Congress Limits Conservation Easement Write-Offs—That’s Good for Conservation and Taxpayers

The 2023 omnibus spending bill, signed into law by President Biden last month, is a massive $1.7 billion spending spree, but the 4,000-page package does include a modicum of fiscal prudence. It will limit tax write-offs for land donations that benefit wealthy investors under the guise of conservation. While this represents a small step toward more effective environmental policy, it is a welcome one. 

The provision, urged by a bipartisan coalition of lawmakers, limits deductions for conservation easements, a popular private conservation tool. These are perpetual agreements between landowners, who give up rights to subdivide and develop houses, and nonprofit land trusts or government agencies who monitor the land use.  

Conservation easements can provide public benefits by limiting development of environmentally sensitive lands. And because the donations are voluntary, they are an attractive alternative to coercive land-use regulations. This explains why Congress has allowed federal tax deductions since the 1970s, and why several states now offer generous exemptions and credits. Economist Walter Thurman and I show that, as a result, the per-donation value of conservation easements dwarfs all other forms of charitable giving and the total number of acres covered by easements is the size of Washington State.

The problem is that tax-driven easement donations can conserve the wrong lands—those with less environmental value than the cost to general taxpayers in the form of foregone tax revenue. High-profile examples of questionable deals involve Donald Trump, who sheltered $39 million in taxable income when he gifted an easement on a New Jersey golf course in 2005. This easement, like his more recent $21 million deduction in New York, arguably qualified for a charitable deduction because Trump claimed the appraisal was valid and that the golf course preserved significant open space benefits for the public, which is the vague requirement for tax deduction under current law.  

Read the full article in The Hill.

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