House Report 113-494 - CONSERVATION EASEMENT INCENTIVE ACT OF 2014

[House Report 113-494]
[From the U.S. Government Publishing Office]

113th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 113-494

======================================================================

CONSERVATION EASEMENT INCENTIVE ACT OF 2014

_______

June 26, 2014.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed

_______

Mr. Camp, from the Committee on Ways and Means,
submitted the following

R E P O R T

together with

DISSENTING VIEWS

[To accompany H.R. 2807]

[Including cost estimate of the Congressional Budget Office]

The Committee on Ways and Means, to whom was referred the
bill (H.R. 2807) to amend the Internal Revenue Code of 1986 to
make permanent the special rule for contributions of qualified
conservation contributions, having considered the same, report
favorably thereon with an amendment and recommend that the bill
as amended do pass.

CONTENTS

Page
I. SUMMARY AND BACKGROUND...........................................2
A. Purpose and Summary................................. 2
B. Background and Need for Legislation................. 2
C. Legislative History................................. 3
II. EXPLANATION OF THE BILL..........................................3
A. Special Rule for Qualified Conservation
Contributions Made Permanent (sec. 170(b) of the
Code).............................................. 3
III. VOTES OF THE COMMITTEE...........................................6
IV. BUDGET EFFECTS OF THE BILL.......................................8
A. Committee Estimate of Budgetary Effects............. 8
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 9
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 9
D. Macroeconomic Impact Analysis....................... 10
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......10
A. Committee Oversight Findings and Recommendations.... 10
B. Statement of General Performance Goals and
Objectives......................................... 10
C. Information Relating to Unfunded Mandates........... 10
D. Applicability of House Rule XXI 5(b)................ 11
E. Tax Complexity Analysis............................. 11
F. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 11
G. Duplication of Federal Programs..................... 11
H. Disclosure of Directed Rule Makings................. 12
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........12
VII. DISSENTING VIEWS................................................14

The amendment is as follows:
Strike all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Conservation Easement Incentive Act of
2014''.

SEC. 2. SPECIAL RULE FOR CONTRIBUTIONS OF QUALIFIED CONSERVATION
CONTRIBUTIONS MADE PERMANENT.

(a) In General.--
(1) Individuals.--Subparagraph (E) of section 170(b)(1) of
the Internal Revenue Code of 1986 is amended by striking clause
(vi).
(2) Corporations.--Subparagraph (B) of section 170(b)(2) of
such Code is amended by striking clause (iii).
(b) Effective Date.--The amendments made by this section shall apply
to contributions made in taxable years beginning after December 31,
2013.

I. SUMMARY AND BACKGROUND

A. Purpose and Summary

Similar to a provision contained in the discussion draft of
the ``Tax Reform Act of 2014'' released on February 26, 2014,
the bill, H.R. 2807, reported by the Committee on Ways and
Means, provides that individuals may deduct the fair market
value of qualified conservation contributions up to 50 percent
of the individual's adjusted gross income (AGI). H.R. 2807
provides that farmers and ranchers may deduct the fair market
value of qualified conservation contributions up to 100 percent
of AGI (or 100 percent of taxable income in the case of a
corporate farmer or rancher), provided the property used in
agricultural or livestock production remains available for such
production. An identical, temporary provision expired for
taxable years beginning after December 31, 2013.

B. Background and Need for Legislation

While the Committee continues actively to pursue
comprehensive tax reform as a critical means of promoting
economic growth and job creation, the Committee also believes
that it is important to provide individuals and small
businesses permanent, immediate tax relief to encourage faster
economic growth and job creation, while fostering charitable
giving. By reinstating and making permanent the increased
deduction limits for qualified conservation contributions, H.R.
2807 restores an important incentive for contributions of
conservation easements that benefit the nation's communities
and the environment. The deduction for qualified conservation
contributions was intended to spur new donations of
conservation easements. According to testimony received by the
Committee, in the first two years following its original
enactment, the temporary rule doubled the number of
conservation easement donations in comparison to the two prior
years, and increased the acreage conserved by about 32 percent.
H.R. 2807, which is similar to a provision contained in the
February 26, 2014, discussion draft of the ``Tax Reform Act of
2014,'' will continue these results by providing certainty and
stability to individuals and businesses seeking to contribute
conservation easements.

