Does the "death tax' protect open space?

  The federal estate tax affects only the wealthiest 2 percent of the U.S. population. So why should most Westerners care about the current Republican push to repeal it?

One reason is that part of that wealth isn't cash. It's undeveloped land. And in some cases, the threat of estate taxes keeps it permanently undeveloped.

Here's how. When a landowner donates his or her development rights to a land trust - an arrangement known as a conservation easement - the heirs get a significant break on estate taxes (HCN, 2/28/00). The taxes can be huge, sometimes more than half the value of the property, so the promise of a deduction makes conservation easements very attractive.

"It's an attention-grabber," says Russ Shay of the national Land Trust Alliance. "It's a way to get in a person's door, to talk to someone who might not have thought about a conservation easement."

But the Land Trust Alliance hasn't taken a position on the issue, because repeal might also keep some open space intact. Inflated property values around some resort towns have vaulted some ranchers into that exclusive 2 percent of the population, mainly because profits from development are potentially enormous. But when a ranch is inherited by a family, cash-poor heirs sometimes subdivide the property to pay the estate tax. Without the tax burden, ranch heirs might opt to stay in business.

On Sept. 7, the House of Representatives failed to override President Clinton's veto of the estate-tax repeal bill. Republicans in Congress vow to keep up their fight.

* Michelle Nijhuis
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