July 16, 2018
National Taxpayers Union
“…Recently, however, egged on by a few Members of Congress as well as tax practitioners who’ve made a living off advising clients to set up conservation easements in one particular way, the IRS adopted the vaguely sinister epithet of “syndicated” to describe easement deductions that are structured to allow groups of people to contribute land to conservation and share the tax incentive benefits. From this followed a contorted train of assumptions that led the IRS to issue a listed transaction notice in December of 2016 and then report on taxpayers’ forms only a narrow calculation of deduction numbers with no context reflecting the quality and quantity of land conserved. Why is this decision troubling for the integrity of tax administration writ large? There are a few possibilities.
From a practical, fiscal standpoint, the deduction is more efficient than government-driven spending programs. A fundamental driving principle of the charitable contributions tax deduction is that it recognizes the value of private sector initiatives for the betterment of society, often at a far greater return for every dollar spent than government programs could possibly achieve. The efficiency gains for numerous environmental purposes – such as wildlife habitat, air quality, or clean water – are considerable, as they avoid lengthy bureaucratic processes normally associated with government-driven environmental programs. More than 40 million acres of land have been put under private stewardship through this policy. Like any deduction (e.g. write-offs for teachers’ out of pocket school supplies, or restaurant donations to food banks) conservation easements mean that the Treasury collects less than 100 percent of the statutory tax rate. But what of the value of this private sector activity to taxpayers, which helps to offset even more federal expenditures on schools, hunger programs, and land preservation?”
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Pete Sepp is President of the National Taxpayers Union.