The big $8,000 tax credit that the federal government bestowed on first-time homebuyers up until earlier this year was supposed to persuade lots of people to buy homes and get the deflated housing market moving.
But the tax credit really didn’t “create” lots of new home sales. It just shuffled around the timing of many home sales that were going to happen even if there had been no federal subsidy.
Here is how Randy Durham, president of the Greater Chattanooga Association of Realtors, explained it recently in the Times Free Press:
“What the first-time homebuyers tax credit did was cause people to move up their home purchases that they would normally have bought at other times during the year.”
In other words, they were going to buy anyway. They just rearranged the timing of the purchase to take advantage of the “free” $8,000 credit — courtesy of U.S. taxpayers.
We don’t blame homebuyers for taking that money. But we do blame the federal government for making it available in the first place. It forced taxpayers who did not buy a home to subsidize the purchase price for those who did, and it saddled the nation with billions more dollars in debt — as if our current $13.7 trillion national debt were not big enough!
This is the danger of government thinking it “knows best” and substituting its economic schemes and subsidies for the much more efficient free-market choices that the American people make every day.
Government-planned economies don’t work. Even the smartest lawmakers and government bureaucrats cannot possibly take into account all the factors that millions of consumers consider when they make purchasing decisions. With history showing that again and again, it is appalling that many in Congress have not yet learned that lesson.