According to the Internal Revenue Service, more than 1.5 million claims have already been processed from individuals and families who have purchased a home between January and September 2009, and the National Association of Realtors estimates that some 350,000 of these buyers would not have purchased the home without the tax credit. This means that the original First Time Home Buyer Tax Credit has “cost” Uncle Sam approximately $12 billion per the IRS’ figures.
If we take the 350,000 homes that NAR says were purchased because of the credit all by themselves and multiply this by the $63,000 per home that most agree with as the economic benefit to the economy of each home sold, the tax credit through generating more home sales has actually put $22 billion back into the economy! Is it working? Based on these figures you would have to agree that the credit is stimulating the economy. I read too many pieces that delve into the “cost” without ever putting together what benefits have been derived from the credit. This tax credit is without question doing more to contribute to the economy than any other so-called stimulus that our Federal government has come up with thus far.
Now keep in mind, this current Tax Credit that now expires with homes that go under contract between now and April 30, 2010, is said to be the last and only extension. We need to be “fiscally responsible” as our Congressmen put it. What a joke. Giving Americans back money they earned to begin with and paid into the tax system rather than our government spending it on “pork” is about the most fiscally responsible thing we can do.
Get ready, get set, go!
Analysts say that more than two-thirds of all homeowners and obviously just about all first-time buyers are eligible for the credit extension.
Just a note, even if the $63,000 figure that most economists agree with as being the benefit of the “ripple” effect of one housing unit selling is debatable, I would counter that even if one chopped that number in half, if we added roughly the same money to the U.S. economy as money Uncle Sam handed out to tax payers in the form of tax credits, it still makes a sizable impact on the economy. I would also argue that handing $12 billion back in the form of tax credits this year will have untold potential impact in adding economic benefit as well because people have more money in their pockets to spend. This too is something that most don’t take into consideration. That is, that putting $12 billion back in the pockets of consumers will most likely be spent! Either way you slice it, this Tax Credit has huge future potential at driving the U.S. economy.
