A little-known fact hidden in the stream of news regarding the extension of the Home Buyer Tax Credit is that the tax credit has such enormous multiplier effects that it actually (Almost) pays for itself.
According to an October 16, 2009 release from Associated Press (AP), 
Brookings Institution Economist Ted Gayer stated that the estimated 383,000 additional home sales that would result from extending the credit to all buyers for one year would cost about $15.3 Billion.
However, in testimony before the House Small Business committee on October 8, 2009, Joe Robson, NAHB’s president and a builder in Broken Arrow, Oklahoma, said that “We estimate that these enhancements would increase home purchases by 383,000 in the next year; increase housing starts by 82,000; create more than 347,000 jobs; generate $16.1 billion in wages and salaries; $12.1 billion in business income and tax income of $8.4 billion for the federal government; and $3.2 billion for state and local governments.”
So then, the net cost to the federal government of extending the Tax Credit to all home buyers for one year is not $15.3 billion, but only $6.9 billion: $15.3 billion, less the $8.4 billion in increased income taxes.
But then there are also the increased taxes to state and local governments of $3.2 billion to be considered, which reduces the net cost further to only $3.7 billion: $6.9 Billion less the $3.2 billion.
One could argue that the $3.2 billion could also be considered as a savings to the federal government because a large part of the stimulus bill was to fund payments directly to state and local governments. Typically, state and local governments don’t have the borrowing authority of the federal government and must balance their budgets annually. When tax revenues fall in a recession, they must find other sources of revenue (Uncle Sam) or lay off workers and curtail services.
And the dollar cost is only one part of the equation: What would you pay to have 347,000 American Citizens working again? What would you pay to stop the decline in home prices? What would you pay to free up the housing resale market to enable thousands of American who are trying to sell their existing homes to move on with their lives?
Housing 101 