CONGRESSMAN
Aila Boyd
aboyd@mainstreetnewspapers.com
U.S. Rep. Ben Cline, R-Va., has introduced legislation aimed at protecting property owners from paying federal taxes when their property is taken through eminent domain.
Cline on Feb. 25 unveiled the No Tax on Takings Act, which would amend the Internal Revenue Code to exempt property owners from paying capital gains taxes on property sales compelled by the government.
“Families should never be hit with a federal tax bill after the government forces them to sell their own property,” Cline said in a news release. “When eminent domain is used, property owners are already navigating a difficult process through no fault of their own. The federal government should not increase that burden by taxing a transaction into which they did not voluntarily enter.”
Under current law, property owners whose homes, businesses or land are seized through eminent domain may be required to pay capital gains taxes on any proceeds received beyond the property’s original purchase price.
Cline described the situation as a “double whammy” for property owners, who are required to accept what he called a subjective fair market value for their property and then pay taxes on the proceeds from the mandated sale.
The bill has garnered support from taxpayer and property rights advocacy organizations.
Thomas Aiello, senior director of government affairs for the National Taxpayers Union, said property owners can face tax liability “through no fault of their own” when the government forces a sale through eminent domain.
“That’s not fair, and the No Tax on Takings Act rightly corrects this problem by amending the Internal Revenue Code to shield unsuspecting property owners from paying punitive federal taxes on a transaction they did not choose,” Aiello said.
James Edwards, founder and executive director of Conservatives for Property Rights, said taxing compensation paid to landowners reduces the amount of “just compensation” they receive.
“The government compels property owners to sell land they may have had no intention of selling,” Edwards said. “So, Rep. Cline’s legislation is consistent with the Takings Clause, and CPR supports it.”
Cline represents Virginia’s 6th Congressional District, which includes much of western and central Virginia.
