Giving away money the state doesn’t have is foolish, especially when it does little to stimulate the economy. State lawmakers, facing a $20 billion deficit, did just that when they overwhelmingly approved Assembly Bill 183, a $200 million tax giveaway for the real estate industry.
Local Assemblyman Roger Niello, R-Fair Oaks, was one of the few willing to buck the feel-good measure. “I think it’s a lot of money in a deficit situation that doesn’t have the desired benefit,” Niello said.
He’s right. The stated goals of the bill are contradictory. On the one hand, it seeks to reduce the glut of new and existing homes already on the market by giving homebuyers additional incentives to buy.
But, to generate construction jobs, the bill also seeks to stimulate the construction of new homes, which would increase the housing glut.
While proponents claim AB 183 would “get jobs going,” the bill analysis states that “no formal jobs analysis has been conducted.”
Homebuyers already enjoy substantial tax benefits – from the home mortgage to property tax deductions. The federal government recently provided homebuyer tax credits as part of its stimulus plan.
This measure would give homeowners an additional $10,000 credit over three years. California ends up giving money to homebuyers to do something they were going to do anyway.
The sum of $200 million is not chump change. Such money could be used to maintain adult day care services or preserve farmland through the Williamson Act – programs that this page has sought to protect.
Instead of joining that cause, lawmakers end up giving tax breaks at a time California can least afford them.