Thursday, April 30, 2009

Isakson Criticizes Elimination of Expanded Tax Credit for Homebuyers

Votes Against $3.56 Trillion Budget Resolution

U.S. Senator Johnny Isakson, R-Ga., today criticized House-Senate conference negotiators for the Fiscal Year 2010 Budget Resolution for removing language authored by Isakson that would have provided for a $15,000 tax credit to individuals who purchase a home in the next year. Isakson voted against final passage of the $3.56 trillion Budget Resolution, which passed by a vote of 53 to 43.

It was the second time this year that a House-Senate conference committee has deleted Isakson’s expanded $15,000 homebuyer tax credit after it had won overwhelming approval by the Senate.

“I would like to thank the Senate for its wisdom in adopting the $15,000 credit, express my deep disappointment in the conference committee for dropping it and encourage our president and the leadership of our country to give a second thought to what this credit could do,” Isakson said. “The greatest stimulus in the world is not a gift of money. It is an incentive for American families to invest and restore confidence in the United States economy.”

On April 1, the Senate unanimously passed Isakson’s amendment to the Fiscal Year 2010 Budget Resolution that would have created a deficit-neutral reserve fund to provide for a $15,000 nonrefundable federal income tax credit for the purchase of a principal residence during a one-year period. It would also have ensured that there was room available in the Fiscal Year 2010 budget for a homebuyer tax credit to be passed at a later date.

On Feb. 4, 2009, the Senate unanimously approved an amendment by Isakson to the economic stimulus bill would have provided a direct tax credit to any homebuyer who purchases any home. The amount of the tax credit would be $15,000 or 10 percent of the purchase price, whichever is less. During conference negotiations between the House and Senate on the final version of that bill, Isakson’s $15,000 tax credit for all purchasers of any home was removed. Instead, House and Senate negotiators made only small modifications to the first-time homebuyer tax credit that was enacted in 2008 as part of the Housing and Economic Recovery Act of 2008.

Isakson has pushed hard for a non-repayable tax credit for homebuyers because he knows that it will work. In the mid-1970s, America faced a similar housing crisis when a period of easy credit and loose underwriting flooded the market with new construction. Interest rates rose, the economy slowed and America was left with a three-year supply of vacant homes. Congress responded by passing a $2,000 tax credit for anyone purchasing a new home for their principal residence. Isakson, who was in the real estate industry in Atlanta at the time, says the results were clear and swift as home values stabilized, housing inventory dropped and the market recovered.

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