Washington, D.C. - Iowa's senators are at odds over a plan to allow landowners to get federal conservation benefits in tax credits rather than direct payments.

The plan, which would affect the land-idling Conservation Reserve Program, would benefit high-income landowners because the tax credits would reduce their federal tax liability each year. Under existing rules, landowners who enroll acreage in the program can only receive taxable annual payments.
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The dispute is one of the reasons lawmakers have been unable to agree on a final version of the farm bill. Congress this week extended farm programs until April 18.

The plan would have the effect of giving the congressional tax-writing panels, including the Senate Finance Committee, some say over the conservation program for the first time. Sen. Charles Grassley, R-Ia., is the finance committee's top Republican.

The program is normally under the sole control of the House and Senate agriculture committees. Sen. Tom Harkin, D-Ia., is the Senate committee's chairman.

"We don't know where the money would go, how it would operate," said Harkin, expressing frustration with the tax-credit idea this week. "This is just bizarre. It makes no sense."

His House counterpart, Minnesota Democrat Collin Peterson, said the availability of tax credits could wind up concentrating more rural land in the hands of the wealthy.

"We have enough problems with rich people from the city coming out and buying land for hunting and so forth," he said. "If you allow a rich credit, without any kind of limitations, it is going to shift that program significantly to wealthy people who are going to buy more land."

The Bush administration has objected to the tax-credit plan for a different reason: The loss of tax revenue would increase the overall cost of the program, now $1.8 billion annually.

The plan is part of a larger package of tax incentives and revenue-raising provisions that the Senate tacked to its version of the farm bill. Grassley and the finance committee's chairman, Sen. Max Baucus, D-Mont., said they expected to have some control over the bill if they would help provide money for it.

Grassley called the tax package "a goodwill effort to help the agriculture committee free up money for other things it wanted to pay for."

Some 34.7 million acres of land nationwide are enrolled in the Conservation Reserve Program, including 1.8 million acres in Iowa. The payments to landowners average $111 a year in Iowa and $51 nationwide.

Acreage enrolled in the program is former cropland that is considered environmentally sensitive because of its tendency to erode or its proximity to bodies of water.