The estate tax doesn’t just destroy family-owned businesses. It eliminates jobs, and in the process, damages towns and communities, particularly those in rural areas dependent upon the local industry.
Anthony Timberlands, Inc., is a family-owned company. It began as a tiny mill in 1907. Now Anthony Timberlands is one of the largest privately-owned forest products companies left in the American South. Almost all others have closed, primarily due to the estate tax.
Anthony Timberlands owns mills and facilities across Arkansas and employs more than 1,000 men and women who deliver logs and haul freight. Virtually all of the income produced by the land and the mills has been reinvested in the company and its employees.
With an abundant growing stock of immature trees, Anthony Timberlands requires a huge amount of capital to operate. All their capital investments have been made with after-tax dollars. While these assets are real, they are certainly not cash, which is what is required to pay the estate tax owed to the IRS. Hence, the crisis created by the estate tax. With Anthony Timberlands’ owner, John, nearing old age, there is no way for the business to survive. At death, his family will have no choice but to sell the company to a major corporation. Nothing consolidates wealth so completely as forcing the assets of a privately owned business into the hands of huge corporations that continue operation and are never exposed to the estate tax.
Anthony Timberlands has already paid three generations of estate taxes and cannot survive a fourth. Between the 1950s and 1980s, vast amounts of money were raised to pay the tax. Lands were clear-cut, mills liquidated, communities destroyed, and the business survived. But the next hit will be too great.