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Why Congress Should Get Rid of the PPP

Posted on Aug. 3, 2020
Ariel S. Greenblum
Ariel S. Greenblum

Remaining in one place for so long has stripped the meaning from the concept of time for many of us. But Nancy McLaughlin reminds us that days, months, and years very much matter, if only as they relate to deductible conservation easements (p. 819). When they’re written to allow for amendments — a provision that McLaughlin supports — those amendments must ensure that the property will remain in its condition, and they must prevent using the property in a way that would diminish its conservation values, she writes. The reasons for donation don’t matter — it’s the easement itself that does.

McLaughlin is talking about the requirement under section 170(h) that the property subject to a conservation easement be protected in perpetuity. Vivian Hoard emphasizes that the latter is a function of duration, in her analysis of the related proceeds regulation (p. 847). That rule says that conservation easements are invalid unless a donee land trust acquires a property right equal to the proportionate value of the easement limitation over the property as a whole. Hoard points to the importance of state law and congressional intent in arguing that this regulation should be struck.

But tax benefits or hindrances can’t be the only reasons people act. Alan Appel and Joshua Gamboa consider the marriage penalty and how the TCJA has made the status of married filing separately even more expensive than it was before (p. 797). Allowing married individuals to file as singles would address that problem because less taxable income can mean higher SALT and medical expense deductions.

Companies with related private foundations may be liable for tax under section 4960, which taxes some employee compensation over $1 million, even if the company-sponsored private foundations are not the ones paying it. Shane Hamilton and Anthony Provenzano point out that compensation from related for-profit companies is scrutinized when calculating this excise tax, but they also examine regulatory exceptions that may apply to compensation paid to company employees who also perform uncompensated services to the related foundation (p. 827).

One specific foundation caught the attention of Stephen Shay, who questions why the Americans for Tax Reform Foundation applied for and accepted a Paycheck Protection Program loan, given how critical the associated Americans for Tax Reform is of more government (p. 841). Shay explores the financial relationship between the two groups, emphasizing that the latter will benefit from the former’s loan.

Martin Sullivan argues that Congress should do away with the PPP altogether and instead expand the employee retention tax credit (p. 776). If the proposed changes to the ERTC become law, the maximum amount of the credit will rise to $36,000. Sullivan says that the credit would offer more benefit than a PPP loan, and it would have the advantage of galvanizing the economy directly through keeping employees where they should be — at their jobs.

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