As typical with a majority of government sponsored stimulus plans, the Home-Buyer Credit plan is wrought with fraud. According to the media, tens of thousands of "people" (I call them cheaters) submitted fraudulent claims meant for first time home buyers. More than 500 people under 18, including a 4-year-old boy, had their names on applications. Mom and Dad, if you can call them that, probably put the 4 year old because they made more than the allowable yearly earnings.
"As a "refundable" tax credit, it guarantees the claimants sill get cash back even if they paid no taxes. The credits cost is running about a billion a month and $15 billion for the year. Also, even when employed by an honest buyer, it's another distortion that drives capital into housing and away from other more productive uses. For America's tens of millions of tax-paying renters, its another subsidy they provide for their neighbors to be able to sell their houses (to these first time buyer) at a higher price." (WSJ, 10/29/2009)
Most of the stimulus plans put forward this year are deeply flawed with the law of "unintended consequences" running rampart.
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