How a Takings Became a Givings to Rich People

Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mt.) are playing Batman and Robin on the issue of tax breaks for historic homes.

Grassley, sez Fox News, wants to scotch a break that allows owners to get 10 percent off the value of the home in exchange for maintaining its historic facade. This despite that fact that many homeowners are barred by local govs from changing the look of their homes anwyay. The break is typically enacted when the homeowner donates an easement covering the facade to a charity.

It's no surprise that Washington, D.C., has also become the leading city in the nation for historic easements, with 900 granted so far.

The average value of the home that gets the special tax break is $1 million, yielding a $110,000 tax credit.

The credit is supposed to compensate for property values lost by giving up the right to remodel an historic facade, but in fact property values usually go up for historic properties.

Asks the goggled-eyed senator from the Hawkeye State:

"Isn't it kind of ludicrous to be talking about having a tax credit for historic preservation (search) when you live in a neighborhood where you can't change the facade of your home anyway?"

Well, yes, Sen. Grassley, it is. And it's pretty stupid to have those laws about preservation in place anyway; on their own, people will pay for a good chunk of the past if they find it valuable and meaningful enough.

Link via Freedom News Daily

Comments

[Evan Williams]

"Well, yes, Sen. Grassley, it is. And it's pretty stupid to have those laws about preservation in place anyway; on their own, people will pay for a good chunk of the past if they find it valuable and meaningful enough."

Just a quick question: this last paragraph was indented along with the prior grassley quote. Is this a mistake? Did Nick Gillespie write this paragraph, or was it from someone else?

Anyway, back to the issue at hand: I'm an architect, and I see this notion of historic preservation at the expense of the taxpayers as inherently absurd. First, you leave the decisions regarding your property, that you supposedly own, in the hands of some central governing body, which attempts to objectify this extremely subjective notion of "historic".

Um, but, uh, then again, when your kids ask where you got married, will you have to tell them, "Over there by the unleaded"? That has to be the stupidest commercial ever. But, at least the national trust is a privately funded nonprofit. And I have no problem with them collecting donated money, then using that money to buy & maintain/restore historic properties. However, they still push the idea of easements as tax loopholes.

[Nick Gillespie]

Evan Williams,

Yes, I wrote the last bit and had screwed up the indentation, which is now A-OK.

[Ayn_Randian]

Check out Drudge's report on a new book:

http://www.drudgereport.com/mattcw.htm

Christine Todd Whitman says that the R's are run by "antiregulatory lobbyists and extreme antigovernment ideologues..."

Don't I wish, Christine, don't I wish.

[Warren]

The break is typically enacted when the homeowner donates an easement covering the facade to a charity.

Please help me reduce my ignorance. From dictionary.com if find that an easement is:
A right, such as a right of way, afforded a person to make limited use of another's real property.

So I parse the above to mean, that the wealthy historic property owner donates his sidewalk (and maybe his front porch and door) to charity, and gets his pork... I mean tax break. Huh? What would a charity do with is sidewalk and porch? Charge admission?

More pertinently, where does his $100K show up? I mean does he get to deduct it from his income? Or does he get to reduce the assessed value of his property? Or does he actually get his taxes reduced the full $100k?

Please enlighten me.

[Buddha]

You're already enlightened.

[joe]

Warren, a preservation easement gives the holder the right to preserve a property, or certain features therein. You are donating to the Trust the right to decide whether you can change the exterior elements of your building. Similarly, you can own a farm, but donate or sell a preservation easement to a land trust.

[Ayatollah Usoe]

Prepare for the enlightenment. Tax guy here. You can make a dontation to charity or to government to claim a charitable deduction. What a facade easement is, basically, is a gift to the local government of the appearance of your building. Similar to a deed restriction, it limits what can be done with that building in the future. Were government to do that through zoning, it is clearly a taking, but usually without compensation.

By beating the government to the punch ? donating instead of waiting for the taking, the owner can now estimate the decrease in value of never being able to put in that strip mall.

The local government is happy; they get historic downtown preservation at no cost. The Treasury is unhappy, since someone just took a big charitable deduction (and in some states tax credits) for doing nothing positive.

A similar thing happens in New Joisey with farmland. Someone who wants to live on a farm buys a farm. The state then pays them a large subsidiary if they will only leave it as a farm, which as far as I can tell, is what they thought they were buying in the first place.

[Warren]

aaaaaahhhhhhhhhhh-ooooooohhhhhhhhhmmmmmmmmmmmmmmm

I am now one with the universe

[TWC]

Until major changes in the convoluted 46k pages of IRC and IRS Regs happens, anything that deprives the US Treasury of money is BY DEFINITION a positive good.

And that headline: GIVINGS! What kind of crap is that? This isn't Mother Jones, New Repbulic, or Time Magazine. Twisting reality to imply that somehow some rich bastard is being given something at my expense when what really happened is that the rich bastard is keeping some of his or her own money from being forcibly extracted from her wallet is nothing but a crass appeal to class warfare that I'd expect to hear from some undergrad teaching assistant in Birkenstocks at Berkeley.

REPEAT AFTER ME: We are libertarians. Taxation Is Theft. Anything we do to keep money out of the hands of the government is moral.

And, before you guys hammer me, I understand the thrust of the post.

[Coarsetad]

So a provision to the Tax-code that says "Everyone but TWC gets to take a $10,000 deduction is good?"

[Coarsetad]

Sorry for the misplaced quotes.
Also, i am beginning to see why Liberatarians are a minority party. Alot of people around here need to realize that following ideology blindly only leads to corruption of that ideology when put into practice.

