Clean
Water Action * Defenders of Wildlife
* Energy
and Environment Study Institute * * Friends
of the Earth Natural
Resources Defense Council
* Redefining Progress
* U.S. Public Interest Research
Group * The Wilderness
Society
June 17, 2003
June 17, 2003
Dear
Representative,
As the nations leading environmental and conservation
organizations, we are writing to urge
you to oppose H.R. 8, the “Death Tax Repeal Permanency Act of 2003.” This
legislation proposes to make the estate tax repeal contained in Public Law
107-16 permanent. We are concerned that repealing the Estate Tax may have
unintended negative consequences for land conservation and may not
appropriately address the real threats to family farms.
As conservationists interested in protecting open space,
forests and farms, we are concerned that current legislative proposals
to repealing the Estate Tax law would eliminate reduce an
important incentive to permanently protect land. The Internal Revenue Code currently allows a deduction from the
estate tax for the voluntary donation of land to qualified organizations for
permanent conservation. This tax code
provision, IRC 2031(c), has helped to permanently protect millions of acres by
providing an incentive for willing landowners to donate land for conservation
purposes as they limit the estate tax liability for their heirs.
In
2001, Rrecognizing the importance of the Estate Tax
effect on land conservation, Congress , in 2001, eliminated the geographical
limitation that limited estate donation to land within 25 miles of a
metropolitan area, National Park or wilderness area; or within 10 miles of an
Urban National Forest. Estimates indicate that without these restrictions
land conservation donations should increase over $100 million over 5 years and
almost $300 million in 10 years.
Very little is known about how a repeal of the Estate Tax
will impact farm ownership, forest lands, or land conservation. To our knowledge, this issue has never been
seriously investigated by the Joint Committee on Tax, the General Accounting
Office, or the Treasury Department. To our
knowledge, neither the Joint Committee on Taxation, the General Accounting
Office, nor the Treasury Department has ever seriously investigated the issue. From the limited evidence that
exists, it appears that repealing the Estate Tax will not help most farmers or
forestland owners.
Estate Tax repeal advocates cite anecdotal evidence of heirs subdividing farms and liquidating habitat to pay the Estate Tax. While this can be a problem in theory, there is little credible evidence that suggests this is a widespread dilemma. Neil Harl, an attorney and farm tax expert at Iowa State University, notes that, to his knowledge, no farm in Iowa has been sold because of estate taxes. Several provisions have been established in the estate tax to reduce unintended impacts on farmers. For example, heirs who meet certain conditions and continue farming agricultural estates are allowed to pay any incurred estate tax over 14 years. Another provision allows farmers to value their land based on its “use-value” as farmland rather than the potentially higher market value that developers might be willing to pay. The National Farmers Union representing 300,000 farmers and ranchers has spoken out against outright repeal of the estate tax.
Numerous
improvements can be made to the Estate Tax, both in terms of reducing any
threat to small farmers or its threat to farmland and increasing incentives for
land conservation, but a straight repeal of the Estate Tax will do
neither. We urge you to oppose H.R. 8,
and preserve this important incentive for land conservation.
Sincerely,
Lynn Thorp
Clean Water Action
Mary
Beth Beetham
Director,
Legislative Affairs
Carol Werner
Executive Director
Energy and Environment Study Institute
Sara
Zdeb
Legislative
Director
Friends
of the Earth
Alyssondra Campaigne
Legislative Director
Michel Gelobter
Executive Director
Anna
Aurilio
Legislative
Director
U.S.
Public Interest Research Group
Linda Lance
Vice
President for Public Policy
The
Wilderness Society