Home buying tax credit is on the line

WASHINGTON, Sept. 16 (UPI) -- Sen. Johnny Isakson, R-Ga., has proposed expanding federal tax credits for home buyers that economists say have stimulated home sales at a critical juncture.

Isakson sponsored the first bill, an $8,000 tax credit for first time home buyers that the National Association of Realtors said was the catalyst for 350,000 sales this year.

Moody's Economy.com set the number of home sales at 400,000 that would not have occurred without the tax credit in place, The New York Times reported Wednesday.

That $8,000 tax credit is set to end in November. Isakson, meanwhile, has prepared a bill to increase the credit to a maximum of $15,000 and have it apply to all home buyers who stay in the home they purchase for two years.

"The problem now is not first-time buyers, it's the move-up market -- the guy transferred from Chicago to Atlanta who can't sell his house," Isakson said.

The sales incentive is expected to cost $15 billion this year, more than twice the original estimate, but "the risks of not doing something like this are too great," Economy.com chief economist Mark Zandi said.

Not all agree. "Is this the best way to spend money we don't have," Tax Policy Center senior fellow Roberon Williams asked.