One Year Window: 10% tax credit on all existing single family purchases, no caps, primary, vacation or income property. NO new construction - the idea is to cut inventory in half. Five year hold requirement or prorated reduction of tax credit. Cost to Treasury? $90B - $140B one year.
Two Year Window: Permit passive income depreciation on real estate for all investment properties purchased over two years, no caps. Tax advantage remains for the life of the investment but cannot be transferred. Existing stock only - again - no new construction - the purpose is to mop up inventory. Cost to Treasury? Hard to score - possibly $25B per year for two years and then a gradual reduction every year as qualifying properties are sold off.
There is a tremendous amount of commercial property likely to default in the next two years. Purchase + refi loans are extremely hard to obtain. This would bring a great deal of equity ownership to the marketplace. Doctors and lawyers would be back in syndications, offsetting their healthy incomes with paper losses.
What say you?
2 comments:
What do I think? I think it is real-o-centric but has merit.
The problem is that business decisions are made by your side through the prism of fairness and class envy. No leftie would agree.
How about a 10% reduction in marginal tax rates, no capital gain taxes on purchases in 2009, held for 2 years? Suspension of FICA for 6 months across the board?
The left keeps talking about the need for sacrifice. Let's see how much he calls for tonight and from who.
From the WSJ
"We're not going to be able to fall back into the same old habits," Mr. Obama said. "The casual dishonesty of hiding irresponsible spending with clever accounting tricks, the costly overruns, the fraud and abuse, the endless excuses."
Also from the WSJ (same article)
"If the administration wants to get serious about our budget deficit and our mountains of debt, they are going to have to do a lot more than host a summit, they are actually going to have to make some tough decisions like reining in out-of-control federal spending," said Antonia Ferrier, a spokeswoman for House Minority Leader John A. Boehner (R., Ohio).
Guilty of real-o-centric, but that is where the problem is. Summers said the stimulus should be timely, targeted and temporary and this meets that test. Only far out lefties would have a problem with the likes of Obama, Bernanke and Dodd in support.
When marginal rate tax cuts were scored for stimulation, they came out very poorly - 30 cents on the dollar. Your capital gains approach may work, but is it targeted enough? Whatever we do must soak up the inventory in a year or less.
I'd consider FICA on first $100K (not the 2nd), however, as you know I want to trade most of that - permanently - for carbon taxes.
My kind of sacrifice is across the board - gradually raise the SS + Medicare age to 72 +/-. Begin 1/1/10. Show the world we will be in fiscal balance and paying down debt in 5 - 6 years - really - no smoke + mirrors. Yes, this will require more cuts than currently proposed.
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