New Direction for Energy Independence, National Security, and Consumer Protection Act and the Renewable Energy and Energy Conservation Tax Act of 2007--Continued
Floor Speech
NEW DIRECTION FOR ENERGY INDEPENDENCE, NATIONAL SECURITY, AND CONSUMER PROTECTION ACT AND THE RENEWABLE ENERGY AND ENERGY CONSERVATION TAX ACT OF 2007--Continued -- (Senate - April 03, 2008)
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AMENDMENT NO. 4421 TO AMENDMENT NO. 4387
Mr. CARDIN. Mr. President, the amendment I will be offering shortly, along with Senator Ensign, is an amendment that would try to help the housing market itself. It would provide a tax credit, a temporary tax credit just for this next year, for residential home purchases. It is for someone who is using the house as their primary residence. It would be a $7,000 credit spread out over 2 years. It would be aimed at trying to get people to buy homes today.
As I am sure you are aware and as has been explained on this floor, there is a glut on the housing market. There are so many homes that people are trying to sell, and potential buyers are reluctant to come in to purchase a home because they don't know whether the value will go down. They are waiting. They are sitting it out.
It was the housing market that triggered our current downturn in the economy. We need to pay attention to the housing market in order to get our economy back on track.
The intent of this amendment is to get more interest by home buyers so they will buy homes today knowing that the Government, through a tax credit, is covering some of their risks and making it more affordable for them to be able to buy a home. That is exactly what this amendment would do.
Senator Ensign and I have crafted this amendment so it is temporary. It is available only for the next year. We have crafted it so it is targeted. It only applies to first-time home buyers, those who are most in need. In the Nation, approximately 35 percent of those who buy homes are first-time home buyers. In my own city of Baltimore, it is closer to 65 percent. So it is a large number of people who are potentially in the market, but they are the most reluctant--those who do not own homes today are the most reluctant to come in and buy a home because of the uncertainty in the market. It is targeted in that it only applies to those of limited income, middle-income families. It uses the same dollar limits that are currently used in the District of Columbia tax credit that has been so successful in encouraging families to buy homes within our Nation's Capital. About 3,000 to 4,000 individuals every year take advantage of the tax credit we provide for the residents of the District to buy a home.
This credit, which is temporary and which is targeted, which is aimed at middle-income families, which is aimed at first-time home buyers, which is aimed at getting more interest among consumers into our housing so we can try to help our economy--I think it is the right complement to the legislation that is before us.
The legislation before us is aimed at trying to help people to be able to find mortgages. It is aimed at dealing with homes that are in foreclosure, trying to allow people to stay in their homes, and allowing local governments to have more ability to deal with refinancing homes for those who have subprime mortgages. I have already talked on the floor about this issue. It is aimed at trying to get better advice to people who may be buying homes, and it also has a tax credit. I acknowledge Senator Isakson, who has worked on that. It deals with distressed properties. I would also like to acknowledge that my colleague, Senator Stabenow, has been a longtime proponent of tax credits to stimulate home buys. This amendment is aimed at generating more interest in home buys so we can help bring our economy back to recovery.
I thank my colleague, Senator Ensign, for his input in helping to craft this amendment and his cosponsorship of it. I urge our colleagues to consider that.
Mr. President, I now offer that amendment.
The PRESIDING OFFICER. The clerk will report the amendment.
The bill clerk read as follows:
The Senator from Maryland [Mr. Cardin], for himself and Mr. Ensign, proposes an amendment numbered 4421 to amendment number 4387.
The amendment is as follows:
(Purpose: To amend the Internal Revenue Code of 1986 to allow a credit against income tax for the purchase of a principal residence by a first-time homebuyer)
At the end, insert the following:
TITLE X--FIRST-TIME HOMEBUYERS' TAX CREDIT
SEC. X01. CREDIT FOR FIRST-TIME HOMEBUYERS.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25D the following new section:
``SEC. 25E. PURCHASE OF PRINCIPAL RESIDENCE BY FIRST-TIME HOMEBUYER.
``(a) Allowance of Credit.--
``(1) IN GENERAL.--In the case of an individual who is a first-time homebuyer of a principal residence in the United States during any taxable year, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to so much of the purchase price of the residence as does not exceed $7,000.
``(2) ALLOCATION OF CREDIT AMOUNT.--The amount of the credit allowed under paragraph (1) shall be equally divided among the 2 taxable years beginning with the taxable year in which the purchase of the principal residence is made.
