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Show Study Recommends Taxation Laws for Federal Property Should federal property be subject to state and local taxation? This question recently was examined by the Advisory Commission on Intergovernmental Relations (ACIR) and the result of this study was reported by Utah Foundation, the private tax research organization. According to the Advisory Commission, Congress should "authorize a program of payments in lieu of real property taxes to state and local governments in an amount equal to that which would be paid if the federal government were actually subject to the real property tax." The Commission found that the current federal tax immunity "!?ads to a significant erosion of the total state and local own-source revenue base, but that it also leads to gross violation of the equity principle in public finance that taxpayers in equal circumstance be treated .equally.'' Foundation analysts note, however, that the Advisory Com-mission recommendation would apply only to "non-open space" real property. Specifically excluded from the base used in determining in-lieu tax payments would be "open space" properties, such as those used for flood control and navigation, historical sites, parks, forest and wildlife programs, reclamation and irrigation, grazing, roads and bridges, and monuments and memorials. Also exempted would be all lands in the public domain. It is reasoned that the public domain has no value until it is developed, and that state and local units already receive funds from the public domain through mineral royalties and in-lieu payments. According to the Foundation, if the Advisory Commission recommendations were followed, an estimated $210 billion of federally-owned property throughout the United States would be subject to taxation or in-lieu payments. At average state local tax rates, the federal tax liability would amount to an estimated $3.7 billion. If this federal in-lieu payment were to replace existing federal payments on "non-open spaces" properties, there would be an offset saving of approximately $1.0 billion, leaving a net cost to the federal government of approximately $2.7 billion. In Utah, the federal "non-open space" properties were valued at nearly $2.0 billion in 1978. Based on the average tax rate in the state, the Advisory Commission's recommendations would result in an estimated gross tax liability of $20.2 million per year, and a net liability of approximately $10 million after allowing for the offset savings on in-lieu payments currently made on "non-open space" properties. The Foundation report points out the federal government is the largest owner of real property in the United States. It currently owns 770 million acres, or about one-third of the nation's total land area. In Utah, federal land holdings totaled 33,530,000 acres, or 63.6 percent of the total land area, on September 30, 1978. |