C. Legislative History

Background

H.R. 2807 was introduced on July 24, 2013, and was referred
to the Committee on Ways and Means.

Committee action

The Committee on Ways and Means marked up H.R. 2807, the
Conservation Easement Incentive Act of 2014, on May 29, 2014,
and ordered the bill, as amended, favorably reported (with a
quorum being present).

Committee hearingsThe need for permanent rules regarding
qualified conservation contributions was discussed at no fewer
than three hearings during the 112th and 113th Congresses:
Select Revenue Measures Subcommittee
Hearing on Certain Expiring Tax Provisions (April 26,
2012);
Select Revenue Measures Subcommittee
Hearing on Framework for Evaluating Certain Expiring
Tax Provisions (June 8, 2012); and
Full Committee Hearing on Tax Reform and
Charitable Contributions (February 14, 2013).

II. EXPLANATION OF THE BILL

A. Special Rule for Qualified Conservation Contributions Made Permanent
(sec. 170(b) of the Code)

PRESENT LAW

Charitable contributions generally

In general, a deduction is permitted for charitable
contributions, subject to certain limitations that depend on
the type of taxpayer, the property contributed, and the donee
organization. The amount of deduction generally equals the fair
market value of the contributed property on the date of the
contribution. Charitable deductions are provided for income,
estate, and gift tax purposes.\1\
---------------------------------------------------------------------------
\1\Secs. 170, 2055, and 2522, respectively.
---------------------------------------------------------------------------
In general, in any taxable year, charitable contributions
by a corporation are not deductible to the extent the aggregate
contributions exceed ten percent of the corporation's taxable
income computed without regard to net operating or capital loss
carrybacks. Total deductible contributions of an individual
taxpayer to public charities, private operating foundations,
and certain types of private nonoperating foundations generally
may not exceed 50 percent of the taxpayer's contribution base,
which is the taxpayer's adjusted gross income for a taxable
year (disregarding any net operating loss carryback). To the
extent a taxpayer has not exceeded the 50-percent limitation,
(1) contributions of capital gain property to public charities
generally may be deducted up to 30 percent of the taxpayer's
contribution base, (2) contributions of cash to most private
nonoperating foundations and certain other charitable
organizations generally may be deducted up to 30 percent of the
taxpayer's contribution base, and (3) contributions of capital
gain property to private foundations and certain other
charitable organizations generally may be deducted up to 20
percent of the taxpayer's contribution base.
Contributions in excess of the applicable percentage limits
generally may be carried over and deducted over the next five
taxable years, subject to the relevant percentage limitations
on the deduction in each of those years.

Capital gain property

Capital gain property means any capital asset or property
used in the taxpayer's trade or business the sale of which at
its fair market value, at the time of contribution, would have
resulted in gain that would have been long-term capital gain.
Contributions of capital gain property to a qualified charity
are deductible at fair market value within certain limitations.
Contributions of capital gain property to charitable
organizations described in section 170(b)(1)(A) (e.g., public
charities, private foundations other than private non-operating
foundations, and certain governmental units) generally are
deductible up to 30 percent of the taxpayer's contribution
base. An individual may elect, however, to bring all these
contributions of capital gain property for a taxable year
within the 50-percent limitation category by reducing the
amount of the contribution deduction by the amount of the
appreciation in the capital gain property. Contributions of
capital gain property to charitable organizations described in
section 170(b)(1)(B) (e.g., private non-operating foundations)
are deductible up to 20 percent of the taxpayer's contribution
base.
For purposes of determining whether a taxpayer's aggregate
charitable contributions in a taxable year exceed the
applicable percentage limitation, contributions of capital gain
property are taken into account after other charitable
contributions.

