The graphic above is from an article headlined “Real Estate Sector Cheers Tax Credit” (You bet they are cheering. The real estate sector lobby essentially wrote the legislation) from today’s Wall Street Journal.
A key difference:
the Senate tax credit is nonrefundable, it wouldn’t benefit buyers who don’t owe any income tax or who have a low tax liability.
A non-refundable tax credit means that people won’t be getting a check for the difference between the credit and their actual taxes paid. That is a reason to support the Senate version – A tax credit is one thing, but mailing people government checks to buy a home qualifies as a not-great idea.
I am also skeptical in the extreme that whatever tax credit passes will have any measurable impact on home prices. So if someone would please remind me why we are spending up to $39 billion to essentially do nothing but provide a windfall to mostly already decided homebuyers (who should absolutely take advantage if it passes. I am just saying.) I’d be obliged.
· Real Estate Sector Cheers Tax Credit [WSJ.com]