Did Ron Paul Just Introduce An Extension To The Homebuyer Tax Credit?

[bobbyw24]

IS THIS TRUE???


Given Ron Paul's thorough opposition to the government's meddling into the economy, and the government's inclination to blow bubbles (like housing), we're thoroughly perplexed by this. The Congressmen from Texas is pushing for an extension to the homebuyer tax credit.

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Washington, D.C. - Congressman Ron Paul (TX-14) today introduced legislation to permanently extend the first-time homebuyer tax credit and to make the credit available to people whose homes have been destroyed by a natural disaster, such as a hurricane.

The legislation also makes a number of changes to existing tax credits in order to enhance their usefulness to victims of natural disasters. Specifically, this bill makes casualty loss deductions available to taxpayers who do not itemize, and makes it available to them for five years after the disaster. This legislation also helps people who have lost their jobs because of a natural disaster by making unemployment payments provided under the Disaster Relief and Emergency Assistance Act tax free.

Renewing the first-time home buyer’s credit will help Americans purchase a first home with their own money, instead of having to rely on government-funded or backed programs.

The other sections of this legislation were inspired by conversations Congressman Paul and his staff had with constituents who had to purchase new homes because Hurricane Ike destroyed their prior homes. The first-time homebuyer’s tax credit could be of tremendous value to these people, yet the law denies them the credit because they are replacing destroyed homes.

“It is hard to think of a more beneficial or compassionate expansion of the first-time homebuyer tax credit than to make the credit available to those whose homes have been destroyed or damaged by natural disasters,” stated Congressman Paul. “In addition, the changes to the casualty loss provision will help more taxpayers affected by natural disasters. Providing tax relief to first-time homebuyers and to those affected by natural disasters should be one of Congress’ top priorities.”

http://www.businessinsider.com/wait-why-did-ron-paul-of-all-people-just-introduce-an-extension-to-the-homebuyer-tax-credit-2010-5

[AuH20]

Jeez. He's playing local politics. Disappointing.

[Deborah K]

Given that the gov't steals our money through taxation of our wages, any manner in which to retain some of OUR money only seems fair.

[dannno]

Given that the gov't steals our money through taxation of our wages, any manner in which to retain some of OUR money only seems fair.

Ya, why the hell should the government be taxing ANYBODY, but ESPECIALLY people whose homes were destroyed in natural disasters??



Providing tax relief to first-time homebuyers and to those affected by natural disasters should be one of Congress’ top priorities.

Providing tax relief to ANYBODY in ANY FORM should be one of Congress' top priorities. The more the better.

[Legend1104]

One thing we have to realize is that, if this is true, it is not the same as a stimulus. It seems that his legislation is aimed specifically at helping those that are affected by natural tragedies. This seems to be ment as gov. relief not as stimulus. These people are not people asking for handouts because they are lazy, but rather those that worked hard but had their homes destroyed through no falt of their own. Plus it is a tax credit which gives people back their money.

[Kludge]

Last year I believe it was, Ron introduced legislation very similar to Cash for Clunkers. I can't search for it at this "computer," but there was a lot of outrage and I was perplexed at the time, too. I ended up confused enough that I asked one of his aides what he was thinking - as I recall, it was just populist legislation which "wasn't his favorite bill" but I'll have to look that all up again some day.... I'm not very sober ATM.

[bobbyw24]

One thing we have to realize is that, if this is true, it is not the same as a stimulus. It seems that his legislation is aimed specifically at helping those that are affected by natural tragedies. This seems to be ment as gov. relief not as stimulus. These people are not people asking for handouts because they are lazy, but rather those that worked hard but had their homes destroyed through no falt of their own. Plus it is a tax credit which gives people back their money.

good points

[TheBlackPeterSchiff]

Didn't Ron Pauls district get wiped out by Hurricane Gustav??? Geez, what do you expect the guy to do?

[freshjiva]

Um, hello? This is a tax credit he's introducing. TAX CREDIT! That means, if passed, people will be paying LESS TAXES. How is this against anything he has ever stood for?

Remember, folks, tax credits are not the same as stimulus or subsidies. A tax credit reduces your taxable income, which means you pay less taxes. Stimulus/subsidies means government spends money to prop up businesses and/or sectors of the economy.

See the difference?

[AuH20]

Um, hello? This is a tax credit he's introducing. TAX CREDIT! That means, if passed, people will be paying LESS TAXES. How is this against anything he has ever stood for?

Remember, folks, tax credits are not the same as stimulus or subsidies. A tax credit reduces your taxable income, which means you pay less taxes. Stimulus/subsidies means government spends money to prop up businesses and/or sectors of the economy.

See the difference?

However, it's a first-time home owner credit. Ron is pushing the same irresponsible policies Obama did. I don't see any silver lining in this bill. He's playing local politics to my chagrin.

[MelissaWV]

Someone's got to do something for TN...

I'm with the others on the fact that this is a tax credit, and it at least helps out people who are just starting out (or have to change homes due to, say, a natural disaster). Hopefully the language outlining the qualifications is not too crazy. I'd hate for this to be yet another thing that people have to jump through hoops to get in the aftermath of something tragic.

[Kludge]

Um, hello? This is a tax credit he's introducing. TAX CREDIT! That means, if passed, people will be paying LESS TAXES. How is this against anything he has ever stood for?

Remember, folks, tax credits are not the same as stimulus or subsidies. A tax credit reduces your taxable income, which means you pay less taxes. Stimulus/subsidies means government spends money to prop up businesses and/or sectors of the economy.

See the difference?

I would understand if Ron wanted to eliminate taxes if he were an anarchist, but I've been told very very often that is not the case.

Ron does believe there is a role for government - I'm told - but then, I suppose Ron opposes the Income Tax, which is what this credit seeks to circumvent, not all "legitimate" taxes.