``(b) Limitations.--
``(1) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME.--
``(A) IN GENERAL.--The amount allowable as a credit under subsection (a) (determined without regard to this subsection) for the taxable year shall be reduced (but not below zero) by the amount which bears the same ratio to the credit so allowable as--
``(i) the excess (if any) of--
``(I) the taxpayer's modified adjusted gross income for such taxable year, over
``(II) $70,000 ($110,000 in the case of a joint return), bears to
``(ii) $20,000.
``(B) MODIFIED ADJUSTED GROSS INCOME.--For purposes of paragraph (1), the term `modified adjusted gross income' means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.
``(2) LIMITATION BASED ON AMOUNT OF TAX.--In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year shall not exceed the excess of--
``(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
``(B) the sum of the credits allowable under this subpart (other than this section and section 23) for the taxable year.
``(c) Definitions and Special Rules.--For purposes of this section--
``(1) FIRST-TIME HOMEBUYER.--
``(A) IN GENERAL.--The term `first-time homebuyer' has the same meaning as when used in section 72(t)(8)(D)(i).
``(B) ONE-TIME ONLY.--If an individual is treated as a first-time homebuyer with respect to any principal residence, such individual may not be treated as a first-time homebuyer with respect to any other principal residence.
``(C) MARRIED INDIVIDUALS FILING JOINTLY.--In the case of married individuals who file a joint return, the credit under this section is allowable only if both individuals are first-time homebuyers.
``(D) OTHER TAXPAYERS.--If 2 or more individuals who are not married purchase a principal residence--
``(i) the credit under this section is allowable only if each of the individuals is a first-time homebuyer, and
``(ii) the amount of the credit allowed under subsection (a) shall be allocated among such individuals in such manner as the Secretary may prescribe.
``(2) PRINCIPAL RESIDENCE.--The term `principal residence' has the same meaning as when used in section 121.
``(3) PURCHASE.--
``(A) IN GENERAL.--The term `purchase' means any acquisition, but only if--
``(i) the property is not acquired from a person whose relationship to the person acquiring it would result in the disallowance of losses under section 267 or 707(b) (but, in applying section 267 (b) and (c) for purposes of this section, paragraph (4) of section 267(c) shall be treated as providing that the family of an individual shall include only the individual's spouse, ancestors, and lineal descendants), and
"(ii) the basis of the property in the hands of the person acquiring it is not determined--
"(I) in whole or in part by reference to the adjusted basis of such property in the hands of the person from whom acquired, or
``(II) under section 1014(a) (relating to property acquired from a decedent).
``(B) CONSTRUCTION.--A residence which is constructed by the taxpayer shall be treated as purchased by the taxpayer.
``(4) PURCHASE PRICE.--The term `purchase price' means the adjusted basis of the principal residence on the date of acquisition (within the meaning of section 72(t)(8)(D)(iii)).
``(d) Denial of Double Benefit.--No credit shall be allowed under subsection (a) for any expense for which a deduction or credit is allowed under any other provision of this chapter.
``(e) Recapture in the Case of Certain Dispositions.--In the event that a taxpayer--
``(1) disposes of the principal residence with respect to which a credit is allowed under subsection (a), or
``(2) fails to occupy such residence as the taxpayer's principal residence, at any time within 24 months after the date on which the taxpayer purchased such residence, then the remaining portion of the credit allowed under subsection (a) shall be disallowed in the taxable year during which such disposition occurred or in which the taxpayer failed to occupy the residence as a principal residence, and in any subsequent taxable year in which the remaining portion of the credit would, but for this subsection, have been allowed.
``(f) Basis Adjustment.--For purposes of this subtitle, if a credit is allowed under this section with respect to the purchase of any residence, the basis of such residence shall be reduced by the amount of the credit so allowed.
``(g) Property to Which Section Applies.--The provisions of this section shall apply to a principal residence if the taxpayer's date of acquisition of the residence (within the meaning of section 72(t)(8)(D)(iii)) and date of settlement on such residence are during the period beginning on the date of the enactment of this section and ending on the date that is 1 year after such date.''.
(b) Conforming Amendments.--
(1) Section 24(b)(3)(B) of the Internal Revenue Code of 1986 is amended by striking ``and 25B'' and inserting ``, 25B, and 25E''.
(2) Section 25(e)(1)(C)(ii) of such Code is amended by inserting ``25E,'' after ``25D,''.
(3) Section 25B(g)(2) of such Code is amended by striking ``section 23'' and inserting ``sections 23 and 25E''.
(4) Section 25D(c)(2) of such Code is amended by striking ``and 25B'' and inserting ``25B, and 25E''.
