Fun with the Homebuyer Tax Credit
Our earlier post about the first time Homebuyer tax credit — $15,000 Home Buyers Credit Costs $292,000/home — seems to have hit a chord.
What I find astounding are the number of criminals who come out of the closet whenever there is any sort of program like this, in an attempt to defraud the government and taxpayers:
“Tens of thousands of people may have taken advantage of the first-time home buyer tax credit to defraud the government, an IRS watchdog office said Thursday, in testimony that could jeopardize efforts to extend the popular program.
Treasury Inspector General for Tax Administration J. Russell George told a House panel that more than 19,000 people filed 2008 tax returns claiming the credit for homes they had not yet purchased. Russell said his office had identified another $500 million in claims, by some 74,000 taxpayers, where there were indications of prior home ownership.
He told a House Ways and Means oversight subcommittee that they also found 580 taxpayers under the age of 18 who claimed $4 million in first-time home buyer credit. One was 4 years old.”
Unbelievable . . .
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Hat tip Peter B!
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Source:
Homebuyer Tax Credit Scrutinized
JIM ABRAMS
Time, Oct. 22, 2009
http://www.time.com/time/politics/article/0,8599,1931677,00.html
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October 22nd, 2009 at 11:46 am
Believe it, Barry. We are being overhwelmed by a culture of criminality and fraud. The Sheeple see what their masters are doing to “get rich” quickly and are merely following with their mini-gaming of the system. The tone is set from the top.
October 22nd, 2009 at 11:53 am
What’s the problem, no one goes to jail for stealing trillions or billions, what is the risk, oh it will wreck you’re credit…………the IRS will yell at you…………i believe this is called vulture investing………when the bird is on the ground you pounce………..white collar crimes u get a slap on the wrist, now try the same thing with a gun and it’s crossbar hotel…………..laws are really tough on putting someones life in peril cause you cannot get it back………money, well, not so much…………now, of course you would think something like this they would stop the program, nope, we will do more
October 22nd, 2009 at 11:53 am
Unbelievable?
You toss pretzels on the beach, you’re going to attract seagulls.
Duh…
October 22nd, 2009 at 11:55 am
Manny,
I remember a famous Democratic candidiate for president used to say “The fish rots from the head back.”
October 22nd, 2009 at 11:57 am
@Pool Shark: I fear that we are devoid of any real leaders anymore because everyone is to busying “getting theirs” to care.
October 22nd, 2009 at 11:57 am
Since I am one for quotes today, I’ll quote Tacitus; “The more corrupt the state, the more numerous the laws. ”
Regards,
TDL
October 22nd, 2009 at 11:58 am
that’s too BUSY…..typing 101 Mannwich!
October 22nd, 2009 at 11:58 am
@TDL:……………..and the happier the lawyers.
October 22nd, 2009 at 11:59 am
BR says-
“Unbelievable”
you’re kidding right?
and why not- any last fleeting pangs of “social conscious”- are quickly evaporating as people try to grab what they can- like their much richer brethren
October 22nd, 2009 at 12:00 pm
@torrie-amos
“the IRS will yell at you”
I hope they will do more than yell, at least to those that broke the law. Was there an age limit, ie. are those 580 under the age of 18 breaking the law?
October 22nd, 2009 at 12:04 pm
“One was 4 years old. Unbelievable . . .” lol -( -:
thats a mom & dad who knows how to get their son off to a good start onto the “best path to prosperity”
October 22nd, 2009 at 12:17 pm
All the realtor associations from NAR on down are making a full court press on this.. I got on a few mailing lists, they are screaming daily to get the members to write and call Congress.
I think there is no way in hell an extension of the original credit does not pass. I think everyone is dragging their feet to get more money and support promised to them from the lobbyists. Why say yes now when you can say yes later and get more money.
October 22nd, 2009 at 12:20 pm
I hope, sincerely so, that we aren’t seeing the last grasps of this once proud country, as the “leaders” see their opportunity to get all they can while the gettin’ is good. Soon, all that will be left behind will be laws to stop anyone from doing anything, anda fiscally bankrupt, to go along with the morals, society.
