With mortgage interest rates creeping higher again (and yes, I realize by historical standards, they’re still low, but as a housing stimulus they would need to be below 4 percent), a new idea is floating around industry associations and Capitol Hill. It’s another home buyer tax credit. The current $8000 credit for first time home buyers only expires November 30th. The new proposal is for a $15,000 tax credit for all home buyers.

A new bill from Sen. Johnny Isakson (R-GA), who used to be in the real estate business, would not only offer a bigger credit to a wider swath of potential home buyers, it would also removed the income caps ($75,000) that kept a lot of buyers out of the current credit.

It’s debatable just how much the first time home buyer tax credit juiced the spring housing market. It certainly didn’t hurt, but some say it wasn’t nearly enough, given its limitations. Even allowing borrowers to monetize the credit up front, which HUD recently announced, left a lot of earlier potential buyers out.

“Stimulating the housing market is one of the best ways Congress can help accelerate the recovery of our national economy,” said David Kittle, Chairman of the Mortgage Bankers Association in a press release. Obviously everyone, from the builders to the Realtors support the proposal.

“Due to expire at the end of November, the current $8,000 first-time home buyer tax credit has proved to be an effective policy targeted toward a specific demographic group that is showing tangible results,” chimes NAHB Chairman Joe Robson. “Enhancing this credit would help to stoke the economic engine at a key point in our recovery.”

The question is: At what cost? A letter to Sen. Isakson from the Joint Committee on Taxation provides a revenue estimate for Isakson’s bill, S.1230, the “Home Buyer Tax Credit Act of 2009.”

Assuming an enactment date of July 1, 2009, we estimate that your proposal would have the following effect on Federal fiscal year budget receipts:

I’m not arguing either way for the credit, I just think we should have our eyes wide open as this debate begins.

Questions?  Comments?