Title: Meridian Institute Dialogue on Forested Lands and Taxation
1Meridian InstituteDialogue on Forested Lands and
Taxation
18 October 2006 Todd Barker Partner Meridian
Institute
2Meridian Institute is a non-profit organization
that helps people solve problems and make
informed decisions about complex and
controversial societal problems
Services Multi-Party Problem Solving Strategy
Assessment and Planning Leadership in the Theory
and Practice of Collaboration Issues Environment
, Natural Resources, Agriculture, Food Security,
Science and Technology, Security, and
Health Scale Local, national and international
levels
3Meridian Institute Selected Forestry Projects
- Millennium Ecosystem Assessment (MA)
- First and Second International Dialogue on Forest
Certification - Comparative Analysis of the Forest Stewardship
Council (FSC) and Sustainable Forestry Initiative
(SFI) - Collaborative Adaptive Management Network
(CAMNet) - Workshop Series on Implementation of ESA
Provisions for Private Landowners - Multi-Stakeholder Dialogue on Roadless Area
Conservation - Roundtable on Sustainable Forests
- Workshop on Assessing the Environmental Outcomes
of Community-Based Collaboratives (CBCs) - Wyoming Landowner Sportsmen Forum
- Loblolly Pine Genome Funding Principal
Investigators Meeting
4Meridian DialogueForested Lands and Taxation
- Goal
- Outline federal tax-related strategies to
eliminate disincentives and promote incentives
for private landowners, both industrial and
non-industrial, to maintain forests as forests
and to prevent further fragmentation in this
country. - 2 Meetings
- Consensus building process
- 30 individuals from national and regional
environmental organizations industrial forest
landowners non-industrial forest landowners
state foresters the U.S. Forest Service and
experts in forest and tax policy and management
5Dialogue Topics Covered
- CAPITAL GAINS
- CONSERVATION EASEMENTS
- COST RECOVERY
- ESTATE TAXES
- MARKET FORCES AND LAND USE POLICIES
6Recommendations
- CONSERVATION EASEMENTS
- No. 1 Income Tax Deduction
- No. 2 Income Tax Deduction
- No. 3 Sale of Easements to Land Trusts or
Government Agencies - COST RECOVERY
- No. 4 Material Participation
- No. 5 Stewardship, Restoration, and
Reforestation - No. 6 Wilderness Tax Credit
- ESTATE TAXES
- No. 7 Estate Tax Deferral An Agreement in
Principle - No. 8 Special Use Valuation
- No. 9 Section 6166, Business Requirement
- No. 10 Conservation Easement (IRC 2031(c))
- No. 11 Conservation Easement (IRC 2031(c))
- No. 12 Estate Planning
- TASK FORCE and INDEPENDENT STUDY
7Implementation
- Recommendations 1 and 2
- Increase tax deduction for donation of a
conservation easement from 30 of income to 50
of income, and provide unlimited carryover of
these deductions. - Increased the carryover of these deductions from
5 to 15 years. - Congress recently enacted changes that increase
the tax deduction for donation of a conservation
easement from 30 of income to 50 and, for
landowners whose income is more than 50 from
agriculture including the growing and harvesting
of trees, 100 of income. - Expires for donations made after December 31,
2007. - Recommendation 10
- Remove the geographic limitations on estate tax
benefits available through IRC 2031(c) (for
easement protected lands). - Enacted by Congress in 2001
8Implementation
- Recommendation 12
- Integrate estate planning into both public and
private sector education, extension, and
cooperative forestry programs designed for
non-industrial private landowners. - Establishment of a National Timber Tax Website by
Purdue University with funding from USFS. - Http//www.timbertax.org/estate/estate.asp
9Property Taxes
- Cost Recovery Section
- Recommendation No. 4 Material Participation
- Eliminate the requirement of material
participation for forest landowners and
eliminate the distinction between businesses and
investors in order to allow all owners to fully
deduct management expenses and property taxes
related to their forestland as they occur. - Recommendation No. 6 Wilderness Tax Credit
- Provide a tax credit for the property taxes paid
on properties for which an easement has been
enacted that requires land to be used in a manner
consistent with lands designated as federal
wilderness areas (Dialogue members discussed a
number in the range of a 100 percent tax credit).
10Property Taxes
- Recommendation No. 13 Presidential Task Force
and the Need for an Independent Study - Issue (2b) The feasibility and effectiveness of
reforming any state property taxes for
forestlands that are still based on highest and
best use valuation instead of current use
valuation, and improving conversion protections
on lands receiving preferential tax treatment. - Discussion (2b) A number of forested states
have recognized that taxing forestlands based on
their development potential (or highest and best
use) can force landowners to sell off and
develop their property
11Property Taxes
- Item (2c) Some local governments and regional
planning entities have been experimenting with
mechanisms that may encourage more land-efficient
development patterns, or smart growth. TDR
programs provide a means for landowners in areas
planned for maintenance as forestlands to sell
their development rights to landowners in areas
planned for development. Clustering programs
encourage owners of larger properties to
cluster development in one portion of the
property and protect the remainder, instead of
dispersing the development across the property.
12Meridian Institute
Todd Barker E-mail tbarker_at_merid.org Telephone
1-802-899-2625
Additional Resources
- Http//www.merid.org/pdf/9044FINAL.pdf
- Meridian Institute Dialogue on Forested Lands and
Taxation - Http//www.merid.org
- Meridian Institute