American Forest Foundation Releases “The Impact of the Estate Tax on Forest Stewardship”

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The American Forest Foundation has released a preliminary report “The Impact of the Estate Tax on Forest Stewardship”, detailing the impact of estate taxes on family forest owners, including new data on the potential blow to Minnesota’s family forest owners who own 5.3 million acres of forestland in the state.

If Congress doesn’t act before December 31, the estate tax could threaten millions of acres of family-owned forestland.

The American Forest Foundation (AFF) has released a preliminary report “The Impact of the Estate Tax on Forest Stewardship”, detailing the impact of estate taxes on family forest owners, including new data on the potential blow to Minnesota’s family forest owners who own 5.3 million acres of forestland in the state.

Congress is debating significant fiscal issues facing the nation, and they will likely make a decision about the estate tax as they work to solve these issues. If Congress doesn’t act before December 31, the estate tax will revert back to $1 million at a 55 percent tax rate—threatening millions of acres of family-owned forestland across the country. According to U.S. Forest Service (USFS) research, this could impact nearly 6,000 family forest owners in Minnesota alone, threatening 1.6 million acres of the state’s forests. Since families own 32 percent of Minnesota’s forests, this could have serious implications for the water quality, wildlife habitat, recreation, and forest products that come from these lands.

And more and more families will be facing the estate tax, since the United States is facing an unprecedented transfer of private forestland to the next generation. Parcellation, the breaking up forests into smaller ownerships, or conversion to non-forest uses often happens when burdensome estate taxes cannot be paid. Forest parcellation impacts the health and productivity of America’s forests.

“When an heir is saddled with a big estate tax bill, premature harvesting and selling of forestland is a common outcome,” said Tom Martin, President and CEO of the American Forest Foundation. “More than 15 percent of private forest acres are owned by someone 75 years or older, accounting for more than 50 million acres. Unless Congress acts now to fix the estate tax so that it works for family forest owners, millions of acres of beautiful and productive forestland could be sold into smaller and smaller parcels or lost forever to development. That’s not good for family forests, and it’s not good for the country.”

AFF’s report offers a preliminary sneak peek at new USFS research on the estate tax’s conservation impact. Research results from Minnesota show that if the exemption were to be set at $5 million with a 35 percent tax rate, 250,000 acres of Minnesota’s forestland would be at risk—far fewer than the 1.6 million acres if the tax rate is set at $1 million with a 55 percent tax rate. USFS researchers are conducting their analysis in four more states, and expect to see similar results.

Congress needs to remove the barriers to keeping forest as forests by implementing solutions outlined in AFF’s report “The Impact of the Estate Tax on Forest Stewardship”. At a minimum, to protect America’s forests, Congress should maintain the current estate tax exemption level at $5 million with a 35 percent rate, and fix the special use valuation as outlined in the Keep the Forest and Farm in the Family Act (H.R. 6439), legislation supported by AFF and 57 other organizations (PDF).

“Family forest owners are overwhelmingly hard-working middle class Americans—82 percent make less than $100,000 per year. Congress needs to remove the barriers for families, who are some of the best forest stewards, so they can keep their forest land intact,” Martin said.

Read more in “The Impact of the Estate Tax on Forest Stewardship”.

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Amanda Cooke
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