NCPA - National Center for Policy Analysis

CEI Analysis: The Anti-Environmental Death Tax

May 17, 1999

The estate tax is anti-environmental, say a number of experts. In taxing wealth transfers at death, the estate tax often forces the subdivision and development of large land tracts.

"It is often economic hardship that results in more intense land uses being considered by landowners," notes Dennis "Duke" Hammond, a scientist with the Florida Game and Freshwater Fish Commission. "If estate taxes were not assessed by the government, thousands of privately owned acres of land would be protected from development."

For many rural Americans, selling inherited land is the only way to pay the tax. For instance, the average annual household income of tree farmers is under $50,000, yet the average tree farm has a book value of $2 million or more. When a tree farmer dies, his family cannot pay the federal estate tax of up to 55 percent -- plus state levies -- without clearing timber or selling off land.

"The imposition of federal estate taxes often forces large parcels of environmentally valuable land to be broken up into smaller, less environmentally valuable parcels," reports the nonprofit Keystone Center. "Some of the best remaining habitat for endangered species is put at risk in this manner."

For example, Hammond says the estate tax threatens the survival of the Florida panther. There are only 30 to 50 panthers left in Florida, and habitat is dwindling. "[P]anthers cannot continue to exist if these private lands do not continue to support panthers as they currently are." More than 75 percent of species currently listed under the Endangered Species Act rely upon private land for some or all of their habitat.

Wildlife specialist Michael Bean of the Environmental Defense Fund calls the estate tax "highly regressive in the sense that it encourages the destruction of ecologically important land in private ownership."

Source: Jonathan H. Adler, "The Anti-Environment Estate Tax: Why the "Death Tax" Is Deadly for Endangered Species, CEI On Point No. 35, April 20, 1999, Competitive Enterprise Institute, 1001 Connecticut Avenue, N.W., Suite 1250, Washington, D.C. 20036, (202) 331-1010.


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