Half a Yosemite

That’s How Much Forest Is Destroyed Every Year to Pay Off Federal Estate Taxes

President Bush may earn the environmental legacy that Bill Clinton so desperately wanted—if his tax-reform package passes Congress. Included in the original $1.6 trillion tax rebate is a phaseout of the federal estate tax, better known as the “death” tax.

When Clinton vetoed similar legislation last year, he ignored environmentalists like Michael Bean of the Environmental Defense Fund. In 1997, Bean said, “Estate tax requirements are destroying some of the largest and most important endangered species habitats in private ownership.”

A new study by Mississippi State University and the US Forest Service estimates that some 350,000 acres of non-industrial forestlands are destroyed every year to pay off federal estate taxes. That’s half a Yosemite National Park every year.

With 1.4 million acres of forestland sold to pay the estate tax, a quarter of that acreage is converted to other, more developed uses. These private forestlands often provide the only cover for animals. Without the trees, numerous bird species have no place to nest.

Even if land isn’t sold to pay the tax, habitat can end up altered as a result. The Mississippi State–Forest Service study estimates that each year 2.6 million acres of forestland are harvested earlier than they might have been because of the tax.

Forestlands are not the only ecosystems that suffer from the death tax’s unforgiving sickle. Farms and ranches provide the majority of open spaces and forage areas for deer and antelope, foxes, wild turkeys, and other animals.

They provide migration corridors unimpeded by highways or housing developments. The death tax encloses these open spaces by shutting down family farms and ranches that cannot afford to pay the tax.

House Speaker Dennis Hastert knows this story all too well. During a floor debate last year, the Speaker recalled how the tax prevented him from taking over an Illinois family farm when his father-in-law passed away.

“Every tractor, every combine, every roll of fence, and every head of cattle was sold off so we could pay the estate tax. I might have been a good farmer, but I didn’t have that choice,” recounted the Speaker.

The federal estate tax is levied whenever $675,000 worth of assets transfers from the deceased to family members or other designees of a will. The tax is due in cash nine months later.

At a bare minimum of 37 percent, it nearly equals the rate of the highest income-tax bracket.

While most would find half a million dollars to be a substantial inheritance, this windfall frequently arises in the form of forestland, a small business, or an agricultural operation, not a liquid asset. By leaving the next generation in the awkward position Hastert faced—being dirt rich but dollar poor—the tax can cripple a family business.

A number of congressmen have argued for raising exemption limits instead of completely eliminating the tax. This only extends the problem into the future, where creeping inflation or a quiet act of Congress can lower the exemptions again with little effort. Only outright repeal of the tax will protect future generations from its harmful effects. There is no reason to protect the tax for fiscal purposes.

The estate tax brings in 1 to 2 percent of total federal revenues. The Joint Economic Committee of Congress has questioned whether income from the tax even outweighs the costs of collecting it. Resistance to eliminating the tax appears to come from a knee-jerk “soak-the-rich” ideology rather than rational analysis.

During last summer’s death-tax debate, Rep. Barney Frank (D-MA) argued that the only American Dream harmed by the tax was the dream of those “smart enough to have rich parents.” While the agricultural and small-business community may beg to differ with Frank on the human impact, it’s clear that wildlife and our natural environment suffer from the death tax.

Congress should join Bush to secure an environmental legacy for the country by eliminating this menace. If this Congress doesn’t, it will aid the double-dipping Grim Reaper in continuing to reap more than he sows.