Edit: soo..... I guess..... If Ron's policies will bring on the collapse of the current US czarist regime faster... reducing money for military and increasing private wealth... more power to him!

[Brooklyn Red Leg]

Nice to see some people confuse getting the government OFF our backs (tax breaks) with government stealing our money at gunpoint (taxation/stimulus). :rolleyes: Give me a fucking break!

[AuH20]

The government is wrongfully enticing ignorant individuals to purchase homes they cannot afford. If an 8000 dollar tax credit is the deciding factor in one's thought process to purchase a home in excess of 300k, they have some issues given the looming instability of our interest rate situation. Ron is indirectly contributing to bad behavior with this extension.

[Epic]

Guys, this has been his policy throughout his career. He's vote for tax breaks on anything.

I actually would rather this didn't happen. I want taxes to be uniform and as low as possible.

But this SAME debate breaks out on the forums every 3 months or so. It doesn't need to happen again.

The bottom line is that in a statist society, the libertarian is always caught in a catch 22. It's either let people keep more of their money, or distort the market. In statist systems, libertarians never win.

[MelissaWV]

The government is wrongfully enticing ignorant individuals to purchase homes they cannot afford. If an 8000 dollar tax credit is the deciding factor in one's thought process to purchase a home in excess of 300k, they have some issues given the looming instability of our interest rate situation. Ron is indirectly contributing to bad behavior with this extension.

Tax credits do not lower your projected mortgage (monthly) payment. If someone is going to buy a $300,000 home (no idea where you're even getting that number), the price and payments are the same with or without the tax credit. The bad behavior is going to exist, regardless, and $8,000 is really unlikely to make someone who isn't thinking of buying a home... go out and do so. It is, however, a nice chunk of a tax credit for those buying their first home in really tough times, and it's certainly a nice leg-up for those who've been wiped out by a disaster without the proper insurance (like what's going on in TN).

[dannno]

The government is wrongfully enticing ignorant individuals to purchase homes they cannot afford. If an 8000 dollar tax credit is the deciding factor in one's thought process to purchase a home in excess of 300k, they have some issues given the looming instability of our interest rate situation. Ron is indirectly contributing to bad behavior with this extension.

You should really learn the difference between government backing loans and handing out subsidies vs. tax breaks.

I know somebody who is receiving a $10k subsidy for a first time buyer credit.. that is money in their pocket just for buying a house, regardless of whether they work or how much they make. That is not the same as giving them a tax break...

[RCA]

I don't agree with a "first time" home buyer's credit. I do however, agree with a credit for ANY home buyer.

[AuH20]

Tax credits do not lower your projected mortgage (monthly) payment. If someone is going to buy a $300,000 home (no idea where you're even getting that number), the price and payments are the same with or without the tax credit. The bad behavior is going to exist, regardless, and $8,000 is really unlikely to make someone who isn't thinking of buying a home... go out and do so. It is, however, a nice chunk of a tax credit for those buying their first home in really tough times, and it's certainly a nice leg-up for those who've been wiped out by a disaster without the proper insurance (like what's going on in TN).

Yes, you and I know this. The average person rationalizes otherwise or altogether doesn't care because they see the $8000 as free money instead of a rapidly depreciating token. I've read article after article when the first homeowner tax credit was unveiled, how this "gift" was the primary determining factor in buying a home. You have people with practically "little to no money down" mortgage deposits buying homes because of a measly tax credit? Ron is subsidizing bad behavior, throwing the "it's their money" semantics out the window.

[Kludge]

I don't agree with a "first time" home buyer's credit. I do however, agree with a credit for ANY home buyer.

I'd be interested in seeing how you justify this? You believe unfairness is okay so long as it only benefits home-buyers and not renters?

.... Or do you just hate the poor? :p

[RideTheDirt]

I'm so outraged that Ron Paul wants people to pay less taxes111!!!1!:rolleyes:

[AuH20]

I'm so outraged that Ron Paul wants people to pay less taxes111!!!1!:rolleyes:

That's not really the crux of the discussion. Ron supposedly abhors predatory lending practices and loose money policies, yet signs off on a policy which is directly dependent on such precepts? Huh? I love Ron Paul and what he stands for, but when he's decisively wrong, I'm going to voice my opposition.

[RCA]

I'd be interested in seeing how you justify this? You believe unfairness is okay so long as it only benefits home-buyers and not renters?

.... Or do you just hate the poor? :p

What you're talking about is ending all taxation for everyone, which I support. However, the topic at hand is home buyers, hence my limitation to tax credits for all home buyers. If the subject turned to big screen tv buyers, then I would also support tax credits for all big screen tv buyers and so on and so on.

[RideTheDirt]

That's not really the crux of the discussion. Ron supposedly abhors predatory lending practices and loose money policies, yet signs off an policy which is directly dependent on such precepts? Huh? I love Ron Paul and what he stands for, but when he's decisively wrong, I'm going to voice my opposition.
Sorry, but no matter how hard you try you won't convince me that less tax = bad.

[freshjiva]

That's not really the crux of the discussion. Ron supposedly abhors predatory lending practices and loose money policies, yet signs off an policy which is directly dependent on such precepts? Huh? I love Ron Paul and what he stands for, but when he's decisively wrong, I'm going to voice my opposition.

I still don't understand your argument here, AuH. This tax credit Ron is proposing lowers taxable income for first-time homebuyers. Tax credits have nothing to do with supporting predatory lending practices. How do you connect the two?

The bottom line is that tax credits lower your taxes. Sure, there are conditions (you have to be a first-time homebuyer) but its still a tax credit. It only helps, even if it is just for a few people. Still better than nothing.

