[House Report 113-494]
[From the U.S. Government Publishing Office]


113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     113-494

======================================================================



 
              CONSERVATION EASEMENT INCENTIVE ACT OF 2014

                                _______
                                

 June 26, 2014.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

            Mr. Camp, from the Committee on Ways and Means, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 2807]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 2807) to amend the Internal Revenue Code of 1986 to 
make permanent the special rule for contributions of qualified 
conservation contributions, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................2
          A. Purpose and Summary.................................     2
          B. Background and Need for Legislation.................     2
          C. Legislative History.................................     3
 II. EXPLANATION OF THE BILL..........................................3
          A. Special Rule for Qualified Conservation 
              Contributions Made Permanent (sec. 170(b) of the 
              Code)..............................................     3
III. VOTES OF THE COMMITTEE...........................................6
 IV. BUDGET EFFECTS OF THE BILL.......................................8
          A. Committee Estimate of Budgetary Effects.............     8
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................     9
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................     9
          D. Macroeconomic Impact Analysis.......................    10
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......10
          A. Committee Oversight Findings and Recommendations....    10
          B. Statement of General Performance Goals and 
              Objectives.........................................    10
          C. Information Relating to Unfunded Mandates...........    10
          D. Applicability of House Rule XXI 5(b)................    11
          E. Tax Complexity Analysis.............................    11
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................    11
          G. Duplication of Federal Programs.....................    11
          H. Disclosure of Directed Rule Makings.................    12
 VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........12
VII. DISSENTING VIEWS................................................14

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Conservation Easement Incentive Act of 
2014''.

SEC. 2. SPECIAL RULE FOR CONTRIBUTIONS OF QUALIFIED CONSERVATION 
                    CONTRIBUTIONS MADE PERMANENT.

  (a) In General.--
          (1) Individuals.--Subparagraph (E) of section 170(b)(1) of 
        the Internal Revenue Code of 1986 is amended by striking clause 
        (vi).
          (2) Corporations.--Subparagraph (B) of section 170(b)(2) of 
        such Code is amended by striking clause (iii).
  (b) Effective Date.--The amendments made by this section shall apply 
to contributions made in taxable years beginning after December 31, 
2013.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    Similar to a provision contained in the discussion draft of 
the ``Tax Reform Act of 2014'' released on February 26, 2014, 
the bill, H.R. 2807, reported by the Committee on Ways and 
Means, provides that individuals may deduct the fair market 
value of qualified conservation contributions up to 50 percent 
of the individual's adjusted gross income (AGI). H.R. 2807 
provides that farmers and ranchers may deduct the fair market 
value of qualified conservation contributions up to 100 percent 
of AGI (or 100 percent of taxable income in the case of a 
corporate farmer or rancher), provided the property used in 
agricultural or livestock production remains available for such 
production. An identical, temporary provision expired for 
taxable years beginning after December 31, 2013.

                 B. Background and Need for Legislation

    While the Committee continues actively to pursue 
comprehensive tax reform as a critical means of promoting 
economic growth and job creation, the Committee also believes 
that it is important to provide individuals and small 
businesses permanent, immediate tax relief to encourage faster 
economic growth and job creation, while fostering charitable 
giving. By reinstating and making permanent the increased 
deduction limits for qualified conservation contributions, H.R. 
2807 restores an important incentive for contributions of 
conservation easements that benefit the nation's communities 
and the environment. The deduction for qualified conservation 
contributions was intended to spur new donations of 
conservation easements. According to testimony received by the 
Committee, in the first two years following its original 
enactment, the temporary rule doubled the number of 
conservation easement donations in comparison to the two prior 
years, and increased the acreage conserved by about 32 percent. 
H.R. 2807, which is similar to a provision contained in the 
February 26, 2014, discussion draft of the ``Tax Reform Act of 
2014,'' will continue these results by providing certainty and 
stability to individuals and businesses seeking to contribute 
conservation easements.

                         C. Legislative History


Background

    H.R. 2807 was introduced on July 24, 2013, and was referred 
to the Committee on Ways and Means.

Committee action

    The Committee on Ways and Means marked up H.R. 2807, the 
Conservation Easement Incentive Act of 2014, on May 29, 2014, 
and ordered the bill, as amended, favorably reported (with a 
quorum being present).

