The American Dream Succumbs to the Death Tax

"Man makes a death which Nature never made . . .
. . . And feels a thousand deaths in fearing one."
- Edward Young

Young, an 18th century writer, penned these words with no knowledge of the death tax, but the essence of these feelings certainly describes the experiences of one family of Florida forest landowners. As the Mitchell family moves into the third decade of grappling with the death tax, much of their effort and focus must, by necessity, be on finding ways to pay debts incurred by the 55% tax and preparing their heirs to pay the tax yet again.

Virginia Mitchell, mother of two, has gone two rounds with the death tax herself and remembers a third from her childhood. "ItÕs just so wrong and so very frustrating," comments Mitchell. "IÕd like my children to be able to focus on growing healthy forests and working in the woods. Instead, theyÕve been exposed to the hardship of dealing with the death tax, and that steals some of the joy."

MitchellÕs 3,700 acres of timberland have been in her family for at least three generations. With the death of her grandmother came her earliest memories of the impact of the death tax. "I remember it being rough around our house for several years as we struggled to maintain the land and pay the tax," says Mitchell. Her struggle to maintain the land in forests has been ongoing and immense since the death of her father in 1979. The estate tax debts incurred then were not yet paid off when her mother passed away in 1987. Her death unleashed a whole new round of taxes.

"When Mom died we were back in debt again, and we still had debt remaining from my dadÕs death. I had to make some tough decisions if we were to keep the land," says Mitchell. Those tough decisions included selling off some of the property and putting together a very deep cut on the remaining land. Because the timber sales were also subject to capital gains tax and coordinating the sales incurred forestry fees, Mitchell was forced to liquidate enough timber to bring nearly double the amount of the tax.

"To raise the money to pay the death tax, we had to sell enough timber to cover the 28 percent capital gains taxes and our forestry fees. We sold over a million board feet of timber and weÕre still paying for that today in lost revenue as we wait for that timber to regenerate," explains Mitchell. "Normally youÕd plan to cut growth at a rate that would allow you to have a perpetual cut Ð a consistent level each year. Because of the deep cut, IÕm now losing 130,000 board feet in production Ð and revenue Ð each year. All because of the death tax."

While the financial burden of paying taxes of more than half the value of the inherited property is pretty clear, the environmental cost of the death tax is often overlooked. Due to the death tax, Mitchell and her two brothers have been forced to sell greater volumes of timber off the land that theyÕve retained and been forced to sell off almost a third of the original 12,000 acres they inherited from their parents. Some of those parcels remained in timberland, but many have been clearcut and developed, increasing the forest fragmentation.

In addition to the financial and environmental costs, emotional costs have struck the family as well. "WeÕve had family fights over selling some of the property. Everyone wants to keep it in the family, but we just couldnÕt afford to," recalls Mitchell. "We went through times when family members werenÕt speaking and all to pay taxes on land that has already had death taxes paid on it three times now, not to mention the property taxes, income taxes and capital gains taxes weÕve paid over the years."

"Some days you wonder if itÕs really worth it. You think you could just sell out, cash in and spend it all. That might be fairer to my children than having them scramble to pay the death tax," comments Mitchell. "But IÕm very proud to be in forestry and I want my children to experience that. The death tax is just wrong and it needs to go."

MitchellÕs daughter, Aimee Judy, has every right to be disillusioned after witnessing the struggles her family has gone through to keep the legacy of forestland ownership. "Why pursue the American dream when youÕre penalized for success," comments Judy. "My family has worked hard and been successful with the land. IÕd like to do the same, but not to pay it all in death taxes."

Young may have had other motivations in mind, but Uncle SamÕs steep penance for death certainly keeps the Mitchell family contemplating the thousands of ways the death tax has cost them over the last three generations.