John Ed Anthony
Owner
Anthony Timberlands
1906 Highway 290
Hot Springs, AR 71913

Written Testimony prepared for the U.S. Senate Finance Committee
Hearing on “Alternatives to the Current Federal Estate Tax”
March 12, 2007

Chairman Baucus, Ranking Member Grassley, and members of the Committee: I am making this contribution to the hearing record specifically in response to the claim of panelist Lily Batchelder that “no family farms have been sold due to the death tax.” She is wrong and as a tree-farmer in Arkansas, I know it.

At age 69 I serve as Chairman of Anthony Timberlands Inc., a Sub-S Corporation which I own with my two sons and a daughter. My son Steven, now 47 with two sons of his own now in college, is President.

Our company was formed in 1907 by my grandfather and operates manufacturing facilities and owns timberland in South Arkansas in 7 communities employing over 1000 people in the plants and in support of our operations.

We paid the Death Tax when my father died in 1961 and again when my grandfather died in 1980. It is hopeless for my heirs to pay the tax at my death and the company will have to be sold to one of several corporate suitors either at my death or prior, which is more likely, since the handwriting is on the wall unless the tax is repealed. We are one of the last privately owned forest products company of significance remaining in the state and one of only a few remaining in the South, all sold to pay the tax. Allow me to briefly explain why.

Only a fool sits on the track waiting for the train the run over them. The reason it appears to Ms. Batchelder that no family farms have been lost is that the owners of those farms, in anticipation of the inevitable catastrophe of the Death Tax, have all sold the farm prior to the train wreck.

In the process of a lifetime of accumulating assets, bought with after tax dollars, and particularly with regard to farm, range and timberland, many efforts are made by entrepreneurs to jump through countless hoops to deal with the Death Tax. These include the purchase of insurance at enormous cost, legal fees for tax attorneys involving often illogical business plans and formation of complicated trusts, gifts and spin-offs. This almost always results in there coming a time when, at the end of the day, they see that it was a hopeless effort. They then conclude that the on ly course of action is to liquidate the asset, sell out to the corporate entity, and dissolve the family business.

That's why there are no private companies of consequence, particularly in manufacturing, remaining. It's also the reason no family farms have been sold on the courthouse steps. Innovators and good managers are too prudent to allow their families to be bushwhacked in their final days, so they salvage what they can by selling out, usually to corporate interests, and most often to the detriment of the communities and regions which they have helped develop and nurture. That's why rural America is slowing going away. All the assets once held privately in the small towns of America have been acquired by the multinational corporations, which are never exposed to the tax.

The case for death tax repeal has long been established. It is time for the committee to support legislation which actually ends this unfair and pernicious tax.