7887

• UCREFRP Catalog Number: 7887
• Author: Fischer, H., ‎(Wendy E. Hudson, ed.)‎.
• Title: Building Economic Incentives Into The Endangered Species Act, Third Edition.
• USFW Year: 1994.
• USFW - Doc Type: Washington, D.C.
• Copyright Material: NO

It should be noted that tax deductions and tax credits2 shift the burden of cost of
habitat preservation from the private sector to the public sector. They do not
make these costs disappear. Given current federal budget constraints, the goal of
any economic incentive program should be some modicum of revenue neutrality
where moneys from the disincentives fund the various incentives. Because we are
presenting more incentives than disincentives, this array of proposals probably
falls short of the revenue neutrality goal. Without data on the acreage levels of
private land supporting eligible habitat, or the number of private landowners who
would decide to take advantage of the tax incentives, it is not possible to deter-
mine the extent of this revenue shortfall.
Substantial research on the costs of implementing and monitoring these various
incentive programs (what we term "transaction costs") is needed to ensure that
they are acost-effective means of safeguarding important biological habitats.
Proposal 1- Prop.~v Tax Credits for Habitat Maintenance
Description: Local and state property taxes paid on lands providing habitat for
endangered, threatened, and candidate species, and for significant biodiversity
would be offset by an annual federal tax credit. Such property taxes are already
deductible from the federal income tax, but a tax credit in the amount of the
allowable deduction would amplify the tax benefit so that qualifying lands would
become completely exempt from property taxes.
Stipulations: To qualify for the tax credit, land owners would develop aLand/
Habitat Management Plan in cooperation with the FWS or a designated state or
local jurisdiction. To achieve the goal of long-term habitat protection, landown-
ers would have to commit to the plans for lengthy time periods, say 10, 15, or 25
years, with a penalty for early termination.
Rationale: Property taxes can account for up to 25 percent of total operating costs
in urban areas, 10 percent in suburban areas, and 2 percent in rural areas (Wolf
1981). Reductions in property taxes are a widespread and accepted method for
preserving farm and range lands, open space, and historic properties. For ex-
ample, more than half the states use differential assessments, or related variations,
to reduce the tax burden on lands kept in an open state (LJ.S. Department of
Commerce 1989). Because of the tremendous increase in property assessment
levels during the 1980s real estate boom, property tax credits could prove to be a
positive inducement for private-sector land preservation (Barton 1993). Such
credits may be especially effective in the fringe areas of rapidly developing urban
and suburban areas where assessed property values increase dramatically, and
where increasing numbers of plant and animal species are being listed as endan-
gered or threatened.
s Tax deductions are 1:1 reductions in taxable income from which the tax liability is determined.
Tax credits are 1:1 reductions in tax liability, or actual amount of tax owed.
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