[Seamus]

If people are claiming huge tax deductions for easements that restrain the homeowner little or no more than existing local law, then the problem is not that people are permitted to deduct the value of the easements, but that the IRS is letting taxpayers get away with grossly inflated calculations of the fair market value of those easements. It's the same problem that arises when someone donates his clunker to charity and claims a charitable deduction much greater than any sane person would have paid for the car.

[isildur]

Look, it's the nearly-daily ad hominem attack on libertarianism. 'I can see why Libertarians are a minority party lol lol!'

Thanks for your ever-so-original commentary. No-one around here has heard that one before, I'm sure.

[Coarsetad]

Much like no one has heard the tired mantra of "Taxes=Theft, no matter what." I mean come on, who is ever gonna take a ideology seriously when you have extremists, left and right, spouting things like:
"Taxation Is Theft. Anything we do to keep money out of the hands of the government is moral."

(That said, there also alot of great folks on here that realize getting from A to B is a process, and we just cant jump from huge government to no government literally overnight.)

[Buddha]

You are indeed one with the universe, but only on a free, one-week trial basis. If you wish to continue being enlightened, simply do nothing, and your credit card will conveniently be billed 19.95 a month.

If you wish to cancel your oneness, then fill out our simple online form within the next business day.

[TWC]

Coarsetad, the tax regs are 46,000 pages of special interest tax breaks, incentives, social engineering, social penalties, and various assorted crap.

I know you missed it but I plainly stated that I understood the silliness of the rule that Nick posted about. But that is just one of thousands of equally unfair tax breaks or tax burdens that do not fall equally upon the populace as a whole. Case in point would be the HUGE tax breaks afforded to those like me with children as opposed to those who are childless. Another is the incredible break that home owners get compared to people who rent apartments.

On another matter, libertarian principles are founded upon voluntarism. The income you earn is yours. Unless you voluntarily agree to fork over your hard earned to the government or anyone else it certainly can't be called anything else but theft. Yes, I know that this makes me sound like a fruitcake. Yes, we shouldn't talk like that in polite company but I figured that by saying REPEAT AFTER ME, that most people would see the smile on my face.........and realize that while completely serious I was also being tongue-in-cheek.

But now that I'm on the subject, if you do not pay your taxes and you resist in a particularly annoying way you will be jailed. If you fail to surrender when the US Marshalls come for you, or worse, try to protect yourself from them, you will be killed. It doesn't happen often but the extreme price of failure to pay taxes is death.

A second tenet of libertarian thought, at least in my book, is recognizing reality for what it is. The reality of life today is that we put up with taxation and regulation as a condition of being left more or less alone by the federales. However, recognition of that reality doesn't change the nature of taxation from mandatory to voluntary.

Pissing money down a rathole isn't an avocation of mine but it certainly brings a great deal of pleasure to those at the levers of power. If you want to send them more, go for it. But don't kick because others choose not to do so and avail themselves of every legal opportunity to avoid doing so.

[Iguana]

The purpose of the federal income tax should be to raise money to operate the federal government and not to reward or punish certain behaviors.

However, TWC is right. To whatever extent we can keep money out of the hands of the government is good because whatever tax revenue they have will be gone in seconds. So give them as little as possible.

[Coarsetad]

TWC

I understand and even agree with the philospophy of a volunteer society. But its not like we just a few "votes" away from making it happen. Its ridiculous to think that our problems are as simple as taking the tax code and burning it streets. Even though its opressive, the current state of society makes alot of people feel very comfortable and safe. What do think is gonna happen to the state of mind of those people, when the structures they have built thier lives around are arbiturally dismantled? One thing that isnt going to happen, is everyone waking up with a sudden urge keep the cogs of society moving, by volunteering. I guess my point is, there should be a culture of libertarianism before you can a government of libertarianism. Arbitrarily hacking away at government is something else, Anarchism.
In essence we should reduce the NEED for taxes first. Otherwise you end up with desperate people, will to do desperate things. Not a place I want to live, taxes or no taxes

"The purpose of the federal income tax should be to raise money to operate the federal government and not to reward or punish certain behaviors."
Iguana makes a fundamental point, and a statement like that forms a better and more sensible framework for reducing the size of government.

[thoreau]

The purpose of the federal income tax should be to raise money to operate the federal government and not to reward or punish certain behaviors.

I agree! That's why I support revenue-neutral tax simplification: It would remove a tool for economic micromanagement.

[kevrob]

Tax breaks for historic preservation easements are a hell of a better deal than having the preservaton restrictions slapped on your property against your will, with no cash payment.

Local government leasing or buying development rights from agricultural landowners can be smart, too. It can preserve groundwater, and put off the need for extending expensive infrastructure such as sewers. As a voluntary program it avoids those nasty 5th amendment takings problems.

Can these type of programs fall prey to corruption? Sure, but just about any govt. scheme can.

Kevin

[TWC]

Corstead, I don't necessarily disagree which is why it is important to give the government as little money as possible while not exposing yourself to risk of imprisonment. IOW, Stay away from Irwin Schiff's plan.

They're already spending trillions they don't need more. And, as you suggest, the gradualist approach is probably best, chipping away here and there at the edifice of government through legitimate means using weapons like Institute for Justice and outreach organizations like Reason and Cato.

But as you also suggest, the change is not coming quickly or perhaps not at all because most of our citizens are content with things just the way they are right now.

Tho-row and the lizard need a pipeline to DC to get this simplification done. Maybe they'll have better luck than Steve Forbes.