    Committee hearingsThe need for permanent rules regarding 
qualified conservation contributions was discussed at no fewer 
than three hearings during the 112th and 113th Congresses:
            Select Revenue Measures Subcommittee 
        Hearing on Certain Expiring Tax Provisions (April 26, 
        2012);
            Select Revenue Measures Subcommittee 
        Hearing on Framework for Evaluating Certain Expiring 
        Tax Provisions (June 8, 2012); and
            Full Committee Hearing on Tax Reform and 
        Charitable Contributions (February 14, 2013).

                      II. EXPLANATION OF THE BILL


A. Special Rule for Qualified Conservation Contributions Made Permanent 
                       (sec. 170(b) of the Code)


                              PRESENT LAW

Charitable contributions generally

    In general, a deduction is permitted for charitable 
contributions, subject to certain limitations that depend on 
the type of taxpayer, the property contributed, and the donee 
organization. The amount of deduction generally equals the fair 
market value of the contributed property on the date of the 
contribution. Charitable deductions are provided for income, 
estate, and gift tax purposes.\1\
---------------------------------------------------------------------------
    \1\Secs. 170, 2055, and 2522, respectively.
---------------------------------------------------------------------------
    In general, in any taxable year, charitable contributions 
by a corporation are not deductible to the extent the aggregate 
contributions exceed ten percent of the corporation's taxable 
income computed without regard to net operating or capital loss 
carrybacks. Total deductible contributions of an individual 
taxpayer to public charities, private operating foundations, 
and certain types of private nonoperating foundations generally 
may not exceed 50 percent of the taxpayer's contribution base, 
which is the taxpayer's adjusted gross income for a taxable 
year (disregarding any net operating loss carryback). To the 
extent a taxpayer has not exceeded the 50-percent limitation, 
(1) contributions of capital gain property to public charities 
generally may be deducted up to 30 percent of the taxpayer's 
contribution base, (2) contributions of cash to most private 
nonoperating foundations and certain other charitable 
organizations generally may be deducted up to 30 percent of the 
taxpayer's contribution base, and (3) contributions of capital 
gain property to private foundations and certain other 
charitable organizations generally may be deducted up to 20 
percent of the taxpayer's contribution base.
    Contributions in excess of the applicable percentage limits 
generally may be carried over and deducted over the next five 
taxable years, subject to the relevant percentage limitations 
on the deduction in each of those years.

Capital gain property

    Capital gain property means any capital asset or property 
used in the taxpayer's trade or business the sale of which at 
its fair market value, at the time of contribution, would have 
resulted in gain that would have been long-term capital gain. 
Contributions of capital gain property to a qualified charity 
are deductible at fair market value within certain limitations. 
Contributions of capital gain property to charitable 
organizations described in section 170(b)(1)(A) (e.g., public 
charities, private foundations other than private non-operating 
foundations, and certain governmental units) generally are 
deductible up to 30 percent of the taxpayer's contribution 
base. An individual may elect, however, to bring all these 
contributions of capital gain property for a taxable year 
within the 50-percent limitation category by reducing the 
amount of the contribution deduction by the amount of the 
appreciation in the capital gain property. Contributions of 
capital gain property to charitable organizations described in 
section 170(b)(1)(B) (e.g., private non-operating foundations) 
are deductible up to 20 percent of the taxpayer's contribution 
base.
    For purposes of determining whether a taxpayer's aggregate 
charitable contributions in a taxable year exceed the 
applicable percentage limitation, contributions of capital gain 
property are taken into account after other charitable 
contributions.

