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6/3/2014 » 6/6/2014
National Conference of Private Forest Landowners

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The Estate Tax
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The Estate Tax

The Forest Landowners Association supports full and permanent elimination of the Federal Estate Tax. The death tax provides a disincentive for heirs to retain their family forests businesses or to continue sustainable management their forests.

Latest Action

On March 22, 2013, Senator John Thune (R-SD) offered amendment (#307) to permanently abolish the federal death tax during the consideration of S. Con. Res. 8, the Senate Democrat budget. The amendment was defeated by a vote of 56 to 43. Senator Thune issued the following statement:

"A death in the family should not be a taxable event. Unfortunately, a majority of Senate Democrats opposed full repeal of this unfair tax on family farms and businesses, and continue to support a tax policy that hurts economic growth and job creation. Currently more than 70 percent of family businesses do not survive to the second generation, and 90 percent of family businesses do not survive to the third generation. According to a study by former CBO Director Douglas Holtz-Eakin, repealing the death tax would create 1.5 million additional small business jobs and would shave almost a percentage point off the unemployment rate. It is time for Congress to end this punitive tax on entrepreneurship and small business job creation.” Senator John Thune (R-SD)

 

To date, further legislation to permanently abolish the estate tax has not been introduced in the 113th Congress.

Current Law
The American Taxpayer Relief Act of 2012, was a bipartisan tax compromise package that was passed at the end of 2012 and included some estate tax relief provisions for our nation's family businesses. 
 
Key provisions of current law include: 
  • A maximum estate tax rate is 40 percent, effective January 1, 2013. While this is an increase 2012's 35 percent, it is sharply lower than the 55 percent rate that could have taken effect absent the legislation.  
  • The law permanently maintains the $5 million exemption amount, indexed to inflation. As of the end of 2012, the inflation adjusted amount is $5.12 million.
  • Unification:  The estate and gift taxes are permanently unified. This establishes a single graduated rate schedule for both the estate and gift taxes, simplifying estate planning.  
  • Spousal portability:  The law permanently allows couples to transfer any unused exemption to the surviving spouse under simplified rules.    
  • No harmful offsets—preserves valuation discounts, grantor-retained annuity trusts (GRATs) and state estate tax deductibility.

 

Why It’s Important

 

The US Forest Service estimates that landowners harvest 2.4 million acres of forestland each year to pay the federal estate tax. The Death Tax encourages fragmentation and subsequent non-forest development of existing forestland.
 
According to a study by former CBO Director Douglas Holtz-Eakin, repealing the death tax would create 1.5 million additional small business jobs and would shave almost a percentage point off the unemployment rate.

 

Effect of the Federal Estate Tax on Nonindustrial Private Forest Holdings, Green, Bullard, Cushing, and Beauvais.

What We’ve Done

 

FLA has been the lead national forestry champion for the repeal of the death tax since 1998. Working with the Forest Landowners Tax Council, we have continuously sought elimination of this onerous tax.
 
In 2012 we continued to work with the Family Business Coalition and key Congressional leaders to advance legislation that would fully repeal the estate tax (S. 2242/H.R. 1259).  Through FLA’s grassroots advocacy efforts, the legislation garnered over 200 bi-partisan cosponsors in the U.S. House of Representatives and over 35 in the U.S. Senate.
 
In 2010, the Forest Landowners Association led a coalition of 53 forestry organizations in a united front to support the interim measure passed by congress in 2010. 

 

FLA Member Blake Sullivan’s and Henry Barclay’s Testimony
Lincoln/Kyl letter

 


 

 

 

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