October 22nd, 2009 at 12:26 pm
Pool Shark,
it was Dukakis, of the infamous (D) team of Dukakis/Bentsen ’88
“The Fish rots from the Head down.”
he was purporting that it was ‘an old Greek’ saying
October 22nd, 2009 at 12:33 pm
ashpelham2,
see:
“The last official act of any government is to loot the treasury.” –source unknown
“Government is not reason; it is not eloquence; it is force. Like fire, it is a dangerous servant and a fearful master.” –George Washington, first elected president of the United States of America
“That government is best which governs the least, because its people discipline themselves.”
“When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.”
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government.” –Thomas Jefferson, third president of the United States of America
joshkaufman.net/government
October 22nd, 2009 at 12:33 pm
Unrelated, maybe…..
http://news.bbc.co.uk/2/hi/asia-pacific/8320849.stm
October 22nd, 2009 at 12:33 pm
Barry said: “What I find astounding are the number of criminals who come out of the closet whenever there is any sort of program like this, in an attempt to defraud the government and taxpayers”
Just wait until Obama’s loan program for entrepreneurs gets off the ground. Every scammer out there will suddenly become a “small business owner.”
Posted earlier that I dipped a toe in DXD this morning at 32.85. Must have been deleted.
October 22nd, 2009 at 12:40 pm
Mannwhich is right on the money. A culture of criminality and fraud. Until this changes…….
October 22nd, 2009 at 12:44 pm
Get ready for another big drop in housing:
I also believe that a true bottom will be marked by the time when most remaining real estate brokers are out of the business, all of the homebuilder stocks are below $5/share or completely gone, and we stop seeing Wall Streeters and Barbara Corcoran go on national media shows proclaiming that housing prices are great value now.
http://truthingold.blogspot.com/2009/10/dont-believe-hype-about-housing-market.html
October 22nd, 2009 at 12:50 pm
I think there’s also another cultural element to this in that increasingly people see that the path to so-called “prosperity” isn’t by working a regular job (why do that when many incomes barely cover cost of living?), but by finding the new gravy train to hop on and ride it until it stops. Then find another one, and so on and so on. Who cares what it does to your neighbor and community in the process. Heck, that’s not MY problem, is it? I’m just getting mine. That’s just “capitalism”. It’s also a road to ruin, but hey, who cares. We’ll all be dead and gone by the time that day comes.
October 22nd, 2009 at 12:57 pm
I know a realtor/landlord who bought a new house in the name of each of her 3 college aged children to take advantage of the first time homebuyer credit. These were homes that she was looking to buy anyway and simply titled them in the name of her children for the tax credit. I believe that she intends to help set her kids up as landlords of these houses. Government programs like this always have a lot of waste in them even if they are “good” programs. That’s why government should be radically downsized in favor people caring more for themselves.
October 22nd, 2009 at 12:59 pm
One can also sell a house on contract to uncreditworthy buyers and use their tax credit as downpayment. When they “buyers” default a few months later you just take the house back and sell it to someone else.
October 22nd, 2009 at 1:28 pm
http://www.nytimes.com/2009/10/23/business/23outlook.html?_r=1&ref=business
WASHINGTON (AP) — The government’s economic stimulus spending has already had its biggest impact and probably will not contribute to significant growth next year, a top White House adviser said Thursday.
The adviser, Christina D. Romer, the chairwoman of President Obama’s Council of Economic Advisers, said the initial jolt of the $787 billion stimulus expanded the economy in the second and third quarters of this year. But she said the remaining spending will simply keep the economy from slipping.
“By mid-2010,” she said, “fiscal stimulus will likely be contributing little to further growth.”
…Well, whaddaya know? 700 billion dollars and it was just for a one night stand. Franklin, I am so proud I could pop the buttons off my vest!
What’s that you say, Frank? That the 700 billion will have restored our economy, and that’s why it will “likely be contributing little to further growth”?
