Tax-savings bill pays you to 'green' up home

By Bob Keefe

The Atlanta Journal-Constitution

Call it a DIY tax break.

A bill introduced by two Georgia congressmen could net you a $2,000 tax deduction for buying certain building products or home furnishings — everything from mattresses and kitchen cabinets to furniture, flooring and paint — between now and the end of 2011.

U.S. Reps. Hank Johnson, a DeKalb County Democrat, and Nathan Deal, a Republican from Gainesville, say their proposed legislation — they call it the Home Improvements Revitalize the Economy, or HIRE, Act — could create or save more than 352,000 jobs and boost sagging home values nationwide.

That would help not only retailers such as Atlanta-based Home Depot and manufacturers of furniture, carpeting and other flooring products — many of which are based in Georgia — but also local contractors and construction companies nationwide, the congressmen say.

Under the legislation, taxpayers could get a tax deduction of up to 20 percent per couple or 10 percent per individual — or a tax credit of up to $500 — for qualified building products.

Spend $10,000 to put in new floors or remodel a kitchen, for instance, and you and your spouse could get a tax break of $2,000.

If the building products you use meet national green building standards, the deduction could be doubled.

Contractors and remodelers who resell qualifying building materials could take a tax deduction of up to $10,000.

Not surprisingly, businesses that would benefit say the Georgia congressmen hit the nail on the head with the proposed legislation.

“The HIRE Act will not only put money directly into consumers’ hands, it will also assist businesses like ours in retaining and creating U.S. jobs,” Stephen Fendrich, CEO of Atlanta-based mattress maker Simmons Co., said in a statement.

Added Home Depot spokesman Ron DeFeo: “We support legislation that encourages people to make investments in their homes.”

Critics, however, point out that industry-specific tax breaks typically don’t do as much overall good as they might seem.

“The downside is that we have to pay for it somewhere or somehow, either by lowering spending or raising taxes elsewhere,” said Gerald Prante, senior economist at the Tax Foundation, a right-leaning research group in Washington. “And if you have to raise taxes elsewhere, it’s definitely not going to be better for society overall.”

The home improvement legislation has a long way to go from becoming law. Congress won’t even consider it until it returns to work in September.

But already, it has received some support from lawmakers in other parts of the country where the home improvement supplies industry is big, such as New Jersey, North Carolina and Ohio. U.S. Reps. John Barrow of Savannah and Sanford Bishop of Albany, both Democrats, also have signed on as supporters.

Like the rest of the housing industry, the home improvement industry has been hammered by the recession. According to industry estimates, home furnishings and improvements businesses lost $67 billion from 2007 to 2008 and cut 273,000 jobs last year.

In Georgia alone, more than 50 businesses could get an immediate boost if the bill becomes law, according to Johnson’s office.

We need a break!

Tax break legislation for specific industries — which usually benefit their congressional sponsors’ voters and campaign contributors back home — isn’t unusual or new. But some proposals are more unusual than others. A sampling:

HAPPY ACT:
Formally called the Humanity And Pets Partnered through the Years (HAPPY) Act, the bill from U.S. Rep. Thaddeus McCotter, a Michigan Republican, would let pet owners take a tax deduction for pet care expenses.
TIRE ACT:
In addition to his HIRE Act, U.S. Rep. Hank Johnson, a DeKalb County Democrat, introduced the TIRE (Tire Investment, Recovery and Extension) Act that gives tax credits for vehicle fleet operators if they buy tires made from recycled rubber.
NEWSPAPER ACT:
Struggling newspapers could qualify for nonprofit, tax-exempt status — just like public broadcasting stations — as long as they quit endorsing political candidates under a bill from Sen. Benjamin Cardin, a Maryland Democrat.