Tax Pros Tell You Why Reflating the Bubble is Smart

Think back to the summer of 2000. The NASDAQ had, well, NASDAQ’d, all of Silicon Valley was nursing a collective hangover, and the rest of the country was getting back to normal. Imagine if, in the midst of all that, someone had gotten a clever policy idea: now that nobody is starting new startups, we could just gather together smart 22-year-olds, give them thousand-dollar office chairs, five thousand-dollar computers, and million-dollar stock options packages, and we could pay for it all with taxpayer money!

Okay, that’s crazy & but it’s less crazy than using tax credits as down payments on a new house (first mentioned on Taxrascal in this real estate crisis, redux, post). At least during the dot-com bubble, people were excited about starting new companies. The real estate bubble involved people excited about other people paying too much for dirt.

What’s worse is that this has some support, from people who should know better:

“It is a very attractive offering, and basically it addresses one of the hurdles that keeps more people from buying a home – getting help with the down payment or paying closing costs,” says Bob Meighan, a vice president with TurboTax.

Yes, one of the “hurdles” to owning a home is not being able to afford one. Every month, we get more bad economic news caused by overpriced homes bought with too much borrowed money, and the most popular solution is still to help people overpay for homes, by lending them too much money.

The rest of the article has even more examples of states and lenders falling over each other to get as much financial incompetence out of every dollar of tax credits. Bailout humor is practically its own industry right now. Do we need another crisis already?