Qualified conservation contributions

Qualified conservation contributions are one exception to
the ``partial interest'' rule, which generally bars deductions
for charitable contributions of partial interests in
property.\2\ A qualified conservation contribution is a
contribution of a qualified real property interest to a
qualified organization exclusively for conservation purposes. A
qualified real property interest is defined as: (1) the entire
interest of the donor other than a qualified mineral interest;
(2) a remainder interest; or (3) a restriction (granted in
perpetuity) on the use that may be made of the real property.
Qualified organizations include certain governmental units,
public charities that meet certain public support tests, and
certain supporting organizations. Conservation purposes
include: (1) the preservation of land areas for outdoor
recreation by, or for the education of, the general public; (2)
the protection of a relatively natural habitat of fish,
wildlife, or plants, or similar ecosystem; (3) the preservation
of open space (including farmland and forest land) where such
preservation will yield a significant public benefit and is
either for the scenic enjoyment of the general public or
pursuant to a clearly delineated Federal, State, or local
governmental conservation policy; and (4) the preservation of
an historically important land area or a certified historic
structure.
---------------------------------------------------------------------------
\2\Secs. 170(f)(3)(B)(iii) and 170(h).
---------------------------------------------------------------------------
Qualified conservation contributions of capital gain
property are subject to the same limitations and carryover
rules as other charitable contributions of capital gain
property.

Temporary rules regarding contributions of capital gain real property
for conservation purposes

In general
Under a temporary provision\3\ the 30-percent contribution
base limitation on contributions of capital gain property by
individuals does not apply to qualified conservation
contributions (as defined under present law). Instead,
individuals may deduct the fair market value of any qualified
conservation contribution to the extent of the excess of 50
percent of the contribution base over the amount of all other
allowable charitable contributions. These contributions are not
taken into account in determining the amount of other allowable
charitable contributions.
---------------------------------------------------------------------------
\3\Sec. 170(b)(1)(E).
---------------------------------------------------------------------------
Individuals are allowed to carry over any qualified
conservation contributions that exceed the 50-percent
limitation for up to 15 years.
For example, assume an individual with a contribution base
of $100 makes a qualified conservation contribution of property
with a fair market value of $80 and makes other charitable
contributions subject to the 50-percent limitation of $60. The
individual is allowed a deduction of $50 in the current taxable
year for the non-conservation contributions (50 percent of the
$100 contribution base) and is allowed to carry over the excess
$10 for up to 5 years. No current deduction is allowed for the
qualified conservation contribution, but the entire $80
qualified conservation contribution may be carried forward for
up to 15 years.
Farmers and ranchers
In the case of an individual who is a qualified farmer or
rancher for the taxable year in which the contribution is made,
a qualified conservation contribution is allowable up to 100
percent of the excess of the taxpayer's contribution base over
the amount of all other allowable charitable contributions.
In the above example, if the individual is a qualified
farmer or rancher, in addition to the $50 deduction for non-
conservation contributions, an additional $50 for the qualified
conservation contribution is allowed and $30 may be carried
forward for up to 15 years as a contribution subject to the
100-percent limitation.
In the case of a corporation (other than a publicly traded
corporation) that is a qualified farmer or rancher for the
taxable year in which the contribution is made, any qualified
conservation contribution is allowable up to 100 percent of the
excess of the corporation's taxable income (as computed under
section 170(b)(2)) over the amount of all other allowable
charitable contributions. Any excess may be carried forward for
up to 15 years as a contribution subject to the 100-percent
limitation.\4\
---------------------------------------------------------------------------
\4\Sec. 170(b)(2)(B).
---------------------------------------------------------------------------
As an additional condition of eligibility for the 100
percent limitation, with respect to any contribution of
property in agriculture or livestock production, or that is
available for such production, by a qualified farmer or
rancher, the qualified real property interest must include a
restriction that the property remain generally available for
such production. (There is no requirement as to any specific
use in agriculture or farming, or necessarily that the property
be used for such purposes, merely that the property remain
available for such purposes.)
A qualified farmer or rancher means a taxpayer whose gross
income from the trade or business of farming (within the
meaning of section 2032A(e)(5)) is greater than 50 percent of
the taxpayer's gross income for the taxable year.
Termination
The temporary rules regarding contributions of capital gain
real property for conservation purposes do not apply to
contributions made in taxable years beginning after December
31, 2013.\5\
---------------------------------------------------------------------------
\5\Secs. 170(b)(1)(E)(vi) and 170(b)(2)(B)(iii).
---------------------------------------------------------------------------

