[quote=Rich Toscano]I don’t believe this is a level playing field situation even if it applies to all businesses.

Let’s just take Bob Toll as an example. He took huge risks, accordingly made huge money during the boom, and then lost a lot in the bust.

Now contrast that to a business run by someone who wasn’t reckless. This hypothetical owner was more careful so had more modest profits in the boom, but then didn’t lose money in the bust. So this policy doesn’t benefit this business owner at all.

The net of it is that it benefits the homebuilder by subsidizing the losses he took for being reckless, but it doesn’t have a direct impact on the non-reckless.

So it is a question of bailing out the reckless (again). It’s not a level playing field because it largely rewards those who took huge, stupid risks, while not providing any help to those who did not.

Rich[/quote]

Technically, this is true, but… I seriously doubt that the “more careful” business owner you describe above would rather be in Bob Toll’s situation – that is, losing a shitpile of money but now getting the benefit of receiving tax dollars formerly paid out in profitable years. At the margin, I’m just not sure that there are many folks who would act more recklessly simply because they knew they might get to re-claim taxes paid in a prior period (at least I’m speaking for myself and the businesses I’m involved with). The TARP program and plenty of other measures taken by the government are, in my view, clear examples of creating moral hazard and warping incentives and behavior. But this “tax recapture” – I don’t view it in the same terms. (Recall that the TARP capital was “new” capital, while “tax recapture” is simply a return of taxes that the company already paid out of previous profits. These are two very different things.) As long as everyone’s getting the same treatment – which a prior poster is suggesting is the case (I don’t know) – then it doesn’t bother me too much.