An old synagogue management joke …
There was a hundred-year-old synagogue on the East Coast where the rabbi stood on the right side of the bimah and the cantor the left. Every time they crossed from one side to the other they would take two steps, bow deeply to one another and continue to the other side.
One day, a new member asked the rabbi and the cantor why they bowed to each other and they said, “It’s our tradition. It’s a sign of respect to each other.” An elder of the temple standing nearby interrupted. “That’s not the reason,” he said. “In the old building the Eternal Light on the bimah was hung too low. The rabbi and cantor had to duck or get knocked out cold.”
There’s another similar joke but the point is this … traditions all begin with a solitary act that gets repeated over and over again until almost no one remembers why the tradition started in the first place.
The $8,000 tax credit for first-time buyers quickly is approaching that point. Already forgotten is the credit’s forebearer, the $7,500 “loan” for first-time buyers that was in effect in 2007. This wasn’t a tax credit, it was a loan that had to be repaid.
That changed last year when the dollar amount was increased to the current $8,000 and changed from a loan to a tax credit for those closing escrow before November 30.
Rumors abound as to the future of this tax credit … I’ve heard everything from the credit not being extended to it being expanded and possibly even being made available to those who aren’t first-time buyers, impact on the nation’s financial bottom line be damned.
It’s anyone’s guess how much the presence of this tax credit has increased interest in the housing market. While I’ve had a handful of clients eligible to take advantage of the credit next April, I’ve yet to have any who cited the presence of the credit as their reason for purchasing a home. To be candid, I believe the impact has been overblown.
But that’s not really my concern. My concern is if the tax credit is extended another year, it soon will attain the sacred cow status so often seen in Washington that will make it damn near impossible to eliminate later. And this is something that should not become a permanent credit; there are many reasons for someone to decide to purchase a home rather than rent, but a tax credit shouldn’t be among them.
Let the tax credit for first time home buyers expire, my friends. While somewhat useful, it’s unnecessary as a continuing government dole.[tags]Phoenix real estate[/tags]