The federal estate tax and nonindustrial private landowners

Timber and land values have increased significantly in many areas of the U.S. in recent years, and in some circumstances heirs liquidate timber, or sell or develop portions of inherited timber and agricultural lands to pay federal estate taxes. To better understand how the estate tax is affecting timberland owners, a survey was conducted of members of the National Woodland Owners Association, the American Tree Farm System, and a random sample of landowners throughout the United States in 1999. Survey questions involved estate values, and estate tax liabilities that were incurred between 1987 and 1997. Respondents were asked if it was necessary to harvest timber, or to sell land to pay federal estate taxes. Responses were obtained from 1,905 people (a 33.5% response rate), and results indicate that the federal estate tax was a contributor to the conversion of forest and agricultural lands to other uses during this period. Two hundred and two of the 1,905 respondents were involved in an estate between 1987 and 1997. Forty-three percent of the estates exceeded the $600,000 exemption that was allowed in those years; eight percent of the estates exceeded $3 million and were taxed at the highest marginal rate. Almost twenty-seven percent of the estates paid federal estate taxes. Approximately twenty-eight percent responded that timber was harvested or land was sold to pay federal estate taxes.