Yes, I see that. Yes, I do. Yep.
700 billion…everything’s all fixed…Yep…
October 22nd, 2009 at 1:30 pm
Housing-China-Future:
My prediction: before 2035 there will have occurred an influx of 20+ million mainland Chinese citizens into the US (mostly the contiguous lower 48).
I plan on providing them with children’s clothing and shoes. And pillows in the shape of fruit.
October 22nd, 2009 at 3:20 pm
I love how we con, loot, and pillage the system every chance we get (those who applied for or gave out liar loans, inflated appraisals, scammed the gov’t cashforclunkers or first time buyer rebates, etc.) and then blame the government for our collective bad behavior. Or blame wall street. Or blame the chinese/saudis/russians/koreans/mexicans (here and there). Blame the banks, the blacks, the political hacks, the lobbyists the educators; the collective finger is always pointing at someone else. Face it America, you sucked for the last 8 years. You elected a crap-ass idealogical/theological goverment. You wanted government to “stay out of your business” while the businessmen took advantage of you. You flipped that house! and turned it into an ATM and bought tanker-loads of cheap chinese crap. You didn’t manage your portfolio, you took enormous risks with other people’s money, you invaded 2 countries and didn’t care about the outcome, you wanted to live like millionaires, you over-extended, you lived on credit, so quit your bitching America.
October 22nd, 2009 at 3:28 pm
@lalaland: You’re absolutely correct. It kind of feels like it’s the last grab at the carcas that is the U.S., doesn’t it?
But I have to correct you – - not ALL of us engaged in this behavior that you describe. In fact, I would submit that most have not engaged in it all but have watched it unfold with horror, amazement, and morbid fascination. Some of us are STILL doing that now.
October 22nd, 2009 at 3:46 pm
Bruce; the GDP is reported as a delta not in absolute terms. It is designed to lose its effect. The 0.8 trillion stimulus was designed to stop the drop of the cliff fall from a 2 trillion drop in aggregate demand, not to substitute private enterprise as the engine of the economy. The fact that is took us from -6% GDP numbers in Q4-08 and Q1-09 to -2% in Q2-09 and break even in Q3-09 is pretty impressive. A lot of people who would have been without jobs if the -6% had just been allowed to continue unopposed are happy that someone cared and stopped them from losing their jobs, homes and everything they own in a great depression.
October 22nd, 2009 at 3:49 pm
Unbelievable?
Why Barry is this unbelievable? Whenever regular people see the big shots loot with impunity (government sponsored) they will eventually figure that they deserve their “fair share”. When you have a two tier justice/enforcement system in any country, the country eventually slides into lawlessness and this is the worst damage that these capos have cause this country.
October 22nd, 2009 at 5:34 pm
The amount of fraud in any market is directly proportional to the level of governmental manipulation of the market. Want more fraud? Always and forever, the answer is to get more government involvement. Direct manipulation, like tax credits, begats the most fraud. Indirect manipulation, like pouring massive amounts of money into a market by fed purchases of bonds used to fund the market ($1.25 trillion), gets less direct fraud, but then, effectively, makes the whole market a fraud.
The residential real estate market in the United States is a fraud built on a fraud. It will soon enough collapse, sorta like the Berlin Wall.
October 22nd, 2009 at 5:54 pm
Chump change!! Tell me how TARP was spent. Show me the path the money followed!! To where did it go?
October 23rd, 2009 at 12:52 pm
The housing credit, like many of these “small” giveaways, will increase in cost forever. The $15 Billion cost will have to be borrowed, and will never be paid back. The interest ($3.8 million a year based on current .38% one year treasury) cannot be paid, and more bonds must be sold. The interest therefore compounds, which is not much of a problem at ZIRP, but would be a problem at a more normal, say 3%. My math may be wrong, but at 3% the debt doubles every 23 years.
This fact was brought home to me by a poster about the Cash for Clunkers. The debt for the credit would double into perpetuity, but the new car would be in the junk yard in 12 years. Not a glowing report card on our economic experts in DC.