Qualified conservation contributions

    Qualified conservation contributions are one exception to 
the ``partial interest'' rule, which generally bars deductions 
for charitable contributions of partial interests in 
property.\2\ A qualified conservation contribution is a 
contribution of a qualified real property interest to a 
qualified organization exclusively for conservation purposes. A 
qualified real property interest is defined as: (1) the entire 
interest of the donor other than a qualified mineral interest; 
(2) a remainder interest; or (3) a restriction (granted in 
perpetuity) on the use that may be made of the real property. 
Qualified organizations include certain governmental units, 
public charities that meet certain public support tests, and 
certain supporting organizations. Conservation purposes 
include: (1) the preservation of land areas for outdoor 
recreation by, or for the education of, the general public; (2) 
the protection of a relatively natural habitat of fish, 
wildlife, or plants, or similar ecosystem; (3) the preservation 
of open space (including farmland and forest land) where such 
preservation will yield a significant public benefit and is 
either for the scenic enjoyment of the general public or 
pursuant to a clearly delineated Federal, State, or local 
governmental conservation policy; and (4) the preservation of 
an historically important land area or a certified historic 
structure.
---------------------------------------------------------------------------
    \2\Secs. 170(f)(3)(B)(iii) and 170(h).
---------------------------------------------------------------------------
    Qualified conservation contributions of capital gain 
property are subject to the same limitations and carryover 
rules as other charitable contributions of capital gain 
property.

Temporary rules regarding contributions of capital gain real property 
        for conservation purposes

            In general
    Under a temporary provision\3\ the 30-percent contribution 
base limitation on contributions of capital gain property by 
individuals does not apply to qualified conservation 
contributions (as defined under present law). Instead, 
individuals may deduct the fair market value of any qualified 
conservation contribution to the extent of the excess of 50 
percent of the contribution base over the amount of all other 
allowable charitable contributions. These contributions are not 
taken into account in determining the amount of other allowable 
charitable contributions.
---------------------------------------------------------------------------
    \3\Sec. 170(b)(1)(E).
---------------------------------------------------------------------------
    Individuals are allowed to carry over any qualified 
conservation contributions that exceed the 50-percent 
limitation for up to 15 years.
    For example, assume an individual with a contribution base 
of $100 makes a qualified conservation contribution of property 
with a fair market value of $80 and makes other charitable 
contributions subject to the 50-percent limitation of $60. The 
individual is allowed a deduction of $50 in the current taxable 
year for the non-conservation contributions (50 percent of the 
$100 contribution base) and is allowed to carry over the excess 
$10 for up to 5 years. No current deduction is allowed for the 
qualified conservation contribution, but the entire $80 
qualified conservation contribution may be carried forward for 
up to 15 years.
            Farmers and ranchers
    In the case of an individual who is a qualified farmer or 
rancher for the taxable year in which the contribution is made, 
a qualified conservation contribution is allowable up to 100 
percent of the excess of the taxpayer's contribution base over 
the amount of all other allowable charitable contributions.
    In the above example, if the individual is a qualified 
farmer or rancher, in addition to the $50 deduction for non-
conservation contributions, an additional $50 for the qualified 
conservation contribution is allowed and $30 may be carried 
forward for up to 15 years as a contribution subject to the 
100-percent limitation.
    In the case of a corporation (other than a publicly traded 
corporation) that is a qualified farmer or rancher for the 
taxable year in which the contribution is made, any qualified 
conservation contribution is allowable up to 100 percent of the 
excess of the corporation's taxable income (as computed under 
section 170(b)(2)) over the amount of all other allowable 
charitable contributions. Any excess may be carried forward for 
up to 15 years as a contribution subject to the 100-percent 
limitation.\4\
---------------------------------------------------------------------------
    \4\Sec. 170(b)(2)(B).
---------------------------------------------------------------------------
    As an additional condition of eligibility for the 100 
percent limitation, with respect to any contribution of 
property in agriculture or livestock production, or that is 
available for such production, by a qualified farmer or 
rancher, the qualified real property interest must include a 
restriction that the property remain generally available for 
such production. (There is no requirement as to any specific 
use in agriculture or farming, or necessarily that the property 
be used for such purposes, merely that the property remain 
available for such purposes.)
    A qualified farmer or rancher means a taxpayer whose gross 
income from the trade or business of farming (within the 
meaning of section 2032A(e)(5)) is greater than 50 percent of 
the taxpayer's gross income for the taxable year.
            Termination
    The temporary rules regarding contributions of capital gain 
real property for conservation purposes do not apply to 
contributions made in taxable years beginning after December 
31, 2013.\5\
---------------------------------------------------------------------------
    \5\Secs. 170(b)(1)(E)(vi) and 170(b)(2)(B)(iii).
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee believes that the special rule that provides 
an increased incentive to make charitable contributions of 
partial interests in real property for conservation purposes is 
an important way of encouraging conservation and preservation, 
and therefore should be permanently extended.