[AuH20]

I still don't understand your argument here, AuH. This tax credit Ron is proposing lowers taxable income for first-time homebuyers. Tax credits have nothing to do with supporting predatory lending practices. How do you connect the two?

The bottom line is that tax credits lower your taxes. Sure, there are conditions (you have to be a first-time homebuyer) but its still a tax credit. It only helps, even if it is just for a few people. Still better than nothing.

The tax credit is a lure for home purchasing. It's a catalyst for a sordid chain of unsound economic activity IMHO. That's what I object to. It's as phony as cash for clunkers.

[freshjiva]

The tax credit is a lure for home purchasing. It's a catalyst for a sordid chain of unsound economic activity IMHO. That's what I object to. It's as phony as cash for clunkers.

And so you believe the federal government should keep taxes the way they are to discourage people from buying million dollar homes when they make $40,000/yr, right? Taxes protect us from making bad financial decisions! Government knows better than we do! Brilliant!

Good luck selling that point on this forum.

[AuH20]

And so you believe the federal government should keep taxes the way they are to discourage people from buying million dollar homes when they make $40,000/yr, right? Taxes protect us from making bad financial decisions! Government knows better than we do! Brilliant!

Good luck selling that point on this forum.

Don't reverse the argument on me. The government and the Federal Reserve encourage extreme levels of usury in order to increase their bottom line (in the the case of the Fed and it's member banks ) and buy votes. They prey on the ignorance of the populace to accept these unmaintainable agreements before finally foisting the built-up, aggregate debt onto the backs of the taxpayer. There is no such thing as a "tax credit", until you separate these massive institutions from the government tit.

[Knightskye]

This is social engineering.

I realize he wants to please his constituents, but incentivizing home-buying?

This is coming from the expert on blowback.

[nandnor]

for **** sake guys lower taxes dont create bubbles, dont fall for this shit(and neither do govt insured whatever fannie freddie etc). what creates is the lower interest rates signalling high order capital & long payment consumer good production. Austrian Economics.

[kahless]

Don't reverse the argument on me. The government and the Federal Reserve encourage extreme levels of usury in order to increase their bottom line (in the the case of the Fed and it's member banks ) and buy votes. They prey on the ignorance of the populace to accept these unmaintainable agreements before finally foisting the built-up, aggregate debt onto the backs of the taxpayer. There is no such thing as a "tax credit", until you separate these massive institutions from the government tit.

The government stole thousands of dollars from me in taxes but because of Ron Paul I may get some of that money back that I can use towards buying a home. This is not a mortgage credit it is a tax credit. The money they robbed from me that I busted my ass for I will now get a small fraction of it back to use towards possibly a mortgage free or low mortgage home.

Even if the buyer is going to have a mortgage it is completely assanine to believe this small tax credit will force people to take on a mortgage they cannot afford. But you are against this?

[AuH20]

This is social engineering.

I realize he wants to please his constituents, but incentivizing home-buying?

This is coming from the expert on blowback.

Exactly. It's the aiding and abetting of socialism. More mortgages get thrown onto the back of Fannie Mae and Freddie Mac when these 2 overwhelmed organizations barely can make their interest payments. Ron obviously knows everything of which I outlined but still couldn't resist the urge to play Santa Claus with his constituents. Ron Paul needs his head examined to push reckless home ownership in a perilous economic climate such as this.

[Southron]

I am definitely against this.

For one it encourages home buying "while you can still get free money".

And second it drives up the price of housing.

This is using the tax code to encourage certain behavior. And as long as we keep printing more money it's not just a tax break but future inflation.

[ARealConservative]

:confused:

[TinCanToNA]

However, it's a first-time home owner credit. Ron is pushing the same irresponsible policies Obama did. I don't see any silver lining in this bill. He's playing local politics to my chagrin.

"First time home buyer" doesn't mean it's your first time buying a home. Remember, it was created by Congress, so it means whatever they want it to mean. In this case, anyone is a "first time home buyer" if they haven't purchased a home in three years, if I recall correctly.

[Danke]

^ So much ignorance. Tax Credits just shift the burden. Spending cuts is what will reduce taxation.

[kahless]

For one it encourages home buying "while you can still get free money".

Free money my ass. That is just a tiny fraction of the money they stole from me. If they did not rob me of it in the first place I would have brought years ago.

Thank God Ron Paul's views are not reflective of allot the bullshit I read in these forums. This thread sounds an awfully like I am reading the Daily Kos. Progressives worshiping an the altar of more taxes and not getting anything those bastards stole from me back.

[AuH20]

Free money my ass. That is just a tiny fraction of the money they stole from me. If they did not rob me of it in the first place I would have brought years ago.

Thank God Ron Paul's views are not reflective of allot the bullshit I read in these forums. This thread sounds an awfully like I am reading the Daily Kos. Progressives worshiping an the altar of more taxes and not getting anything those bastards stole from me back.

The tax credit you're receiving is CONTINGENT upon you purchasing a home. Your tax money is not being reciprocated despite this misconception. It's a coercive act by the government for you to purchase a home in a renter's market. That's the huge catch involved, especially if you lock in with a variable rate mortgage.

[freshjiva]

The tax credit you're receiving is CONTINGENT upon you purchasing a home. Your tax money is not being reciprocated despite this misconception. It's a coercive act by the government for you to purchase a home in a renter's market. That's the huge catch involved, especially if you lock in with a variable rate mortgage.

Ok, let's play a little logic game here. Bear with me for 60 seconds.

Since you're posting on RonPaulForums.com, I assume you are a supporter of Ron Paul. Since you are a supporter of Ron Paul, I assume you agree with something he has argued for years: ending the income tax.

So far so good? Yes?

