The federal estate tax affects only the wealthiest 2
percent of the U.S. population. So why should most Westerners care
about the current Republican push to repeal
it?
One reason is that part of that wealth isn’t
cash. It’s undeveloped land. And in some cases, the threat of
estate taxes keeps it permanently
undeveloped.
Here’s how. When a landowner donates
his or her development rights to a land trust – an arrangement
known as a conservation easement – the heirs get a significant
break on estate taxes (HCN, 2/28/00). The taxes can be huge,
sometimes more than half the value of the property, so the promise
of a deduction makes conservation easements very
attractive.
“It’s an attention-grabber,” says
Russ Shay of the national Land Trust Alliance. “It’s a way to get
in a person’s door, to talk to someone who might not have thought
about a conservation easement.”
But the Land
Trust Alliance hasn’t taken a position on the issue, because repeal
might also keep some open space intact. Inflated property values
around some resort towns have vaulted some ranchers into that
exclusive 2 percent of the population, mainly because profits from
development are potentially enormous. But when a ranch is inherited
by a family, cash-poor heirs sometimes subdivide the property to
pay the estate tax. Without the tax burden, ranch heirs might opt
to stay in business.
On Sept. 7, the House of
Representatives failed to override President Clinton’s veto of the
estate-tax repeal bill. Republicans in Congress vow to keep up
their fight.
* Michelle Nijhuis
This article appeared in the print edition of the magazine with the headline Does the “death tax’ protect open space?.
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