Democratic congressman Gary Ackerman of New York is suggesting a new round of housing stimulus, this time focused on first-time home buyers and potential investors.
Dubbing his plan the “Homestead Act” of the 21st century, Ackerman’s plan would have two stages. First, it would open a line of matching funds for borrowers, up to $20,000 worth. The funds would only be available to two million eligible participants, and no details have been released on what restrictions the funds would have, such as what type of houses the money could be applied to. Second, the plan would target investors, offering a 10-year tax exemption for one million people who purchased properties with the intention of renting them out.
As Nick Timiraos of the Wall Street Journal notes, the plan would certainly cost a pretty penny, but Ackerman claims to have a solution: he would cut the corporate tax rate on repatriated earnings from 35 percent to 10 percent, a move he hopes would sway US firms to re-invest those funds at home.
However, financing and proposals notwithstanding, Timiraos makes perhaps the most important point in his article: “It’s hard to see much political appetite from Congress for a new round of stimulus. While handicapping legislation isn’t our strength, it’s fair to assume the odds that something like this would pass are remote.”
With national housing numbers slowly improving, the housing industry will have to wait and see what happens with this proposed plan.