REASONS FOR CHANGE

The Committee believes that the special rule that provides
an increased incentive to make charitable contributions of
partial interests in real property for conservation purposes is
an important way of encouraging conservation and preservation,
and therefore should be permanently extended.

EXPLANATION OF PROVISION

The provision reinstates and makes permanent the increased
percentage limits and extended carryforward period for
qualified conservation contributions.

EFFECTIVE DATE

The provision is effective for contributions made in
taxable years beginning after December 31, 2013.

III. VOTES OF THE COMMITTEE

In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statements are made
concerning the votes of the Committee on Ways and Means in its
consideration of H.R. 2807, the Conservation Easement Incentive
Act of 2014, on May 29, 2014.
The vote on the motion by Mr. Brady to table Mr. Thompson's
motion to appeal the ruling of the Chair was agreed to by a
roll call vote of 22 yeas to 14 nays (with a quorum being
present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp....................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Rangel....... ........ X .........
Mr. Brady...................... X ........ ......... Mr. McDermott.... ........ X .........
Mr. Ryan....................... X ........ ......... Mr. Lewis........ ........ ........ .........
Mr. Nunes...................... ........ ........ ......... Mr. Neal......... ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Becerra...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Boustany................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Gerlach.................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Price...................... X ........ ......... Mr. Kind......... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Pascrell..... ........ ........ .........
Mr. Smith...................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Schock..................... X ........ ......... Ms. Schwartz..... ........ X .........
Ms. Jenkins.................... X ........ ......... Mr. Davis........ ........ X .........
Mr. Paulsen.................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Marchant................... X ........ .........
Ms. Black...................... X ........ .........
Mr. Reed....................... X ........ .........
Mr. Young...................... X ........ .........
Mr. Kelly...................... X ........ .........
Mr. Griffin.................... X ........ .........
Mr. Renacci.................... X ........ .........
----------------------------------------------------------------------------------------------------------------

The vote on the amendment by Mr. Neal to the amendment in
the nature of a substitute, which would strike the short title
and the provision making permanent the special rule for
contributions of qualified conservation contributions,
replacing those provisions with a two-year extension of that
special rule, was not agreed to by a roll call vote of 10 yeas
to 26 nays (with a quorum being present). The vote was as
follows:

