Monday, January 5, 2009

The Ramsey-Waller Bailout Plan: Addendum

Has anyone besides me thought a great way to prevent foreclosure, or at least help some faced with it, would be to reduce or drop property taxes on homes for a short period of time?

And if the government wanted to encourage people to buy homes, wouldn't it be a great idea to offer them a hiatus from property tax? If the county whined that they couldn't afford to not charge property tax, then maybe the government could give people an income tax credit equal to their property tax.

Here's an idea: First-time homebuyers get a 5-year income tax credit equal to the amount of property tax they owe each year.
Repeat home-buyers get a 3-year income tax credit equal to the amount of property tax they owe each year.
Current homeowners that refinance from an ARM to a fixed-rate mortgage get a 3-year income tax credit equal to the amount of property tax they owe each year on their home.

Now, I'm sure it'd have to be more complicated that that, but it seems like a nifty way to encourage people to start buying homes...because lowering interest rates really isn't working, it's just encouraging refi's.


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1 comment:

Benjamin Dueholm said...

I don't know, but it seems to me that most people facing foreclosure are in that situation because they have insufficient income (badly structured and/or too-large loans and unforeseen medical expenses are likely other reasons). Unless a tax credit is fully-refundable, i.e., effectively a negative income tax like the EITC, it won't help out people who are in dire straits because of a lost job. They won't be paying enough income taxes to get much of a credit.

This is a problem, incidentally, with property taxes as a method of raising revenue. If you lose your job, your federal taxes will decline accordingly. But your property tax will not.