turned out to be one of the best decisions I ever made.
You’re not wrong about a home buyer tax credit doing nothing to address the underlying housing supply shortage. But at the same time I don’t think it’s going to blow the market up by itself since it’s a bit more targeted. As part of a multi prong approach to address the housing crisis, I think it’s good policy. I think we need to do some other things like relax zoning restrictions, but your post was about tax policy, so I thought it was relevant