More on the tax break for builders

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

A number of you have questioned whether a tax break for home builders is accurately described as a bailout. Let me make a few points as we continue the discussion.

--The New York Times calls the proposal ‘a break for struggling home builders, allowing them to claim current losses against taxes paid in earlier, more profitable years. This provision, intended to aid home builders, would cost about $15 billion in the first year.’

--Senators Baucus and Grassley, in their housing proposal, estimate the cost of these ‘refunds’ -- their word, not mine -- at $6.1 billion. You can find a link to the Baucus/Grassley proposal on Market Beat columnist Tom Petruno’s new L.A. Times blog, Money & Company.

--Let’s remember that most big home builders are also lenders. What’s being discussed here are multi-billion dollar tax refunds for builders and lenders, refunds they are not entitled to under existing tax law.

--Lastly, let’s remember that the builders made a ton of money in the bubble. Executives were paid very well. Then they overbuilt, and now they’re stuck sitting on inventory of unsold houses. My vision is not great, but I can’t see why it would be a bad thing to let the builders reduce prices until they sell off the inventory, without any special help, encouragement, or refunds from the federal government.

Enlighten me. Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.