Howard Gleckman bashes the homebuyer tax credit:
The credit-induced artificial deadline has helped create a toxic brew of hungry real estate agents, ravenous mortgage brokers, desperate sellers, and frantic and inexperienced buyers. We learned what happened with Homebuyer Credit I. That tax subsidy led to massive fraud (including a large fraction of people claiming the credit who never bothered to buy a house). It also produced both a rush to buy before it (almost) expired last fall, and the inevitable sag in sales that followed.
As my Tax Policy Center colleague Ted Gayer has noted, 85 percent of those who took last year’s credit would have purchased anyway, and the credit merely encouraged them to buy a few months sooner. As a result, Ted estimated it cost the government about $43,000 for each additional sale.
My bet is this year will be more of the same.
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