It was a mistake for Congress to give pricey tax credits to first-time and some existing homebuyers the past couple of years. The credits, up to $8,000 per buyer, added to our national debt and rewarded a few Americans at the expense of all others.
But the credits didn’t fix the housing market as it was hoped they would. Sales of new and existing homes remain weak. The irony is, Washington’s meddling was a key reason why the housing market flopped in the first place, so Congress shouldn’t have interfered again.
Now, as always happens with big federal programs, another problem with the homebuyer tax credits has surfaced: fraud.
It seems the Internal Revenue Service shelled out more than half a billion dollars in credits to people who most likely didn’t qualify. Among those receiving the money were children, prisoners and people who for various other reasons were not supposed to get it.
The IRS says it is trying to “recapture” improper credits.
Great, but wouldn’t it have made sense not to create the credit in the first place — and not to have to clean up a costly mess now?