BIG Tax Break For Homebuilders Hidden In New Law

[bobbyw24]

November 15, 2009
Fair Game
Home Builders (You Heard That Right) Get a Gift
By GRETCHEN MORGENSON

ON Nov. 6, President Obama signed the Worker, Homeownership and Business Assistance Act of 2009 into law, extending unemployment benefits by 20 weeks and renewing the first-time homebuyer tax credit until next April.

But tucked inside the law was another prize: a tax break that lets big companies offset losses incurred in 2008 and 2009 against profits booked as far back as 2004. The tax cuts will generate corporate refunds or relief worth about $33 billion, according to an administration estimate.

Before the bill became law, the so-called look-back on losses was limited to small businesses and could be used to counterbalance just two years of profits. Now the profit offset goes back five years, and the law allows big companies to take advantage of it, too. The only companies that can’t participate are Fannie Mae and Freddie Mac and any institution that took money under the Troubled Asset Relief Program.

Among the biggest beneficiaries are home builders, analysts say. Once again, at the front of the government assistance line, stand some of the very companies that contributed mightily to the credit crisis by building and financing too many homes.

This is getting to be a habit: companies that participated on the upside and are now reaping rewards from the taxpayers on the downside. The banks that underwrote so many dubious loans, for example, received government aid to get them lending again. Unfortunately, that hasn’t been the result.

One can make an argument that throwing money at the banking system is necessary if we are to jump-start the economy. And banks need a bigger capital cushion to protect against future losses.

But dropping helicopter money on the home builders — the folks who massively overbuilt in community after community — seems decidedly less urgent (unless you are one of these companies, of course). Given that the supply of housing far outstrips demand, it is unlikely that these companies will use these tax breaks to hire workers (unless they go into a completely new line of business).

“I AM surprised that home builders are getting hundreds of millions of dollars given that many have very strong balance sheets,” said Ivy Zelman, chief executive at Zelman & Associates, a research firm. “We question the public policy decision to gift home builders with capital that many will not use to create jobs, since they admit that job growth will be dependent not on capital, but on improving demand.”

When Mr. Obama signed the law, his administration said the tax break would help “struggling businesses.” But as Ms. Zelman pointed out,


http://www.nytimes.com/2009/11/15/bu...my/15gret.html

[forsmant]

Woo HOO! I love tax breaks for my industry!

[HOLLYWOOD]

Yeah, I posted this on another forum:

Wondering WHY no Corporate taxes collected and the US Treasury Actually ran a deficit for October 2009? Check this $#@!in Trick out...


Home Builder's Return on Lobbying:

ROL = Return On Lobbying

Gretchen Morgenson at the New York Times writes about the, "Tax Loss Carry-Forward Gift" for home builders in the recently signed "Worker, Homeownership and Business Assistance Act of 2009": Home Builders (You Heard That Right) Get a Gift

The Center for Responsive Politics reports that through Oct. 26 of this year, home builders paid $6 million to their lobbyists. ... Much of this year’s lobbying expenditures were focused on arguing for the tax loss carry-forward, documents show.

Among individual companies, Lennar spent $240,000 lobbying while companies affiliated with Hovnanian Enterprises spent $222,000. Pulte Homes spent $210,000 this year.

That’s some return on investment. After spending its $210,000, Pulte will receive $450 million in refunds. And Hovnanian, after spending its $222,000, will get as much as $275 million.

That is quite a Return on Lobbying (ROL), although some of the money went to lobbying for the inefficient homebuyer tax credit.

And, oh, this "gift" will create few if any jobs.

[forsmant]

It may not create new jobs but it does help maintain jobs. Still a complete waste of money. The tax code should not be used to play favorites, or should it?

[bobbyw24]

The New York Times's Gretchen Morgenson points out that lobbyists have won another victory that will lead to billions in taxpayer dollars being handed over to firms that helped spur the economic crisis.

The Worker, Homeownership and Business Assistance Act of 2009, which President Obama just signed into law, contains "a tax break that lets big companies offset losses incurred in 2008 and 2009 against profits booked as far back as 2004," Morgenson reports. (Read the full story here.)

The administration estimates that the tax breaks will be worth some $33 billion, and home builders -- who analysts say were key players in the financial crisis by building and financing too many homes -- stand to benefit enormously.

One of the more shocking elements of Morgenson's piece is just how large a rate of return these home builders got for the money they spent on lobbying for this tax break:

Securing this tax break was a top priority for home builders, lobbying records show. The Center for Responsive Politics reports that through Oct. 26 of this year, home builders paid $6 million to their lobbyists. Last year, the industry spent $8.2 million lobbying...


...Among individual companies, Lennar spent $240,000 lobbying while companies affiliated with Hovnanian Enterprises spent $222,000. Pulte Homes spent $210,000 this year.

That's some return on investment. After spending its $210,000, Pulte will receive $450 million in refunds. And Hovnanian, after spending its $222,000, will get as much as $275 million.

Even as unemployment continues to rise and the Obama administration's foreclosure plan appears to be failing, Congress and the White House are signing off on tax breaks that reward those who are partly responsible for our financial predicament.

To follow more lobbying shenanigans, check out HuffPost's LobbyBlog.



http://www.huffingtonpost.com/2009/1..._n_358389.html