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By Mr. BEGICH (for himself and Ms. Murkowski):
S. 1673. A bill to amend the Internal Revenue Code of 1986 to encourage charitable contributions of real property for conservation purposes by Native Corporations; to the Committee on Finance.
Mr. BEGICH. Mr. President, I am pleased today to join my colleague, Senator Murkowski, in introducing legislation that would give Alaska Native Corporation, ANC, parity for an important tax incentive encouraging the permanent protection of land through the charitable donation of a conservation easement. I would also like to commend our colleague Congressman Don Young, who today introduces a companion bill in the House of Representatives.
America's wildlife, waters, and land are an invaluable part of our Nation's heritage. It is imperative to preserve these natural treasures for future generations. Congress long ago concluded that it was good public policy to encourage the charitable contribution of conservation easements to organizations dedicated to maintaining natural habitats or open spaces help protect the nation's heritage. A conservation easement creates a legally enforceable land preservation agreement between a willing landowner and another organization. The purpose of a conservation easement is to protect permanently land from certain forms of development or use. The property that is the subject to the easement remains the private property of the landowner. The organization holding the easement must monitor future uses of the land to ensure compliance with the terms of the easement and to enforce the terms if a violation occurs.
In 2006, Congress enhanced the charitable tax deduction for conservation easements in order to encourage such gifts. With the 2006 legislation, Congress temporarily increased the maximum deduction limit for individuals donating qualified conservation easements from 30 percent to 50 percent of the taxpayer's adjusted gross income. Congress also created an exception for qualified farmers or ranchers, which are non-publicly traded corporations or individuals whose gross income from the trade or business of farming is greater than 50 percent of the taxpayer's gross income. In the case of a qualified farmer or rancher, the limitation increased from 30 percent to 100 percent. The 2008 Farm Bill extended the temporary rules for two additional years to charitable contributions made before December 31, 2009.
Unfortunately, the way the law was crafted has disadvantaged a number of important landowners in my home state. Alaska Native Corporations, ANCs, own nearly 90 percent of the private land in Alaska, including some of the most scenic and resource rich. However, although they are very similar to the small communal family farms that are eligible, subsistence-based Alaskan Native communities are ineligible for these important new tax incentives. For thousands of years, Alaska has been home to Native communities, whose rich heritages, languages, and traditions have thrived in the region's unique landscape. Members of Alaska Native communities continue to have a deeply symbiotic relationship with the land even today. Much like their ancestors, many Native Alaskan communities engage in traditional subsistence activities, with nearly 70 percent of their food coming from the land or adjacent waters. For many communities, subsistence is an economic necessity considering both the lack of economic development and the cost and difficulty involved in purchasing food. For example, in Kotzebue, a community in Northwestern Alaska, milk costs nearly $10 per gallon. In Buckland, a village home to approximately 400 people, a pound of hamburger, when it is actually available, costs $14.00.
In Alaska, the Native Corporations have an important role to be stewards of the land. Their shareholders see themselves as the caretakers of the land and water as their ancestors have for thousands of years. Nonetheless, in Alaska today this means they have to balance the need for resource development and the need to cultivate the land for subsistence activities. The traditional lifestyles of Native Alaskans are under increasing stress from outside influences. Population growth and the pressure to pursue cash-generating activities have increased the desire for substantial development, significantly adding to the ecological stress on already fragile ecosystems. Without permanent protection, their lands could be developed in a manner that would destroy its ability to support the traditional ways and subsistence lifestyles crucial to Alaskan Native communities. Making use of tax incentives available to other Americans will make it easier for Native communities to make the right decisions for their shareholders.
Today, Alaska Native communities are not eligible for the 50 percent deduction available to individuals because they are federally chartered as C corporations under the Alaska Native Claims Settlement Act of 1971, ANCSA. This leaves Alaska Natives without the ability to convert to an eligible entity as other landowners can. In addition, most Alaska Native Corporations do not have sufficient gross income from the trade or business of what is considered traditional farming to be eligible for the 100 percent deduction available to qualified farmers or ranchers. This is in spite of the fact that as a group the Alaska Native shareholders of Alaska Native Corporations receive far more in subsistence benefits than they receive in income from the Alaska Native Corporation. As a result, Alaska Native Corporations do not have the same ability to offset the cost to permanently protect their properties, which contain important wildlife, fish, and other habitats, through donations of qualified conservation easements.
The bill I am introducing with Senator Murkowski will allow Alaska Native Corporations to protect these important wildlife habitats, many used for subsistence, by providing an enhanced deduction for qualified conservation easements. The legislation modifies Section 170(b)(2) of the Internal Revenue Code by creating a new subsection that provides Alaska Native Corporations with a deduction for donations of certain qualified conservation easements. In order to be eligible, a qualified charitable conservation contribution must: (1) otherwise qualify under Section 170(h)(1); (2) be made by a Native Corporation; and (3) be land that was conveyed by ANCSA. Under Section 170(b)(2)(iii)(I), ``Native Corporation'' is defined by ANCSA, section 3(m). Under Section 170(b)(2)(i), the maximum deduction limit would be set at 100 percent of the taxpayer's adjusted gross income. If the taxpayer has deductions in excess of the applicable percentage-of-income limitation, Section 170(b)(2)(ii) would allow the taxpayer to carry-forward the deduction for up to 15 years.
Congress must act to assist Alaska Native communities in permanently protecting their culturally, historically, and ecologically significant land, preserving the communities and their rich traditions in the process. I urge my colleagues to support this important legislation.
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