[Congressional Record Volume 146, Number 118 (Thursday, September 28, 2000)]
[Senate]
[Pages S9473-S9474]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS:
  S. 3134. A bill to amend the Internal Revenue Code of 1986 to provide 
an income tax credit for certain charitable conservation contributions 
of land by small farmers and ranchers, and for other purposes; to the 
Committee on Finance.


                    RURAL HERITAGE CONSERVATION ACT

  Mr. BAUCUS. Mr. President, our nation's agricultural heritage is a 
rich tradition, which encompasses much of what we are about as a 
people; hard work, common sense, and a deep respect for the land.
  In Montana, and in too many communities across America, our 
agricultural heritage is at risk. Productive farms and ranches that 
have been in the same family for generations are being forced to turn 
their back on the land they love in order to make ends meet.
  I applaud our current conservation easement system and the many fine 
non-profit organizations that have worked with landowners across 
America to protect millions of acres of land. The successes have been 
great, but so too have the lessons.
  What we have learned is that the current system does not work 
particularly well for working farmers and ranchers. That's why I've 
introduced the Rural Heritage Conservation Act, a creative approach 
that provides farmers and ranchers with a real incentive to preserve 
their, and our, agricultural heritage.
  Over the past twenty-five years, over 3 million acres of agricultural 
land have been lost to development in Montana alone. Many of these 
acres were lost when family farms, hit hard by tough times, chose to 
give up their generations of old farming operations and sell to 
developers in order to pay their outstanding debts.
  The measure proposed in this legislation will expand the current 
conservation easement tax incentive program with an eye toward making 
the system work better for the bulk of real, working farmers and 
ranchers who would like to preserve their land for future generations 
but for whom the current system does not provide any meaningful 
incentive.
  Let me give you a real-life example that was presented by my good 
friend Jerry Townsend of Highwood Montana before the Senate Finance 
Committee's subcommittee on Tax and IRS oversight.
  Mr. Townsend testified that when he gave a conservation easement to 
the Montana Land Reliance, the value of his deduction was $524,000. 
However, under current law, over the last five years he has only been 
able to save $1,858 in federal taxes. Not much of an incentive, 
particularly when you factor

[[Page S9474]]

in the $2,500 he paid for the appraisal required to complete the 
conservation easement process.
  The Rural Heritage Conservation Act will do three things.
  First, it will create a targeted, limited tax credit for farm and 
ranch filers who donate a conservation easement to a qualified land 
trust. Mr. Townsend's example is all too familiar a story to farmers 
and ranchers throughout America. The relatively small deduction they 
can obtain under current law does not in any way equate to either the 
potential income they have forfeited or the value the public has gained 
from the donation. As a result, fewer and fewer farmers and ranchers 
are donating conservation easements and protecting their land for 
future generations.
  To protect against abuse, the bill calls for a cap on the total tax 
credit available under the program and requires that a majority of the 
income for the qualifying filer be from farm and ranch operations.
  Second, this legislation will level the playing field for all types 
of agricultural filers. Current law allows C-Corps to deduct up to 10 
percent of their income compared to the 30% allowed for other business 
types including Limited Liability Companies, Sole Proprietorships and 
Limited Liability Partnerships.
  According to figures presented by the Montana Land Reliance, there 
are some 40,000 acres of land in Montana alone owned by C-Corporations, 
in most cases family held, that have identified the 10 percent limit as 
a barrier to their contributing an easement.
  Third, the bill would eliminate the current provision that limits 
additional estate tax relief to landowners only within a 25 mile radius 
of a metropolitan area.
  As we have discussed at some length in this very chamber, estate tax 
is a significant issue for many Americans, including those who live in 
farm and ranch households. The current radius restriction works to the 
financial disadvantage of people who live in states with sparse 
populations.
  Elimination of the radius will be a significant improvement to 
current law and will enable many rural families to pass along to future 
generations family farms and ranches that are so much a part of the 
very heart of America.
  Protecting our agricultural heritage and the land that makes it 
possible is good public policy. I believe that the Agricultural 
Heritage Preservation Act is a creative, common sense approach to 
improving the current conservation easement program and making it work 
better to meet this important goal. I'm not claiming that this approach 
is the ``perfect'' approach, or the only way to accomplish our goals. 
But it's clear that the current system does not work effectively for 
small farmers and ranchers and we must do more. I hope that the 
introduction of this bill will initiate an informed, intelligent 
discussion of this important matter. We must find the best way to solve 
this problem that threatens the conservation of our agricultural lands 
and rural way of life.
  I hope that as we consider other land conservation initiatives and 
other measures to make significant changes to the estate tax system, 
that the changes I'm proposing in the Rural Heritage Conservation Act 
will be a key part of the discussion.
                                 ______