                        EXPLANATION OF PROVISION

    The provision reinstates and makes permanent the increased 
percentage limits and extended carryforward period for 
qualified conservation contributions.

                             EFFECTIVE DATE

    The provision is effective for contributions made in 
taxable years beginning after December 31, 2013.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the votes of the Committee on Ways and Means in its 
consideration of H.R. 2807, the Conservation Easement Incentive 
Act of 2014, on May 29, 2014.
    The vote on the motion by Mr. Brady to table Mr. Thompson's 
motion to appeal the ruling of the Chair was agreed to by a 
roll call vote of 22 yeas to 14 nays (with a quorum being 
present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp.......................        X   ........  .........  Mr. Levin........  ........        X   .........
Mr. Johnson....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
Mr. Brady......................        X   ........  .........  Mr. McDermott....  ........        X   .........
Mr. Ryan.......................        X   ........  .........  Mr. Lewis........  ........  ........  .........
Mr. Nunes......................  ........  ........  .........  Mr. Neal.........  ........        X   .........
Mr. Tiberi.....................        X   ........  .........  Mr. Becerra......  ........        X   .........
Mr. Reichert...................        X   ........  .........  Mr. Doggett......  ........        X   .........
Mr. Boustany...................        X   ........  .........  Mr. Thompson.....  ........        X   .........
Mr. Roskam.....................        X   ........  .........  Mr. Larson.......  ........        X   .........
Mr. Gerlach....................        X   ........  .........  Mr. Blumenauer...  ........        X   .........
Mr. Price......................        X   ........  .........  Mr. Kind.........  ........        X   .........
Mr. Buchanan...................        X   ........  .........  Mr. Pascrell.....  ........  ........  .........
Mr. Smith......................        X   ........  .........  Mr. Crowley......  ........        X   .........
Mr. Schock.....................        X   ........  .........  Ms. Schwartz.....  ........        X   .........
Ms. Jenkins....................        X   ........  .........  Mr. Davis........  ........        X   .........
Mr. Paulsen....................        X   ........  .........  Ms. Sanchez......  ........        X   .........
Mr. Marchant...................        X   ........  .........
Ms. Black......................        X   ........  .........
Mr. Reed.......................        X   ........  .........
Mr. Young......................        X   ........  .........
Mr. Kelly......................        X   ........  .........
Mr. Griffin....................        X   ........  .........
Mr. Renacci....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

