Monday, November 2, 2009

Home buyer's credits

Jack Hough of Smartmoney doesn't like the proposed extension of the home buyers credit. Neither do I. I am not sure that I fully agree with all his points, but the first two are on target. A home buyer credit will have the effect of raising prices. I doubt very much that it will have significant stimulus effect.

May I suggest a better use for the money. If you want to stimulate the economy and increase employment, use the credit instead to reduce payroll taxes. You'll distribute the stimulus money evenly across the economy instead of just to a) new home buyers or b) people who want to trade their clunker for a prius.