There was a disturbing story in Yahoo News today. The headline was: New-home sales plunge 33 pct with tax credits gone. But that was not the disturbing part of the story.
The troubling part was buried toward the end of the piece where it was noted that the median price for a new was $200,900, and the average amount of taxes collected on the construction of a new home is about $90,000.
In other words nearly 50% of the price of a $200,000. home is not labor, not materials, but taxes. And I realize the comparing the median price for a new home to the average amount of taxes collected is not exactly apples to apples. Still the figures are startling.
The government had been offering a 6-8,000. tax credit against the purchase of a new home, but this credit expired. In light of the amount governments collect on the construction of a new residence, this tax break seems paltry indeed.
If the government wasn’t soaking everyone for nearly half the amount of the $200,000. home it would cost only $110,000. Wouldn’t that do wonders for the housing market?