By your logic, then, it would follow that if the federal government shut down the IRS and ended the income tax once and for all, you'd call it a "coercive act by the government" because zero income taxes might encourage people to start spending money, because disposable income would rise significantly. You'd then have retail sales go through the roof, thereby "inflating" (by your logic) the retail market. That would send sales of suppliers up, increase demand for raw materials, which in turn would increase the demand for credit and make the banks rich. By your logic, an abolition of the income tax is a "coercive act of government" because it would inflate virtually every sector of the economy.

Hence, you're opposed to abolishing the income tax.

Do you follow where I'm going with this?

[peacepotpaul]

Providing tax relief to ANYBODY in ANY FORM should be one of Congress' top priorities. The more the better.

what if it's unfair or disproportionate?

[low preference guy]

Ron will vote for any and all tax cuts that are offered.

He's always voted that way, and it's the right way to vote.

[peacepotpaul]

Ok, let's play a little logic game here. Bear with me for 60 seconds.

Since you're posting on RonPaulForums.com, I assume you are a supporter of Ron Paul. Since you are a supporter of Ron Paul, I assume you agree with something he has argued for years: ending the income tax.

So far so good? Yes?

By your logic, then, it would follow that if the federal government shut down the IRS and ended the income tax once and for all, you'd call it a "coercive act by the government" because zero income taxes might encourage people to start spending money, because disposable income would rise significantly. You'd then have retail sales go through the roof, thereby "inflating" (by your logic) the retail market. That would send sales of suppliers up, increase demand for raw materials, which in turn would increase the demand for credit and make the banks rich. By your logic, an abolition of the income tax is a "coercive act of government" because it would inflate virtually every sector of the economy.

Hence, you're opposed to abolishing the income tax.

Do you follow where I'm going with this?

are you suggesting that ending income tax (or other major forms of taxation), would be the same as printing money, which would increase money in circulation, inflation, and depreciate the purchasing power of our dollar?

[kahless]

The tax credit you're receiving is CONTINGENT upon you purchasing a home. Your tax money is not being reciprocated despite this misconception. It's a coercive act by the government for you to purchase a home in a renter's market. That's the huge catch involved, especially if you lock in with a variable rate mortgage.

The government is bailing out home owners, lenders and an entire financial industry that did not play by the rules. That should not have ever happened and is fair game for criticism that Ron should focus his attack on. However in this case here is a tax cut for first time home buyers. Those that can afford a home that are playing by the rules that will get some of their own tax money back.

I agree that I would rather see a tax cut without it being contigent on purchasing a home but I am not going to bitch about this kind of middle class tax cut. Middle class tax cuts should be the last thing we should be criticizing and is not a way to win an election.

[BlackTerrel]

Ron will vote for any and all tax cuts that are offered.

He's always voted that way, and it's the right way to vote.

Ditto. This bill takes money away from the government and to the people. Why is that a bad thing?

[AuH20]

Ok, let's play a little logic game here. Bear with me for 60 seconds.

Since you're posting on RonPaulForums.com, I assume you are a supporter of Ron Paul. Since you are a supporter of Ron Paul, I assume you agree with something he has argued for years: ending the income tax.

So far so good? Yes?

By your logic, then, it would follow that if the federal government shut down the IRS and ended the income tax once and for all, you'd call it a "coercive act by the government" because zero income taxes might encourage people to start spending money, because disposable income would rise significantly. You'd then have retail sales go through the roof, thereby "inflating" (by your logic) the retail market. That would send sales of suppliers up, increase demand for raw materials, which in turn would increase the demand for credit and make the banks rich. By your logic, an abolition of the income tax is a "coercive act of government" because it would inflate virtually every sector of the economy.

Hence, you're opposed to abolishing the income tax.

Do you follow where I'm going with this?

You're comparing apples to oranges. Any elimination of the income tax would allow the free market to operate as it was intended. Conversely, the entire mortgage industry in this country is backed by a socialistic institution and it's inherently insolvent nature is facilitated by the Federal Reserve. Over 90% of the mortgages in this country are held by the quasi-federal entities known as Fannie Fae and Freddie Mac. Thanks to this highly recognizable moral hazard, realtors and banks were fully aware they could flout underwriting rules, sell made-to-default mortgages and still collect their fees. Of course, not be outdone, our friends at such fine upstanding firms like Goldman Sachs recognized an opportunity to package together these toxic loans into AAA bonds, which they sold all over the world to hungry pension funds and private equity outfits. The question is? Are we continuing to adhere to their crooked rules and simply give them exactly what they want? They want high home prices. They want increased borrowing. They want FM/FM to be a "too big too fail" wasteland for defaulted mortgages, while they cash out on the sidelines. Who do you think is on the hook for FM/FM's bloated balance sheet?

[bighairycaveman]

He'll probably still vote against the bill, even if he does introduce it.

[freshjiva]

are you suggesting that ending income tax (or other major forms of taxation), would be the same as printing money, which would increase money in circulation, inflation, and depreciate the purchasing power of our dollar?

No, what I'm saying is that tax cuts do not distort nor coerce the market; rather, the very existence of taxes are what distort the market.

ANY reduction in taxation yields a truer free market. The closer we get to zero taxes, the closer we move towards a truly free market.

[Jordan]

No, what I'm saying is that tax cuts do not distort nor coerce the market; rather, the very existence of taxes are what distort the market.

ANY reduction in taxation yields a truer free market. The closer we get to zero taxes, the closer we move towards a truly free market.

Not really. Actually, not at all.

All you're doing is distorting the marketplace even more by subsidizing 1 thing and placing a greater burden on another, or everything else that isn't subsidized.

This is the only complaint I have with Ron. I wish he'd just work to lower taxes equally and across the board rather than voting for a credit here, a credit there.

Also, this isn't really a tax cut. Let's be real. It gives you money for buying a home, and yes, it is refundable. It encourages an action. It is a subsidy.

