A Tax Credit to Create Jobs (Oct. '10 Constituent Newsletter)

By Assemblyman Lou Greenwald

Home sales in New Jersey fell 23 percent in May and 27 percent in June. Those numbers are even scarier considering those are typically busy times for the real estate market. Construction of homes has plummeted, and our unemployment rate stands at over 9 percent.

It’s simple to explain—falling sales in homes means a weaker economy and fewer jobs for New Jersey. That is why I worked hard for months in a bipartisan fashion to pass my bill creating a tax credit for homebuyers in New Jersey. This Homebuyer Tax Credit would make the American Dream more affordable for families and give our housing market the shot in the arm it needs.

Under the bill, the tax credits would be allowed for up to $15,000 or 5 percent of the home purchase price, whichever is less. The total credits would be capped at $100 million, with $75 million set aside for newly constructed homes.

Estimates show that this bill would create 18,150 jobs. Carpenters and bricklayers would begin work on new projects. Pipefitters, electricians, and other construction workers—an industry that is experiencing nearly 40% unemployment—would move from the unemployment lines to the job site. But the job creation doesn’t end with construction workers.

When a family buys a home, they typically go shopping. They purchase furniture and decor. They shop around for flooring and appliances. These new purchases—driven by purchasing a new home—helps local retailers’ bottom lines, allowing them to create jobs. Statistics show 70 percent of our economy is consumer-driven, and home sales combined with associated retailers and industries are a key driver of our economy.

Moreover, by stimulating our economy, my Homebuyer Tax Credit would generate $500 million in state income tax revenue—revenue which would be dedicated to property tax relief. And because the credit would be spread over three years, this newly generated revenue would more than cover the tax credit’s $33 million per year cost.

That is why my bill achieved strong, bipartisan support, passing the Assembly 67-8 and the Senate 38-0. Unfortunately, the Governor vetoed my bill. More unfortunately, we are already seeing the devastating consequences of that veto—with local employers like Georgia Pacific, a major manufacturer of housing materials, announcing they will lay off workers.

New Jersey’s economy and our families are suffering. Reinvigorating our housing sector is the key to creating jobs and jump-starting our economy. I believe it is time to put partisanship aside—as we had originally done in passing the Homebuyer Tax Credit with strong, bipartisan support. I look forward to working with my colleagues on both sides of the aisle to put New Jersey families first and stimulate our housing market.

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