----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp....................... ........ X ......... Mr. Levin........ X ........ .........
Mr. Johnson.................... ........ X ......... Mr. Rangel....... X ........ .........
Mr. Brady...................... ........ X ......... Mr. McDermott.... X ........ .........
Mr. Ryan....................... ........ X ......... Mr. Lewis........ ........ ........ .........
Mr. Nunes...................... ........ ........ ......... Mr. Neal......... X ........ .........
Mr. Tiberi..................... ........ X ......... Mr. Becerra...... ........ X .........
Mr. Reichert................... ........ X ......... Mr. Doggett...... ........ X .........
Mr. Boustany................... ........ X ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... ........ X ......... Mr. Larson....... X ........ .........
Mr. Gerlach.................... ........ X ......... Mr. Blumenauer... X ........ .........
Mr. Price...................... ........ X ......... Mr. Kind......... ........ X .........
Mr. Buchanan................... ........ X ......... Mr. Pascrell..... ........ ........ .........
Mr. Smith...................... ........ X ......... Mr. Crowley...... X ........ .........
Mr. Schock..................... ........ X ......... Ms. Schwartz..... X ........ .........
Ms. Jenkins.................... ........ X ......... Mr. Davis........ X ........ .........
Mr. Paulsen.................... ........ X ......... Ms. Sanchez...... X ........ .........
Mr. Marchant................... ........ X .........
Ms. Black...................... ........ X .........
Mr. Reed....................... ........ X .........
Mr. Young...................... ........ X .........
Mr. Kelly...................... ........ X .........
Mr. Griffin.................... ........ X .........
Mr. Renacci.................... ........ X .........
----------------------------------------------------------------------------------------------------------------

The vote on the motion by Mr. Brady to table Mr.
McDermott's motion to appeal the ruling of the Chair was agreed
to by a roll call vote of 23 yeas to 14 nays (with a quorum
being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp....................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Rangel....... ........ X .........
Mr. Brady...................... X ........ ......... Mr. McDermott.... ........ X .........
Mr. Ryan....................... X ........ ......... Mr. Lewis........ ........ ........ .........
Mr. Nunes...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Becerra...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Boustany................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Gerlach.................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Price...................... X ........ ......... Mr. Kind......... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Pascrell..... ........ ........ .........
Mr. Smith...................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Schock..................... X ........ ......... Ms. Schwartz..... ........ X .........
Ms. Jenkins.................... X ........ ......... Mr. Davis........ ........ X .........
Mr. Paulsen.................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Marchant................... X ........ .........
Ms. Black...................... X ........ .........
Mr. Reed....................... X ........ .........
Mr. Young...................... X ........ .........
Mr. Kelly...................... X ........ .........
Mr. Griffin.................... X ........ .........
Mr. Renacci.................... X ........ .........
----------------------------------------------------------------------------------------------------------------

The bill, H.R. 2807, was ordered favorably reported as
amended by a roll call vote of 23 yeas to 14 nays (with a
quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp....................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Rangel....... ........ X .........
Mr. Brady...................... X ........ ......... Mr. McDermott.... ........ X .........
Mr. Ryan....................... X ........ ......... Mr. Lewis........ ........ ........ .........
Mr. Nunes...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Becerra...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Boustany................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Gerlach.................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Price...................... X ........ ......... Mr. Kind......... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Pascrell..... ........ ........ .........
Mr. Smith...................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Schock..................... X ........ ......... Ms. Schwartz..... ........ X .........
Ms. Jenkins.................... X ........ ......... Mr. Davis........ ........ X .........
Mr. Paulsen.................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Marchant................... X ........ .........
Ms. Black...................... X ........ .........
Mr. Reed....................... X ........ .........
Mr. Young...................... X ........ .........
Mr. Kelly...................... X ........ .........
Mr. Griffin.................... X ........ .........
Mr. Renacci.................... X ........ .........
----------------------------------------------------------------------------------------------------------------

IV. BUDGET EFFECTS OF THE BILL

A. Committee Estimate of Budgetary Effects

In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 2807, as
reported.
The bill, as reported, is estimated to have the following
effect on Federal budget receipts for fiscal years 2014-2024:

FISCAL YEARS
[Millions of Dollars]
----------------------------------------------------------------------------------------------------------------
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014-19 2014-24
----------------------------------------------------------------------------------------------------------------
-6 -81 -77 -81 -84 -94 -111 -127 -142 -156 -169 -422 -1,128
----------------------------------------------------------------------------------------------------------------
Note: Details do not add to totals due to rounding.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority

In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee further states that the revenue-reducing tax
provisions involve increased tax expenditures. (See amounts in
table in Part IV.A., above.)