[Philmanoman]

I keep hearing 1st time home owners are on the rise...I havent looked myslef...but if this is true...the people are going to be buying houses regardless if this bill passes or not,I doubt it will have little to no effect on numbers rising.Maybe I have it wrong but sounds like even if they default on the loan,its like a fart in the wind.Will it even matter?

[Jordan]

I keep hearing 1st time home owners are on the rise...I havent looked myslef...but if this is true...the people are going to be buying houses regardless if this bill passes or not,I doubt it will have little to no effect on numbers rising.Maybe I have it wrong but sounds like even if they default on the loan,its like a fart in the wind.Will it even matter?

You wouldn't be more likely to buy a home if you got $8,000 back from the government for doing so?

[Southron]

You wouldn't be more likely to buy a home if you got $8,000 back from the government for doing so?

That's more than many down payments!:eek:

[Philmanoman]

Arent there already a buttload of policies in effect right now that encourage that already?Record low interest rates is one I can think of.

[Jordan]

That's more than many down payments!:eek:

Not to mention you could use the tax credit AS a down payment.

So, no cash? No problem! Buy a home that is under $266,000 and you'll have enough to qualify for an FHA loan that requires a 3% down payment.

Its messed up, I know.

[brandon]

Not really. Actually, not at all.

All you're doing is distorting the marketplace even more by subsidizing 1 thing and placing a greater burden on another, or everything else that isn't subsidized.

This is the only complaint I have with Ron. I wish he'd just work to lower taxes equally and across the board rather than voting for a credit here, a credit there.

Also, this isn't really a tax cut. Let's be real. It gives you money for buying a home, and yes, it is refundable. It encourages an action. It is a subsidy.

Agree completely.

I think a lot of people don't understand the difference between a tax deduction and a refundable tax credit.

[freshjiva]

You're comparing apples to oranges. Any elimination of the income tax would allow the free market to operate as it was intended. Conversely, the entire mortgage industry in this country is backed by a socialistic institution and it's inherently insolvent nature is facilitated by the Federal Reserve. Over 90% of the mortgages in this country are held by the quasi-federal entities known as Fannie Fae and Freddie Mac. Thanks to this highly recognizable moral hazard, realtors and banks were fully aware they could flout underwriting rules, sell made-to-default mortgages and still collect their fees. Of course, not be outdone, our friends at such fine upstanding firms like Goldman Sachs recognized an opportunity to package together these toxic loans into AAA bonds, which they sold all over the world to hungry pension funds and private equity outfits. The question is? Are we continuing to adhere to their crooked rules and simply give them exactly what they want? They want high home prices. They want increased borrowing. They want FM/FM to be a "too big too fail" wasteland for defaulted mortgages, while they cash out on the sidelines. Who do you think is on the hook for FM/FM's bloated balance sheet?

And you, sir, beautifully described the 2008 banking crisis. What I want to point out, however, is that you're confusing fiscal policy, which concerns taxation and spending, with monetary policy, which concerns everything you described above: credit, inflation, and money supply.

You're right that the Fed's decade long policies distorted the free market, but this is because setting interest rates if a form of price fixing, where you dictate to the market the cost of credit. Tax cuts, however, lead to market behavior that naturally would have occurred had the taxes not been instituted in the first place. It is what we call 'organic growth', not artificial growth due to price fixing.

Tax cuts invariably lead towards a freer market, even if they are directed towards a particular segment of the economy.

[freshjiva]

Not really. Actually, not at all.

All you're doing is distorting the marketplace even more by subsidizing 1 thing and placing a greater burden on another, or everything else that isn't subsidized.

This is the only complaint I have with Ron. I wish he'd just work to lower taxes equally and across the board rather than voting for a credit here, a credit there.

Also, this isn't really a tax cut. Let's be real. It gives you money for buying a home, and yes, it is refundable. It encourages an action. It is a subsidy.

For the 10th time, this is NOT a subsidy. Do you understand the difference between subsidies and tax credits? Subsidies require government spending to artificially drive down the out-of-pocket expense for the consumer. Tax credits reduces your tax liability to Uncle Sam. It means less government, not more! If cutting taxes encourages homebuying, so be it! It's organic! What's not organic is setting artificially low interest rates, giving zero-interest loans to big banks via the Discount Window, and escalating the money supply to monetize debt. The Fed's actions are coercive, NOT tax credits.

Sheesh...I didn't know we had so many people against tax reductions on RPF.

[No1ButPaul08]

This is such BS. If you pay $5000 in taxes and qualify for the $8000 credit that means you get $3000 of other people's money. Transfer of wealth pure and simple.

[Jordan]

Do you understand the difference between subsidies and tax credits? Subsidies require government spending to artificially drive down the out-of-pocket expense for the consumer.

Clearly you don't understand the difference. In this case there isn't a difference.

[Jordan]

Sheesh...I didn't know we had so many people against tax reductions on RPF.

I'd be all for an across the board tax reduction as well as a flat tax rate with no tax credits here and there.

Tax credits help drive down the cost and increase demand for certain products. We encourage people to buy homes, cars, windows, etc by offsetting some of the cost with a tax benefit.

Its stupid. A flat tax system is far better than $500 credits here, $200 credits there, $50 credits everywhere. You're just creating a market economy that functions differently than if it were truly free.

[kahless]

This is such BS. If you pay $5000 in taxes and qualify for the $8000 credit that means you get $3000 of other people's money. Transfer of wealth pure and simple.

Now, that part I agree is wrong. I had to go back and read it just to be sure. I however have not read the new bill to see if it has this detail.



12.I read that the tax credit is “refundable.” What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

[driege]

I'm very disappointed. Nobody in this forum would be defending this if it weren't Ron Paul. Oh well, nobody's perfect.

