Rep. Gary Ackerman (D-New York) Tuesday announced his plan to propose a bill to reduce the housing glut, create jobs, and stimulate the economy.
Deriving inspiration from the success of the Homestead Act of 1862 - which offered 160 acres to Americans in order to promote Western settlement Ã¢â‚¬" Ackerman's Homestead: Act 2 aims to achieve these goals with three targeted initiatives.
Addressing 3 million properties currently depressing the market, Ackerman proposes a subsidy of up to $20,000 for down payments on foreclosed homes bought by owner-occupants and a tax incentive for investors who purchase foreclosures for rental properties.
Available to the first 2 million eligible, single-family borrowers, the subsidy would function as a loan that would be forgiven in one-fifth increments over five years, provided the borrower stays in the home.
The second component of Ackerman's bill would be a 10-year tax exemption on rental income for the first 1 million investors who purchase single-family homes to rent.
Ackerman believes this tax exemption would motivate investors to purchase properties that would otherwise remain vacant, continuing to depress neighborhoods and the overall housing market.
By absorbing some of the excess inventory on the housing market, Ackerman believes his Homestead: Act 2 would help reignite the traditional housing market, thus putting more than 1 million Americans back to work.
The third component of Ackerman's bill addresses the cost of the first two components Ã¢â‚¬" the subsidy and the tax cut.
Ackerman aims to bring some of the estimated $1.2 trillion in offshore capital back within U.S. borders. He proposes reducing the corporate tax rate on these earnings to 10 percent.
If successful, this action would provide enough income to cover the cost of the home purchase subsidy and investor tax cut.
""Clearly, Ã¢â‚¬ËœHomestead: Act 2' would help to eliminate quickly the overhang glut of the housing market, putting two million owners in homes and inspire the purchase of an additional one million homes by investors who will rent them out, and enjoy tax-free rental income for 10 years,"" Ackerman said.
""This would clear the way for new housing starts, and put millions of Americans back to work. It would incentivize corporations to bring their cash cheaply back into the United States,"" Ackerman added.
""In addition, the newly emancipated billions would further spur the economy,"" he concluded. ""Everybody wins.""
Ackerman plans to introduce the Homestead: Act 2 to Congress after its August recess.