C. Cost Estimate Prepared by the Congressional Budget Office

In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.

U.S. Congress,
Congressional Budget Office,
Washington, DC, June 5, 2014.
Hon. Dave Camp,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2807, the
Conservation Easement Incentive Act of 2014.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Logan
Timmerhoff.
Sincerely,
Douglas W. Elmendorf.
Enclosure.

H.R. 2807--Conservation Easement Incentive Act of 2014

H.R. 2807 would amend the Internal Revenue Code to
reinstate and make permanent specified rules that increased the
amount of income tax deductions allowed for taxpayers making
certain charitable contributions of real property for
conservation purposes. The rules, which expired on December 31,
2013, increased certain income-based limits on the amount of
such conservation contributions that an individual or qualified
corporate farmer or rancher could deduct in a year, and
extended the number of years over which such contributions
above the limits could be carried forward and deducted.
The staff of the Joint Committee on Taxation (JCT)
estimates that enacting H.R. 2807 would reduce revenues, thus
increasing federal budget deficits, by about $1.1 billion over
the 2014-2024 period.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
direct spending and revenues. Enacting H.R. 2807 would result
in revenue losses in each year beginning in 2014. The estimated
increases in the deficit are shown in the following table.
JCT has determined that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Logan
Timmerhoff. The estimate was approved by David Weiner,
Assistant Director for Tax Analysis.

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 2807, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON MAY 29, 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014-2019 2014-2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN THE DEFICIT

Statutory Pay-As-You-Go Effects...................... 6 81 77 81 84 94 111 127 142 156 169 422 1,128
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
Note: Components may not sum to totals because of rounding.

D. Macroeconomic Impact Analysis

In compliance with clause 3(h)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made by the Joint Committee on Taxation with respect to the
provisions of the bill amending the Internal Revenue Code of
1986: the effects of the bill on economic activity are so small
as to be incalculable within the context of a model of the
aggregate economy.

V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

A. Committee Oversight Findings and Recommendations

With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee advises that it was as a result of the
Committee's review of the provisions of H.R. 2807 that the
Committee concluded that it is appropriate to report the bill,
as amended, favorably to the House of Representatives with the
recommendation that the bill do pass.

B. Statement of General Performance Goals and Objectives

With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.

C. Information Relating to Unfunded Mandates

This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.

D. Applicability of House Rule XXI 5(b)

Rule XXI 5(b) of the Rules of the House of Representatives
provides, in part, that ``A bill or joint resolution,
amendment, or conference report carrying a Federal income tax
rate increase may not be considered as passed or agreed to
unless so determined by a vote of not less than three-fifths of
the Members voting, a quorum being present.'' The Committee has
carefully reviewed the bill, and states that the bill does not
involve any Federal income tax rate increases within the
meaning of the rule.

E. Tax Complexity Analysis

Section 4022(b) of the Internal Revenue Service
Restructuring and Reform Act of 1998 (the ``IRS Reform Act'')
requires the staff of the Joint Committee on Taxation (in
consultation with the Internal Revenue Service and the Treasury
Department) to provide a tax complexity analysis. The
complexity analysis is required for all legislation reported by
the Senate Committee on Finance, the House Committee on Ways
and Means, or any committee of conference if the legislation
includes a provision that directly or indirectly amends the
Internal Revenue Code and has widespread applicability to
individuals or small businesses.
Pursuant to clause 3(h)(1) of rule XIII of the Rules of the
House of Representatives, the staff of the Joint Committee on
Taxation has determined that a complexity analysis is not
required under section 4022(b) of the IRS Reform Act because
the bill contains no provisions that amend the Code and that
have ``widespread applicability'' to individuals or small
businesses, within the meaning of the rule.

F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits

With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill, and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.