[AbstractDogma]

Hello everyone. First time poster, so I’ll make it short and sweet :P :P

First, this “tax credit” is also a partial subsidy in some cases. How?

The current $8,000 tax credit does not simply reduce the taxable income of the homebuyer, it reduces their TAX LIABILITY dollar for dollar. And furthermore, if the tax liability is below $8,000, the government subsidizes the difference.

For example, let’s take a single man who earns $45,000 per year, which is roughly the median household income in the US. After taking the standard deduction of $5,700 and, let’s say another $5,000 for miscellaneous deductions, that leaves a taxable income of around $34,300. Their tax liability would be $4,769.

Married couples making this same amount, taking their standard deduction and also another $5,000 would owe $3,459.

Now subtract their respective liabilities from $8,000. Single filers would get a “subsidy” of $3,231 and married couples get a “subsidy” of $4,541.

I’m not claiming my methodology here is scientific or is even all that accurate at estimating the big picture, I’m just pointing out a fact that people often overlook because they don’t understand all of the details of how the tax credit works. It’s also worth adding that the tax credit is 10% of the sales price of a home up to a maximum of $8,000. So that may help to trim some of the subsidies.

And regarding whether people are buying homes solely because of the $8,000 tax credit….In my experience, no (I’m in the biz). However, people will break their leases early, pull their kids out of school before summer and look for a home at a time that’s otherwise a little inconvenient based on their situation IF $8,000 is at stake. So many of the buyers closing in June, as well as many that are closing this month and quite a few that closed last month (many people misinterpreted the tax credit as ending April 30th because that was the deadline to obtain an executed purchase agreement) did so earlier than they would have if $8,000 had not been a factor. So the tax credit stole more buyers from the last two quarters of the year than it created IMO. Probably a lot more. I’m sure the gov’t is looking at the projections based on the decline in activity since the end of April and is getting more than a little nervous…

Perhaps Ron Paul justifies the tax credit by looking at it as the lesser of two evils. On one hand, you have a program that may cost tens of billions of dollars to continue, but it may help to at least sustain prices and prevent a huge spike in defaults, presumably until we start getting some positive news on the employment numbers. On the other hand, if prices were to start a rapid decline, how much would an additional wave of strategic defaults cost the taxpayers via additional losses at the GSEs? I donno, but their total liabilities are in the TRILLIONS. Like it or not, it’s the system we’re stuck with right now and that’s not going to change until a better system is created to take its place.

The government is at the helm of an airplane that has been out of control for many years now. We don’t want prices to rise because that would encourage another bubble, but we don’t want the market to stall because then we might nosedive into the ground and suffer though another feedback loop of defaults. At this point, I think they are just trying to keep the sights leveled until someone figures out how to fix the engines that are still on fire (the GSEs).

Here’s an idea. Perhaps mortgage securities should be pooled into groups and PRICED based on the location of the collateral (in addition to other risk factors that already exist). Allow investors to demand a higher rate of return for markets that start to show signs of unsustainable price inflation like Cali versus North Dakota where prices have almost always been stable. Screw what a rating agency calls “Triple AAA”. I want to see the data for each market and then buy those bonds based on how much risk I feel there is in the COLLATERAL losing value. Risk should be proportional to reward and that might help the markets to price in the risk associated with bubble areas more efficiently. In theory, the higher prices rose in any particular state, the higher mortgage rates would climb in that state, which would raise borrowing costs and cool off the market. Muni bonds aren’t pooled and sold on the national level. If your city has budget problems, their bond prices decline because there is a higher collateral risk that can be easily measured. Would anyone here pay the same for a muni bond issued from Detroit or Los Angeles as they would some farming town in Nebraska that’s always had a surplus?

Everyone wants to focus on the poor underwriting standards and the collusion by the rating agencies, the loosening of the fabric of common sense regulations, the ridiculously low rates and the flood of easy money from the Fed etc, etc. No doubt those were HUGE factors and they needed to change. The majority of the collateral value declines occured in FOUR STATES: Cali, Nev, Fla, Ariz. How might things have turned out differently had the market at least given investors this option? How might it turn out differently tomorrow if that were changed today?

Perhaps this could, at the very least, provide an opportunity to somehow start winding down the GSEs eventually. Perhaps it might even help a program such as this to better target areas where prices are not overvalued but the market itself is weak because of other factors. And less people would take the credit in markets where prices are rising because, in theory, borrowing costs would rise and some buyers would be priced out of the market. I think the government would have a much better chance of unloading bonds and winding down this system if a more specific geographic factor allowed the market to adjust bond pricing. Not to mention, I think it might allow some confidence in risk pricing to return to the market. We have to find a more rational solution to wind down this beast than just dropping it like a rock. If all govt support for the mortgage market vanished overnight, the cost of borrowing would skyrocket and the market would crash as it stands today. The losses would go through the roof. Kind of like how China can’t sell all our worthless paper without causing it to tank before they would have a chance to shove it out the door. Can’t dump trillions of dollars of bonds overnight but you can change the rating system to better reflect the underlying risk of the collateral.

I'm assuming someone already thought of this and decided it could not be done because of some X factor that i'm not thinking of that makes it impossible to impliment. If that's the case, I sure wish someone would point it out because it seems like a good idea to me.

Maybe I’m crazy but sure beats throwing them all in the same pile and calling them all AAA!

[Jordan]

Maybe I’m crazy but sure beats throwing them all in the same pile and calling them all AAA!

First, welcome to the forum.

Second, I digg the idea about packaging mortgages up by locality, quality, and collateral. However, the CDOs didn't get their AAA rating by being packaged up and inheriting some natural diversification. Instead they earned AAA because they were insured by AAA-rated firms like AIG.

