NCPA - National Center for Policy Analysis


February 19, 2009

In Colorado landowners who agree not to develop their land and place it in a permanent conservation easement are able to earn up to $100,000 in state income tax credits that they not only can use themselves, but can sell to other taxpayers in the state.  This new law was meant to level the playing field so all landowners could benefit from preserving their land from development by allowing them to sell their credits for cash, says Ariel Steele, the owner of Tax Credit Connection, Inc.

And it worked with amazing speed.  The first year the tax incentives were in place, the state awarded $1.3 million in tax credits. By 2005 and 2006, the amount of tax credits swelled to more than $80 million each year.

So, what does this mean for conservation and the people of Colorado, asks Steele?

  • Since the inception of the program, nearly 1.2 million additional acres have been preserved, farmers and ranchers are able to get a valuable cash infusion for agreeing not to develop their land and taxpayers can save more than they had in the recent past for investing in tax credits. 
  • To date, $292 million in credits have been claimed by Colorado taxpayers, putting those dollars in the hands of Colorado's farmers, ranchers and owners of wildlife habitat for the services they have been providing to residents free of charge.
  • Coloradoans now know that the scenic vistas, wildlife habitat and productive farm and ranchland have been permanently preserved through the payment to the landowners by way of conservation easement tax credits.

So far, two other states (New Mexico and Virginia) have followed Colorado's lead and it is likely that more will follow once there is evidence that Colorado has weathered the storm of fraud, says Steele.

Source: Ariel Steele, "Experimenting with Tax Credits for Conservation," PERC Reports, Vol. 26, No. 4, December 2008.

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