Yahoo Finance asked this question about the home buyer tax credit yesterday, "Should it expire?"  Short answer:  Yes! [Thanks L!]

Now while the Yahoo article gives a number of dumb reasons for letting the program expire [The panic is over, things are "normalizing", the usual.] they have a couple of good reasons too. 

For one, this is continuing some bad lending practices:

For example, some state housing agencies are allowed to provide second mortgages to buyers who don’t have enough money for a down payment so that they might "monetize" the tax credit and get the cash up front. Down-payment assistance is considered by many to have contributed to the crisis because it helped people buy homes they couldn’t really afford. Anyone who doesn’t understand that it’s a bad idea to push people into buying houses when they’re not ready to hasn’t been paying attention for the past two years.

Two- people might come to expect it:

If a tax credit – or any other economic benefit – sticks around long enough, people start feeling entitled to it, even if it was originally supposed to be temporary. In academic literature this is called the endowment effect. Taking away such a program once it’s ingrained can be a monumental political challenge. It’s not just that expanding the home-buyer tax credit would cost $50 billion to $100 billion this year. It’s that it could easily wind up costing that every year.

Three- taxpayers are paying a lot for very little return:

According to the IRS, 1.4 million homes have been bought since the credit’s inception; the National Association of Realtors gives a somewhat higher figure of 1.8 million to 2 million. (Either way, the program is already going to cost about $15 billion if it winds down as planned, according to the Associated Press .) And yet, according to the NAR’s own math , the tax credit was the make-or-break factor in only 350,000 of those sales. The National Association of Homebuilders, another industry group lobbying to extend the credit, places this figure even lower, at 150,000 . In other words, the vast majority of homebuyers would have signed on the dotted line even without the government’s incentive.

As any marketing professional knows, you don’t measure a campaign’s success by how much it costs but by how much it costs per person to persuade consumers to change their behavior. As the observant bloggers over at Calculated Risk have pointed out , when you divide the number of “conversions” (that is, people who bought a house only because of the tax credit) by the total amount spent on the program, the numbers look very different. Now, instead of the program costing $8,000 per buyer, it costs $43,000.

We could go on- but the tax credit shouldn’t.  Here’s hoping legislators do the right thing [for a change] and let the silly thing die.