The problem was those AAA-rated firms were so over-leveraged it took only a small decline in a hugely inflated market to blow them up. AAA isn't worth jack shit when you've got a few billion dollars liquid and $100 billion in possible liabilities. No one really cared, though. Why care? Real estate is going up forever! ;) :D

[BlackTerrel]

I'm very disappointed. Nobody in this forum would be defending this if it weren't Ron Paul. Oh well, nobody's perfect.

I wouldn't be defending it. But I probably wouldn't be attacking it either.

It's less taxes - you can argue the semantics - but that's what it is.

[Jordan]

I wouldn't be defending it. But I probably wouldn't be attacking it either.

It's less taxes - you can argue the semantics - but that's what it is.

What if tomorrow Congress passed 20,000 tax credits. $.50 for candy bars, $2 for cigarettes, $1,000 for buying a car, etc. Every product out there, every market action, everything earns a new tax credit.

You can't possibly say that would be a good thing. Sure, it would result in less taxation, but businesses would be scrambling to shift resources to fit the new economic mold that Congress created.

This is why I advocate flat taxes. Unlike government spending that accounts for roughly 25% of the GDP, and is spent how legislators see fit (which we can agree is entirely different than how 300,000,000 market actors would allocate the same amount of money), tax incentives affect/reallocate/subsidize/penalize nearly 100% of the economy.

[TulsaRevolution]

An $8000 tax credit for a new home. The price of an average new home, while dropping in price, is still around $250,000.

How much tax does the federal government levy on the entire process of building the home, from the manufacturing of the supplies (and income/profits of those), to the builder, the Realtor, the bank, the loan officer, etc. ? There are probably a dozen parties being taxed on their income, profits, and industry regulations in the process of building a new home. I guarantee that avg number is above the $8,000 tax credit given to the new home-buyer.

While this is not one of the most principally sound things Ron Paul has ever supported, it is practical. Unless you get rid of all current tax laws and regulations, there is no simpler way to reduce the tax burden of creating new homes, and this is the best way to give the break directly to the individual instead of all of the various middlemen involved in the process. You first need willing home-buyers before any of those other machines in the economy can be fueled.

[cswake]

He does it all the time. Go here and search for tax credit:
http://ronpaullibrary.org/

[haaaylee]

The tax credit is a lure for home purchasing. It's a catalyst for a sordid chain of unsound economic activity IMHO. That's what I object to. It's as phony as cash for clunkers.



But it is for people who don't have a home . . . because of a hurricane . . .

They were already looking to purchase a home, there is no lure. Just relief.

[AbstractDogma]

Track the bill here at govtrack.us:
http://www.govtrack.us/congress/bill.xpd?bill=h111-5398

There were no co-sponsors. The full text of the bill is not yet available online. Bill was referred to the House Ways and Means Committee. Needless to say, most never make it past this point.

[AbstractDogma]

First, welcome to the forum.

Second, I digg the idea about packaging mortgages up by locality, quality, and collateral. However, the CDOs didn't get their AAA rating by being packaged up and inheriting some natural diversification. Instead they earned AAA because they were insured by AAA-rated firms like AIG.

The problem was those AAA-rated firms were so over-leveraged it took only a small decline in a hugely inflated market to blow them up. AAA isn't worth jack shit when you've got a few billion dollars liquid and $100 billion in possible liabilities. No one really cared, though. Why care? Real estate is going up forever! ;) :D

Thanks, glad to be here.

I understand and agree with your explanation. I'm not suggesting they be broken down into location IN LIEU OF the ratings, i'm suggesting that be done IN ADDITION TO them.

Triple AAA Cali MBS and Triple AAA Nebraska MBS would essentially have the same credit, collateral and other factors. But if values in Cali started getting out of line (median income to median home price ratios, etc), my theory is bond prices there would fall which would increase mortgage rates and cool off the market. Let the investors decide how they want to "rate" them based not just on the agency rating, but also how the real estate market is performing overall in each state. I suppose the vision here is a "thermostat" that would allow the free market to adjust pricing in regions where values were becoming too high and reward areas where values were remaining stable or declining with lower rates. It might not only help cool down markets that were getting too hot, it might help stimulate markets that were cooling off too much.

Prior to this debacle, there was not enough data to ascertain the future of markets whose values skyrocketed out of control. Thus, everyone thought they might keep going up forever. Now we have much more data to reference. What good is past data unless it's used to help make a better future?

[nobody's_hero]

The government is wrongfully enticing ignorant individuals to purchase homes they cannot afford. If an 8000 dollar tax credit is the deciding factor in one's thought process to purchase a home in excess of 300k, they have some issues given the looming instability of our interest rate situation. Ron is indirectly contributing to bad behavior with this extension.

This.

We have Johnny "Real Estate" Isakson here in Georgia pushing for these tax credits. He fails to understand that an $8,000 tax credit helps to inflate the housing prices, so he wants to increase it to $15,000 to help people buy overpriced homes. Of course, it's not like Sen. Isakson has any personal interest in the matter. —Oh wait, real estate, duh!

Maybe Ron's plan is to hurry up and re-inflate the housing bubble. People don't listen when everything is going okey-dokey. It might not be a bad plan, in that sense.

[Pizzo]

This is such BS. If you pay $5000 in taxes and qualify for the $8000 credit that means you get $3000 of other people's money. Transfer of wealth pure and simple.

Not really. What are the chances that someone buying a home has only paid $5,000 in taxes for their lifetime, and will only pay that amount. In general how many homebuyers will pay less than $8,000 in income taxes throughout their life? So it's not a transfer of wealth, it is their own money back to them in essence. It just happens to be in a lump sum.

[TulsaRevolution]

This.

