The $8,000 first-time home buyer tax credit has generated a lot of discussion in the main stream media, as well as on various blogs and in YouTube videos.

Those opposed to the first-time home buyer tax credit argue that it is a federal government hand out that the nation cannot afford. In addition, opponents of extending the first-time tax credit believe the vast majority of people who purchased a home would have done so without the credit; however, some reports put the number of people who purchased a home because of the tax credit at between 300,000 and 400,000. 

A recent report that thousands of tax credit are fraudulent (apparently a four-year-old filed a claim) has given opponents more evidence that the program is a waste of federal tax dollars.

With local, state and national Realtor and home builder associations voicing strong support to Congress and the Obama Administration, a tax credit extension seems likely. Various proposals to extend the tax credit are competing in the U.S. Senate. One proposal would simply extend the tax credit through June. Another proposal would increase the tax credit to $15,000.

U.S. Senate Majority Leader Harry Reid of Nevada recently suggested yet another proposal that would extend the current tax credit four months and then phase it out over the course of 2010. The value of the credit would decline $2,000 every quarter. U.S. Speaker Nancy Pelosi apparently wants to extend the credit to all home buyers, not just first-time home buyers.

Supporters of the tax credit argue that the tax credit has stabilized the U.S. housing market, an important piece of the nation's economy. Realtor groups claim that each home purchase adds $63,000 to the economy. In addition, housing inventory around the U.S. has declined, putting inventory closer to normal levels.

I think the tax credit should be extended and expanded. I would be happy with an extension until June 30, 2010. I also think all home buyers, not just first-time home buyers, should be eligible for the tax credit. In addition, the income limits should be double to $150,000 for an individual and $300,000 for joint filers. Finally, the tax credit should be for existing homes only, not new construction. Such a limitation would discourage building in states that still have a glut of new homes.

Virtually all of my clients that are eligible for the tax credit have told me they plan to use the tax credit to improve the property. There isn't any doubt in my mind that this tax credit is putting people back to work, and that is not a waste of taxpayer money.

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