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PRI's Environmental News Magazine

Estate Tax Battle

Air Date: Week of June 7, 2002

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The Senate will vote soon on a measure that would permanently repeal the estate tax. Living on Earth’s Anna Solomon-Greenbaum explains how this could have consequences for the environment.

Transcript

CURWOOD: Congress is now considering repealing the inheritance tax. The tax applies to about two percent of the population. And it kicks in when estates are worth at least $1 million. Supporters of the estate tax say it’s needed to redistribute the nation’s wealth. Critics, including the Bush administration, dub it the ‘death tax,’ and say people should be able to pass on what they’ve earned.

A temporary measure, adopted early in the Bush administration, gradually reduces and then eliminates the tax over a number of years. But it will come back if Congress fails to act. The House of Representatives has voted to repeal the tax. Soon the Senate will vote. And if you’re wondering what any of this has to do with the environment, Living on Earth’s Anna Solomon-Greenbaum explains.

SOLOMON-GREENBAUM: Almost three years ago, in the north woods of Maine, the Pingree family sold the development rights to three-quarters of a million acres of their timber-rich land. It was largest conservation easement in the history of the United States. Steve Schley, a member of the Pingree family, says the estate tax was a deciding factor.

SCHLEY: The estate tax was clearly one kicker that moved the family to say we need to ensure our future ability to protect this timberland ownership for future generations.

SOLOMON-GREENBAUM: By selling the development rights, the Pingrees lowered the value of their land and, consequently, the amount of estate tax they’ll have to pay on it each time a family member dies. Steve Schley admits without the estate tax, the historic land deal may not have happened. But he says the money and time spent avoiding the tax could have been better spent on the land.

SCHLEY: All of those resources could be much better allocated at improving our management or providing greater opportunity for public use, or any number of other things that would be productive as opposed to just simply destructive, rearguard kind of action.

SOLOMON-GREENBAUM: Schley says he’d like to see the tax he calls an insidious thorn in his family’s side repealed. But not everyone in the conservation community agrees.

COLLINS: The estate tax is a very important incentive for people to give bequests of land and farmland and easements to conservancy organizations.

SOLOMON-GREENBAUM: Chuck Collins is with United for a Fair Economy, a nonprofit group that’s fighting the repeal of the estate tax. Collins’ father started a land conservancy in northern Michigan many years ago. Collins asked his father what effect he thought repealing the estate tax would have on his work.

COLLINS: And he said, well, it would frankly be devastating because the estate tax gets people to plan, gets people to think about what their legacy is going to be. And it gives us a tool to approach a landowner and say, have you thought about making a bequest of this property when you die?

SOLOMON-GREENBAUM: Staff at land conservancies say the estate tax makes it easier to broach that sensitive question. They admit many gifts of land, particularly the largest, are stimulated as much by estate tax worries as they are by donors’ good will. But not everyone thinks the estate tax benefits the environment. Sure, some families can afford to plan ahead and arrange conservation easements. But for many small landowners, that’s not practical or desirable.

ADLER: What happens, in a lot of cases, is that families are forced to sell off or develop portions of their land in order to pay off the estate tax burden.

SOLOMON-GREENBAUM: Jonathan Adler is Assistant Professor of Law at Case Western Reserve University. He says the estate tax leads to fragmented habitat, threatening species and ecosystems. There are loopholes in the tax for some landowners. And conservation easements are a good option for some.

ADLER: But a lot of those lands that are threatened by development wouldn’t have been threatened in the first place if the estate tax didn’t put a squeeze on families.

SOLOMON-GREENBAUM: It’s not just land that’s affected by the estate tax. The tax generated about $30 million in revenue for the federal government last year. Over the years, the loss of that revenue could affect social and environmental programs of all kinds. Charitable giving overall could take a hit, too. Chuck Collins of United for a Fair Economy says estate money is especially important to foundations, which then pass it on to smaller organizations.

COLLINS: So there will sort of be an indirect whammy on the environmental movement if you pull out the estate tax and the six, seven billion dollars of giving that come from bequests every year.

SOLOMON-GREENBAUM: Others argue repealing the estate tax will leave more money in the hands of the wealthy and allow them to give more freely. The debate isn’t likely to cool off in the next few weeks, as the estate tax heads to the Senate for a vote. For Living on Earth, I’m Anna Solomon-Greenbaum in Washington.

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