We have Johnny "Real Estate" Isakson here in Georgia pushing for these tax credits. He fails to understand that an $8,000 tax credit helps to inflate the housing prices, so he wants to increase it to $15,000 to help people buy overpriced homes. Of course, it's not like Sen. Isakson has any personal interest in the matter. —Oh wait, real estate, duh!

Maybe Ron's plan is to hurry up and re-inflate the housing bubble. People don't listen when everything is going okey-dokey. It might not be a bad plan, in that sense.

Taxes inflate the price of housing. People have to borrow more than the actual value of the house because it has taxation and regulatory fees driving up the price on every step of the way to line the pockets of the government and its chosen benefactors. The only thing that has value is the house, the taxation given over to government waste is of no value to the home buyer. Therefore the price of the house is higher due to TAXES.

Like I said in my last post, the ideal thing would be if the entire tax code and regulatory structure as it is today simply did not exist. The building of, financing of, sale of, furnishing of, and maintenance of a home is being taxed on so many levels under today's system that it is ridiculous.

Ron Paul can fight to have the IRS shut down, income taxes abolished, corporate taxes abolished, stifling regulatory fees eliminated, etc. - But that isn't about to succeed any time soon.

Recognize that the tax burden one pays in the process of owning a home can be quantified, and is substantially higher than this tax credit, and you can understand why this isn't simply a welfare check given to constituency in exchange for votes.

Back to what I originally stated, about the VALUE of the house being the same regardless of whatever tax burden the government forces us to pay for the privilege of purchasing property. The housing crisis and overall credit crisis can be boiled down to people borrowing more money than their assets are worth. Reduce the tax burden on the house, and people will be borrowing that much less over the actual value of their asset.

[TulsaRevolution]

Not really. What are the chances that someone buying a home has only paid $5,000 in taxes for their lifetime, and will only pay that amount. In general how many homebuyers will pay less than $8,000 in income taxes throughout their life? So it's not a transfer of wealth, it is their own money back to them in essence. It just happens to be in a lump sum.

Don't look at it as how much that person paid in income tax. Look at how many taxes are paid in the entire process of building, financing, selling, furnishing, and maintaining a home. It is far beyond $8,000 per home.

[Agorism]

all tax credits are good. Doesn't matter what it's for.

[Danke]

all tax credits are good. Doesn't matter what it's for.

So they print more money to cover the revenue short fall. Increase of inflation. A more "regressive" tax.

[TulsaRevolution]

So they print more money to cover the revenue short fall. Increase of inflation. A more "regressive" tax.

As if Ron Paul never proposed any spending cuts? Not that I don't agree about the effects of deficit spending, but there seems to be a lot of people on this forum trying to attack Paul as a hypocrite. He has proposed more than enough cuts in government spending to cover a practical small targeted cut in taxes such as this.

[Danke]

As if Ron Paul never proposed any spending cuts? Not that I don't agree about the effects of deficit spending, but there seems to be a lot of people on this forum trying to attack Paul as a hypocrite. He has proposed more than enough cuts in government spending to cover a practical small targeted cut in taxes such as this.

I wasn't directing any of my comments in this thread against Ron Paul. But:

http://www.ronpaulforums.com/showpost.php?p=2720417&postcount=36

[specsaregood]

Given Ron Paul's thorough opposition to the government's meddling into the economy, and the government's inclination to blow bubbles (like housing), we're thoroughly perplexed by this. The Congressmen from Texas is pushing for an extension to the homebuyer tax credit.


Only somebody that doesn't follow Dr. Paul's history would be "perplexed". The man has simply never found a tax credit, tax deduction or tax break that he didn't like.

[TulsaRevolution]

I wasn't directing any of my comments in this thread against Ron Paul. But:

http://www.ronpaulforums.com/showpost.php?p=2720417&postcount=36

Politicians are just as reluctant to give up a revenue stream as they are to cutting spending. While I agree with what I assume you are postulating, that cutting spending comes before cutting taxes, I support cutting either one, especially where practical. An $8000 tax credit isn't a skewed benefit towards the super wealthy, and in fact benefits the little guy more than the big guy while at the same time is not a handout to the small guy, merely a reduction in tax burden. This is practical because it gets things moving in the housing market.

The super wealthy get the most benefit out of the monstrous government, not through the transparent progressive taxation, but through complex systems of tax breaks, regulations and legislation that encourages monopolies and prohibits small competition, etc. A simple $8000 tax credit for new homeowners is truly a helping hand to the individual in the fight against a collectivist government that empowers certain cabals.

[nobody's_hero]

YouTube - NAR Call for Action (http://www.youtube.com/watch?v=N7Tm_C7YMH8&feature=player_embedded#)!

The realtors want us to keep it. Once again, we are going to put all of our economic growth eggs into the housing market basket, and everyone will have the right to own a home again. "Live the American dream!"

It will be like the years before 2008 all over again.

Like I said, maybe this is Ron's plan to re-inflate the bubble so when it pops we have a disaster and people will start listening again.

[TulsaRevolution]

You are comparing an $8000 reduction in the amount of taxes paid by individuals to what the real problem was, which was the Federal Reserve flooding the market with cheap credit and new dollars?

$8000 amounts to 1 / 30th the price of the average new home. Meanwhile, through artificially low interest rates and printing presses run amok, the Fed can make prices rise 100% in a decade with the infusion of TRILLIONS of shaky if not fraudulent dollars?

Not even the Democrat super-majority has the ability to re-inflate the housing bubble to the extent that the Fed did.

So here you accuse Dr. Paul of trying to re-inflate the housing bubble with an $8000 reduction in taxes even though he is the leading force in the reigning in of the Federal Reserve's powers to flood trillions of dollars into the economy?

Individual tax credit = drop in the bucket when discussing the housing bubble.