04 March 2010

Housing Credit Inefficient As Stimulus

[T]he extension and expansion of the home buyer tax credit will probably cost taxpayers over $100,000 for each additional home sold.

From here.

Used judiciously, tax law can nudge people in the right direction. But, tax law, and government intervention generally, is profoundly ineffectual in counteracting powerful market trends. Government efforts to "shove" people towards an outcome that markets don't favor work, in practice, more like transfer payments or pork spending than they do like mere economic incentives that change market outcomes.

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