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The case for a $10,000 California tax credit for homebuyers

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POSTED February 12, 2010 2:57 a.m.
The best way to keep California’s housing construction pulse from straight-lining might just be Governor Arnold Schwarzenegger’s proposal  for reviving and expanding the $10,000 state home buyer’s tax credit.

Schwarzenegger wants the $10,000 tax credit restored and to make it apply to existing as well as new homes.

How, one might ask, can the state afford that with a $20 billion deficit projected for the next 18 months?

It is all about triggering economic activity. The more people spend – and there isn’t a mass big ticket item more expensive than a house that has such a big multiple ripple effect on the creation of jobs – the more taxable revenue is generated.

“We need to get people out there buying homes so we can build more homes - which will further stimulate our economy and put people back to work,” Schwarzenegger said in San Diego earlier this week.

Manteca builders such as Florsheim Homes Chief Executive Officer Joseph Anfuso credit the $8,000 federal home buyer tax credit that can be applied for either by first-time or repeat buyers with stimulating home sales in January that saw 46 housing starts within the city limits.

The federal tax credit applies to both existing and new homes.

To qualify for Uncle Sam’s tax credit, a buyer must be in contract by April 30 and close by June 30 of this year.

Some pooh-pooh the tax credit by contending the people who tale advantage of it were going to buy anyway. In today’s market, though, any added incentive can encourage people to take the plunge.

And the more enticements there are to encourage people in a position to buy a home to do so, the better off everyone is.

Anything that gets qualified people off the fence and spending money to buy a home generates a ripple effect through the economy.
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