Did you know the real cost for the government’s cash for clunkers was $24k per car? Well, for similar reasons, the current government cash for homes is really costing $43,000 per home!
Economist Ted Gayer argues the tax credit is poorly targeted, since approximately 1.9 million buyers are expected to receive the credit, but more than 85 percent of these would have bought a home without the credit. This suggests a price tax of about $15 billion – which is twice what Congress intended – for approximately 350,000 additional home sales. “At $43,000 per new home sale, this is a very expensive subsidy,” he said.
The real estate company Zillow, released a report last month, that found an almost identical number. Zillow found that the credit would be a “significant influence” on the decisions of 334,000 buyers’ decisions to buy, out of a total 1.86 million first-time homebuyers who will qualify for the credit. The cost to the government in lost tax revenues will be $14.86 billion, or $44,491 per transaction.
The government says both these programs (cash for cars & homes) were very popular. Well duh! Anyone out there who does not want free money? So, another two well run government programs. Can you imagine if you ran your personal finances like this?
httpv://www.youtube.com/watch?v=Oo1iLiWAfm8
These ideas of credit and IOU’s is getting old. I want something new to talk about.
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So where does that money plan to come out of? Not me!
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