Testimony to Congress

Statement of Lee Ann Goddard Ferris
Member, National Federation Of Independent Business (NFIB)
Ketchum, Idaho

Subject: Death Taxes

Before: Senate Finance Committee

Date: April 10, 1997

Good morning. On behalf of the 600,000 members of the National Federation of Independent Business (NFIB), I appreciate the opportunity to present the views of small business owners on the subject of estate taxes.

My name is Lee Ann Goddard Ferris and I have been a member of NFIB for more than 10 years. My family lives in the central part of Idaho. Our family's cattle ranch is 45 miles northeast of the Ketchum/Sun Valley area in the Lost River Valley, outside of Mackay, Idaho. The ranch consists of 2,600 deeded acres and a cow-calf operation with 700 head of cattle. My youngest brother, Ross, lives with and manages the ranch with my mother. Although I am still very involved in the ranch, my husband and I also own and operate a design business in Ketchum.

My two brothers, my sister and I all grew up working alongside my father, mother and grandfather. We worked weekends, holidays and summers branding, moving cattle, riding the range and fixing fences. We didn't have a lot of material things, but we had our family, the land and the lifestyle.

On October 5, 1993 my father was accidentally killed when his clothing got caught in farm machinery. He was 71 and very healthy. He worked from dawn until dusk, and he loved the land and his family. We were always a very close-knit family, and the hub of our family was my father and the ranch. Even though my brother, Jack, my sister, Cary, and I don't live there anymore, we all go home along with the grandchildren to help with seasonal work. My daughter, Natalia, and I take as much time off in the summer as we can and work at our summer cow camp in Copper Basin moving cattle. My mother puts on a lot of church and community picnics and barbecues down by our swimming hole. Every June our family enters the local parade with a float representing our ranch. All of the other ranchers and their families in the valley do the same. Last year the theme for the parade was "Mackay's Heritage-Ranching, Mining and Logging."

My father's death was the most devastating event that any of us has ever gone through. The second most devastating event was sitting down with our estate attorney after his death. I'll never forget his words, "There is no way you can keep this place, absolutely no way." Still in shock from the accident I said, "How can this be? We own this land. We have no debt! We just lost my father, and now we are going to lose the ranch?"

Our attorney proceeded to pencil out the estate taxes that would be due after my mother's death, and we all sat in total shock. It had taken my grandfather and father their entire lifetimes to build up the ranch, and now we can't continue on and the grandchildren will not have the land and rich heritage it provides.

It has been three and a half years since my father's accident, and we still don't know what we are going to do. We only know that we will not be able to keep the ranch unless something is done with the estate tax law now.

The estimated estate tax on our family ranching assets is $3.3 million. We gross approximately $350,000 per year from the cattle. Without the land being paid for and tight operating costs, we would not be able to make money from the business. To spread the $3.3 million out over 14 years at four percent interest is of absolutely no value to us. That would mean that we would have to pay more than $241,650 per year, which is virtually impossible. Currently we are selling off one of our spring ranges in order to buy a $1 million life insurance policy for my mother in the event that she should suddenly die. This would allow us to pay off one-third of the estate taxes and avoid a fire sale.

This tax situation has put a tremendous strain on my mother. She worries constantly and has had many sleepless nights. I don't know if any of you could ever imagine how hard it has been on her. She doesn't have her husband anymore. She worked hard her whole life and gave up a lot of material things to put her after tax dollars back into the land to pay it off. Now unless this tax law is changed or abolished she will have to leave her home, which she loves, and our family will not have a base from which to carry on.

The same scenario is happening to many of the ranchers in our valley. Eighty percent of the ranches have been owned by the same families for two and three generations. The value of the land has risen dramatically in the last five years. All of these ranchers, live on very modest incomes, and most of them can barely educate their children. I am certain that none of them will be able to pay this tax. The town of Mackay is almost solely supported by the ranchers who buy feed, gas, food and clothing. The community will not be able to survive without them. What is happening is that these ranches are being bought by wealthy absentee owners who do not run cattle and who fly in only once or twice a year. This has already happened to two neighboring ranches. Both of the owners, both second generation ranchers, were killed in accidents. Their families could not pay the estate taxes and sold the ranches to wealthy southern Californians.

I have heard it said that the estate tax exists to redistribute wealth--to take from the "rich" presumably to benefit others less fortunate. Let me tell you, from where I stand I know that this tax accomplishes the opposite.

For my family, the tax means we will not be able to continue running the ranch that has been our heritage for 60 years. This Congress says it is pro-family however, I know from personal experience that the current estate tax law is anti-family. The tax will force us to sell the ranch to a wealthy absentee owner who is unlikely to run cattle, or keep the workers employed, or contribute to the community.

Surely if Congress does not provide relief from this tax, many other families will suffer a similar fate. Ultimately, I wonder whether towns like Mackay as we know it will continue to exist.

Mr. Chairman, members of the committee, I urge you to ask yourselves: Why does this tax exist? Is it worth the great harm it has caused to my family and many others like us? If it is not worth the harm, then the tax shouldn't exist, and I hope you will do everything in your power to eliminate the federal death tax.

Thank you again, Mr. Chairman, for the opportunity to testify before you today.