    The vote on the amendment by Mr. Neal to the amendment in 
the nature of a substitute, which would strike the short title 
and the provision making permanent the special rule for 
contributions of qualified conservation contributions, 
replacing those provisions with a two-year extension of that 
special rule, was not agreed to by a roll call vote of 10 yeas 
to 26 nays (with a quorum being present). The vote was as 
follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp.......................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Brady......................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Ryan.......................  ........        X   .........  Mr. Lewis........  ........  ........  .........
Mr. Nunes......................  ........  ........  .........  Mr. Neal.........        X   ........  .........
Mr. Tiberi.....................  ........        X   .........  Mr. Becerra......  ........        X   .........
Mr. Reichert...................  ........        X   .........  Mr. Doggett......  ........        X   .........
Mr. Boustany...................  ........        X   .........  Mr. Thompson.....  ........        X   .........
Mr. Roskam.....................  ........        X   .........  Mr. Larson.......        X   ........  .........
Mr. Gerlach....................  ........        X   .........  Mr. Blumenauer...        X   ........  .........
Mr. Price......................  ........        X   .........  Mr. Kind.........  ........        X   .........
Mr. Buchanan...................  ........        X   .........  Mr. Pascrell.....  ........  ........  .........
Mr. Smith......................  ........        X   .........  Mr. Crowley......        X   ........  .........
Mr. Schock.....................  ........        X   .........  Ms. Schwartz.....        X   ........  .........
Ms. Jenkins....................  ........        X   .........  Mr. Davis........        X   ........  .........
Mr. Paulsen....................  ........        X   .........  Ms. Sanchez......        X   ........  .........
Mr. Marchant...................  ........        X   .........
Ms. Black......................  ........        X   .........
Mr. Reed.......................  ........        X   .........
Mr. Young......................  ........        X   .........
Mr. Kelly......................  ........        X   .........
Mr. Griffin....................  ........        X   .........
Mr. Renacci....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    The vote on the motion by Mr. Brady to table Mr. 
McDermott's motion to appeal the ruling of the Chair was agreed 
to by a roll call vote of 23 yeas to 14 nays (with a quorum 
being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp.......................        X   ........  .........  Mr. Levin........  ........        X   .........
Mr. Johnson....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
Mr. Brady......................        X   ........  .........  Mr. McDermott....  ........        X   .........
Mr. Ryan.......................        X   ........  .........  Mr. Lewis........  ........  ........  .........
Mr. Nunes......................        X   ........  .........  Mr. Neal.........  ........        X   .........
Mr. Tiberi.....................        X   ........  .........  Mr. Becerra......  ........        X   .........
Mr. Reichert...................        X   ........  .........  Mr. Doggett......  ........        X   .........
Mr. Boustany...................        X   ........  .........  Mr. Thompson.....  ........        X   .........
Mr. Roskam.....................        X   ........  .........  Mr. Larson.......  ........        X   .........
Mr. Gerlach....................        X   ........  .........  Mr. Blumenauer...  ........        X   .........
Mr. Price......................        X   ........  .........  Mr. Kind.........  ........        X   .........
Mr. Buchanan...................        X   ........  .........  Mr. Pascrell.....  ........  ........  .........
Mr. Smith......................        X   ........  .........  Mr. Crowley......  ........        X   .........
Mr. Schock.....................        X   ........  .........  Ms. Schwartz.....  ........        X   .........
Ms. Jenkins....................        X   ........  .........  Mr. Davis........  ........        X   .........
Mr. Paulsen....................        X   ........  .........  Ms. Sanchez......  ........        X   .........
Mr. Marchant...................        X   ........  .........
Ms. Black......................        X   ........  .........
Mr. Reed.......................        X   ........  .........
Mr. Young......................        X   ........  .........
Mr. Kelly......................        X   ........  .........
Mr. Griffin....................        X   ........  .........
Mr. Renacci....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

    The bill, H.R. 2807, was ordered favorably reported as 
amended by a roll call vote of 23 yeas to 14 nays (with a 
quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp.......................        X   ........  .........  Mr. Levin........  ........        X   .........
Mr. Johnson....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
Mr. Brady......................        X   ........  .........  Mr. McDermott....  ........        X   .........
Mr. Ryan.......................        X   ........  .........  Mr. Lewis........  ........  ........  .........
Mr. Nunes......................        X   ........  .........  Mr. Neal.........  ........        X   .........
Mr. Tiberi.....................        X   ........  .........  Mr. Becerra......  ........        X   .........
Mr. Reichert...................        X   ........  .........  Mr. Doggett......  ........        X   .........
Mr. Boustany...................        X   ........  .........  Mr. Thompson.....  ........        X   .........
Mr. Roskam.....................        X   ........  .........  Mr. Larson.......  ........        X   .........
Mr. Gerlach....................        X   ........  .........  Mr. Blumenauer...  ........        X   .........
Mr. Price......................        X   ........  .........  Mr. Kind.........  ........        X   .........
Mr. Buchanan...................        X   ........  .........  Mr. Pascrell.....  ........  ........  .........
Mr. Smith......................        X   ........  .........  Mr. Crowley......  ........        X   .........
Mr. Schock.....................        X   ........  .........  Ms. Schwartz.....  ........        X   .........
Ms. Jenkins....................        X   ........  .........  Mr. Davis........  ........        X   .........
Mr. Paulsen....................        X   ........  .........  Ms. Sanchez......  ........        X   .........
Mr. Marchant...................        X   ........  .........
Ms. Black......................        X   ........  .........
Mr. Reed.......................        X   ........  .........
Mr. Young......................        X   ........  .........
Mr. Kelly......................        X   ........  .........
Mr. Griffin....................        X   ........  .........
Mr. Renacci....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------