G. Duplication of Federal Programs

In compliance with Sec. 3(j)(2) of H. Res. 5 (113th
Congress), the Committee states that no provision of the bill
establishes or reauthorizes a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139. The Committee
also states that the most recent Catalog of Federal Domestic
Assistance, published pursuant to the Federal Program
Information Act (Public Law 95-220, as amended by Public Law
98-169), identified a program related to conservation easement
contributions.

H. Disclosure of Directed Rule Makings

In compliance with Sec. 3(k) of H. Res. 5 (113th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):

INTERNAL REVENUE CODE OF 1986

* * * * * * *

Subtitle A--Income Taxes

* * * * * * *

CHAPTER 1--NORMAL TAXES AND SURTAXES

* * * * * * *

Subchapter B--Computation of Taxable Income

* * * * * * *

PART VI--ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS

* * * * * * *

SEC. 170. CHARITABLE, ETC., CONTRIBUTIONS AND GIFTS.

(a) * * *
(b) Percentage Limitations.--
(1) Individuals.--In the case of an individual, the
deduction provided in subsection (a) shall be limited
as provided in the succeeding subparagraphs.
(A) * * *

* * * * * * *

(E) Contributions of qualified conservation
contributions.--
(i) * * *

* * * * * * *

[(vi) Termination.--This subparagraph
shall not apply to any contribution
made in taxable years beginning after
December 31, 2013.]

* * * * * * *

(2) Corporations.--In the case of a corporation--
(A) * * *
(B) Qualified conservation contributions by
certain corporate farmers and ranchers.--
(i) * * *

* * * * * * *

[(iii) Termination.--This
subparagraph shall not apply to any
contribution made in taxable years
beginning after December 31, 2013.]

* * * * * * *

VII. DISSENTING VIEWS

The six bills approved by the Republicans at the markup
would add $304 billion to the deficit. Combined with the $310
billion that the six bills approved by Republicans on the
Committee in April added to the deficit, Republicans have added
$614 billion to the deficit in two short months--and there does
not appear to be an end in sight. Even though some of these
bills were introduced individually with some bipartisan
support, the opposition to these bills was based on the
position that these tax provisions should not be made permanent
by adding to the deficit without any revenue offset.
To put the combined cost ($614 billion) into context, it is
25 percent more than the entire projected federal deficit this
year and $86 billion more than total non-defense domestic
discretionary spending (e.g., medical research, education,
veterans' pensions and health care, transportation, etc.) will
be in 2014. It is almost seven times what we spend annually on
education, job training, and social services. It is ten times
more than we spend on veterans. And, it is eleven times more
than we spend on medical research and public health.
Public charities and private foundations serve an important
role in our society. We all support the good works of the
charitable community and strive to provide charities with the
resources they need to carry out their charitable mission. The
markup was not to debate the good works of charities across
this country, or the merits of H.R. 2807 which would make
permanent the deduction for conservation easements.
We found it hypocritical that, four months ago, Republicans
let emergency unemployment insurance expire for more than 1.3
million Americans by arguing that an adequate offset had yet to
be proposed. In early April, the Senate came to a bipartisan
agreement on an offset after months of painstaking
negotiations. Yet House Republicans still refuse to act.
Finally, we also opposed the manner in which Republicans
were proceeding--selecting 10 to make permanent without any
offset from the approximately 60 tax provisions that expired
last year. This approach was both fiscally irresponsible and
fundamentally hypocritical.
The consideration of this bill should have been part of the
consideration of all the expired tax provisions commonly
referred to as ``tax extenders.'' The Republicans did not take
up other tax extenders that also are important to Democratic
Committee Members. Left to an uncertain fate are provisions
like the Work Opportunity Tax Credit, the New Markets Tax
Credit, and the renewable energy tax credits, as well as the
long-term status of the Earned Income Tax Credit, the Child Tax
Credit, and the American Opportunity Tax Credit.

Sander M. Levin,
Ranking Member.