DATE: June 19, 2002
BACKGROUND: Yesterday the U.S. Senate Finance Committee approved out of committee the U.S. Care Act of 2002, a bill initially designed to promote donations to charitable organizations through tax incentives. However, Senator Max Baucus (D-MT), Chairman of the Senate Finance Committee, and Senator Charles Grassley, (R-IA), ranking member, added a provision that would give private property owners a 25 percent reduction in the capital gains tax if they sell their property to a local, state or federal government or non-profit group such as an environmental group for purposes of conservation. Several Republican senators as well as the White House have endorsed the plan as well. The White House proposed a 50 percent capital gains tax reduction for this provision earlier this year, calling it a "Conservation Tax Credit."
TEN SECOND RESPONSE: Why should the government encourage with a subsidy the sale of private property to one buyer over another? All buyers and sellers should be equal in the marketplace.
THIRTY SECOND RESPONSE: This expensive proposal would take property off the tax rolls and deprive communities of money to fund schools, roads and law enforcement and probably harm the environment as well. Only someone who believes governments are better stewards of the land than private citizens could possibly favor such a proposal. The record is starkly and scandalously clear: Private owners are much better stewards of the land than any government. Furthermore, if a government agency truly believes it is best for the land to be owned by government, it always has the option of outbidding the other prospective buyers -- an option that would be far less expensive for taxpayers than this program of subsidizing all land purchases, regardless of environmental merit. This proposal is also an inappropriate fundraising scheme for environmental organizations, many if not most of which have a political agenda.
DISCUSSION: Earlier this year the Bush Administration's Department of Interior included in its budget a "Conservation Tax Credit" to give a 50 percent reduction in the capital gains tax if a property owner "voluntarily sell[s] land or water to a government agency or qualified conservation organization for conservation purposes." Now a similar provision has reappeared in the faith-based charity bill. To receive the reduction in capital gains tax, the sale must be for a "qualified conservation purpose" which includes preserving the land for outdoor recreation, protection of natural habitat or preserving open space for the "scenic enjoyment of the general public." This provision would apply for sales made after December 31, 2003.
The provision for the capital gains tax reduction was sponsored by the following 11 senators: Senator Jeffords (I-VT), Senator Grassley (R-IA), Senator Baucus (D-MT), Senator Hatch (R-UT), Senator Snowe (R-ME), Senator Daschle (D-SD), Senator Kerry (D-MA), Senator Lincoln (D-AR), Senator Bingaman (D-NM), Senator Rockefeller (D-WV), Senator Torricelli (D-NJ). Senator Phil Gramm's (R-TX) motion to strike the provision was defeated. The bill, a substitute for the House bill H.R. 7, now goes to the full Senate. H.R. 7, approved by the House, does not contain this tax reduction provision.
To view the provision proposed in "The Care Act of 2002": http://www.house.gov/jct/x-57-02.pdf (see page 20 of the written report or page 23 in Adobe Acrobat).
The federal government currently owns about 30% of the land in the U.S. or over 650 million acres. (1)
by Gretchen Randall, Director
John P. McGovern, MD Center for Environmental and Regulatory Affairs
The National Center for Public Policy Research
Contact the author at: 773-857-5086 or [email protected]
The National Center for Public Policy Research, Chicago office
3712 North Broadway - PMB 279
Chicago, IL 60613
Report for Congress: RL30126: Federal Land Ownership: Constitutional
Authority; the History of Acquisition, Disposal, and Retention;
and Current Acquisition and Disposal Authorities" by Ross
W. Gorte and Pamela Baldwin, April 7, 1999, downloaded from http://www.cnie.org/nie/crsreports/risk/rsk-50.cfm#37
on June 18, 2002.