                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 2807, as 
reported.
    The bill, as reported, is estimated to have the following 
effect on Federal budget receipts for fiscal years 2014-2024:

                                                  FISCAL YEARS
                                              [Millions of Dollars]
----------------------------------------------------------------------------------------------------------------
 2014     2015     2016     2017     2018     2019     2020     2021     2022    2023    2024   2014-19  2014-24
----------------------------------------------------------------------------------------------------------------
    -6      -81      -77      -81      -84      -94     -111     -127     -142    -156    -169     -422  -1,128
----------------------------------------------------------------------------------------------------------------
Note: Details do not add to totals due to rounding.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority. The 
Committee further states that the revenue-reducing tax 
provisions involve increased tax expenditures. (See amounts in 
table in Part IV.A., above.)

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 5, 2014.
Hon. Dave Camp,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2807, the 
Conservation Easement Incentive Act of 2014.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Logan 
Timmerhoff.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 2807--Conservation Easement Incentive Act of 2014

    H.R. 2807 would amend the Internal Revenue Code to 
reinstate and make permanent specified rules that increased the 
amount of income tax deductions allowed for taxpayers making 
certain charitable contributions of real property for 
conservation purposes. The rules, which expired on December 31, 
2013, increased certain income-based limits on the amount of 
such conservation contributions that an individual or qualified 
corporate farmer or rancher could deduct in a year, and 
extended the number of years over which such contributions 
above the limits could be carried forward and deducted.
    The staff of the Joint Committee on Taxation (JCT) 
estimates that enacting H.R. 2807 would reduce revenues, thus 
increasing federal budget deficits, by about $1.1 billion over 
the 2014-2024 period.
    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting 
direct spending and revenues. Enacting H.R. 2807 would result 
in revenue losses in each year beginning in 2014. The estimated 
increases in the deficit are shown in the following table.
    JCT has determined that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Logan 
Timmerhoff. The estimate was approved by David Weiner, 
Assistant Director for Tax Analysis.

            CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 2807, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON MAY 29, 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, in millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                        2014   2015   2016   2017   2018   2019   2020   2021   2022   2023   2024  2014-2019  2014-2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET INCREASE IN THE DEFICIT

Statutory Pay-As-You-Go Effects......................      6     81     77     81     84     94    111    127    142    156    169       422     1,128
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
Note: Components may not sum to totals because of rounding.

                    D. Macroeconomic Impact Analysis

    In compliance with clause 3(h)(2) of rule XIII of the Rules 
of the House of Representatives, the following statement is 
made by the Joint Committee on Taxation with respect to the 
provisions of the bill amending the Internal Revenue Code of 
1986: the effects of the bill on economic activity are so small 
as to be incalculable within the context of a model of the 
aggregate economy.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was as a result of the 
Committee's review of the provisions of H.R. 2807 that the 
Committee concluded that it is appropriate to report the bill, 
as amended, favorably to the House of Representatives with the 
recommendation that the bill do pass.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                D. Applicability of House Rule XXI 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``A bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase may not be considered as passed or agreed to 
unless so determined by a vote of not less than three-fifths of 
the Members voting, a quorum being present.'' The Committee has 
carefully reviewed the bill, and states that the bill does not 
involve any Federal income tax rate increases within the 
meaning of the rule.

                       E. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service 
Restructuring and Reform Act of 1998 (the ``IRS Reform Act'') 
requires the staff of the Joint Committee on Taxation (in 
consultation with the Internal Revenue Service and the Treasury 
Department) to provide a tax complexity analysis. The 
complexity analysis is required for all legislation reported by 
the Senate Committee on Finance, the House Committee on Ways 
and Means, or any committee of conference if the legislation 
includes a provision that directly or indirectly amends the 
Internal Revenue Code and has widespread applicability to 
individuals or small businesses.
    Pursuant to clause 3(h)(1) of rule XIII of the Rules of the 
House of Representatives, the staff of the Joint Committee on 
Taxation has determined that a complexity analysis is not 
required under section 4022(b) of the IRS Reform Act because 
the bill contains no provisions that amend the Code and that 
have ``widespread applicability'' to individuals or small 
businesses, within the meaning of the rule.