(5) Section 26(a)(1) of such Code is amended by striking ``and 25B'' and inserting ``25B, and 25E''.
(6) Section 904(i) of such Code is amended by striking ``and 25B'' and inserting ``25B, and 25E''.
(7) Subsection (a) of section 1016 of such Code is amended by striking ``and'' at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting ``, and'', and by adding at the end the following new paragraph:
``(38) to the extent provided in section 25E(f).''.
(8) Section 1400C(d)(2) of such Code is amended by striking ``and 25D'' and inserting ``25D, and 25E''.
(c) Clerical Amendment.--The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 25D the following new item:
``Sec..25E..Purchase of principal residence by first-time homebuyer.''.
Mr. CARDIN. I now yield to the Senator from Nevada.
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Mr. CARDIN. Mr. President, let me say to my colleague again from Nevada, the two of us did work together very closely in the other body, and now it is a real pleasure to serve together in this body. It is a great honor.
I think the comments the Senator has made about home ownership are so important. Home ownership is critically important to our country. We know where there is home ownership, schools are better, the crime is less.
One of the statistics I found very interesting was a study in Chicago that there was a distinct relationship in a neighborhood between the number of foreclosures and the rise of violent crime. This is an issue that should involve all of us.
I also wish to thank Senator Dodd. He has done a great service to our Nation in being able to bring forward a bill that has bipartisan support. That is not easy today; it is very difficult. We now have the opportunity to move forward.
I was explaining to Senator Dodd that one of my constituents a little bit earlier this evening said: You know, we are so encouraged that Democrats and Republicans could come together on a housing bill, that there is now hope we can act quickly.
What he said to me is interesting. He said: You know, there are a lot of good things in this bill. I think I could have done it better. There are some things I would like to have seen in there. But what I like is you are able to move, you are able to get something done. It is a real signal to this country that Congress is engaged on the housing crisis and wants to do something to help that person who today is in danger of losing his or her home because of a foreclosure, or is in danger of walking away.
One of the things I found amazing is 50 percent of people walk away from their homes; they do not even try. This bill will give them hope that the Government is on their side. It can provide some additional financing, it is going to provide some additional help and counseling, it is going to provide an opportunity for that person to maintain the American dream.
The American dream is about being able to succeed in this country. The most visible sign is owning a home. A lot of people are going to lose their homes as a result of this recession. This legislation will make it possible for more Americans to save their homes.
The amendment Senator Ensign and I are offering is a way in which we believe, I think our colleagues believe, that this body has a responsibility to help build our economy. One of the ways we can do it is by encouraging more home ownership.
This amendment, by providing a tax credit, is saying: The Government is on your side. Go now, buy a home, we will help you hedge against the potential risk and make it a little more affordable for you to own a home.
I encourage my colleagues to accept that amendment.
I yield the floor.
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Mr. ISAKSON. Mr. President, I wish to ask the Senator from Maryland a point of clarification for the Members. This amendment is an additional tax credit in addition to the one that is already in the bill; is that correct?
Mr. CARDIN. That is correct.
Mr. ISAKSON. So what you are doing, you leave targeted the stimulus
to absorb the foreclosed properties, but you add a stimulus for first-time home buyers in the marketplace?
Mr. CARDIN. The Senator is correct.
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Mr. CARDIN. Let me thank again the Senator from Connecticut. The circumstances in Baltimore, in Maryland, in June we ranked 40th in the Nation in foreclosures. We now rank in the teens, 18th in foreclosures. The number of foreclosures in communities where we never thought we would see foreclosures is recordbreaking. That is not the type of records we want to have.
So as the Senator knows, it not only affects that homeowner who is going to potentially lose his or her home, it affects every house in the community. I was talking with some of the housing authority people, some of the people from the nonprofit community who work with these neighborhoods, and the cost to the neighborhood is staggering when you have foreclosed properties. So we are going to have to do something about that.
But it would be a lot better investment that we prevent the foreclosures for those who are financially able to stay in their homes. I think that is what your legislation does. I applaud you for that. Every person we can keep in the home who can afford to stay there will benefit many more people in that community. By the way, it is good for local Government. It will help their property tax revenues. It is good for local governments; I think it will reduce their costs. I think it is a win-win situation. So I congratulate you for bringing forward a bill we can act on quickly, in order to save homes for people who otherwise are likely to lose their homes and to strengthen neighborhoods that would otherwise be suffering as a result of those foreclosures.
I yield the floor.
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