  F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill, and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   G. Duplication of Federal Programs

    In compliance with Sec. 3(j)(2) of H. Res. 5 (113th 
Congress), the Committee states that no provision of the bill 
establishes or reauthorizes a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139. The Committee 
also states that the most recent Catalog of Federal Domestic 
Assistance, published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169), identified a program related to conservation easement 
contributions.

                 H. Disclosure of Directed Rule Makings

    In compliance with Sec. 3(k) of H. Res. 5 (113th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

INTERNAL REVENUE CODE OF 1986

           *       *       *       *       *       *       *



Subtitle A--Income Taxes

           *       *       *       *       *       *       *


CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


Subchapter B--Computation of Taxable Income

           *       *       *       *       *       *       *


PART VI--ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS

           *       *       *       *       *       *       *



SEC. 170. CHARITABLE, ETC., CONTRIBUTIONS AND GIFTS.

  (a) * * *
  (b) Percentage Limitations.--
          (1) Individuals.--In the case of an individual, the 
        deduction provided in subsection (a) shall be limited 
        as provided in the succeeding subparagraphs.
                  (A) * * *

           *       *       *       *       *       *       *

                  (E) Contributions of qualified conservation 
                contributions.--
                          (i) * * *

           *       *       *       *       *       *       *

                          [(vi) Termination.--This subparagraph 
                        shall not apply to any contribution 
                        made in taxable years beginning after 
                        December 31, 2013.]

           *       *       *       *       *       *       *

          (2) Corporations.--In the case of a corporation--
                  (A) * * *
                  (B) Qualified conservation contributions by 
                certain corporate farmers and ranchers.--
                          (i) * * *

           *       *       *       *       *       *       *

                          [(iii) Termination.--This 
                        subparagraph shall not apply to any 
                        contribution made in taxable years 
                        beginning after December 31, 2013.]

           *       *       *       *       *       *       *


                         VII. DISSENTING VIEWS

    The six bills approved by the Republicans at the markup 
would add $304 billion to the deficit. Combined with the $310 
billion that the six bills approved by Republicans on the 
Committee in April added to the deficit, Republicans have added 
$614 billion to the deficit in two short months--and there does 
not appear to be an end in sight. Even though some of these 
bills were introduced individually with some bipartisan 
support, the opposition to these bills was based on the 
position that these tax provisions should not be made permanent 
by adding to the deficit without any revenue offset.
    To put the combined cost ($614 billion) into context, it is 
25 percent more than the entire projected federal deficit this 
year and $86 billion more than total non-defense domestic 
discretionary spending (e.g., medical research, education, 
veterans' pensions and health care, transportation, etc.) will 
be in 2014. It is almost seven times what we spend annually on 
education, job training, and social services. It is ten times 
more than we spend on veterans. And, it is eleven times more 
than we spend on medical research and public health.
    Public charities and private foundations serve an important 
role in our society. We all support the good works of the 
charitable community and strive to provide charities with the 
resources they need to carry out their charitable mission. The 
markup was not to debate the good works of charities across 
this country, or the merits of H.R. 2807 which would make 
permanent the deduction for conservation easements.
    We found it hypocritical that, four months ago, Republicans 
let emergency unemployment insurance expire for more than 1.3 
million Americans by arguing that an adequate offset had yet to 
be proposed. In early April, the Senate came to a bipartisan 
agreement on an offset after months of painstaking 
negotiations. Yet House Republicans still refuse to act.
    Finally, we also opposed the manner in which Republicans 
were proceeding--selecting 10 to make permanent without any 
offset from the approximately 60 tax provisions that expired 
last year. This approach was both fiscally irresponsible and 
fundamentally hypocritical.
    The consideration of this bill should have been part of the 
consideration of all the expired tax provisions commonly 
referred to as ``tax extenders.'' The Republicans did not take 
up other tax extenders that also are important to Democratic 
Committee Members. Left to an uncertain fate are provisions 
like the Work Opportunity Tax Credit, the New Markets Tax 
Credit, and the renewable energy tax credits, as well as the 
long-term status of the Earned Income Tax Credit, the Child Tax 
Credit, and the American Opportunity Tax Credit.

                                           Sander M. Levin,
                                                    Ranking Member.

                                  
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