When Rep. Beryl F. Anthony Jr. (D-Ark.) presented the House Ways and Means Committee last weekend with an amendment preserving a small portion of the timber industry's tax benefits, he said it favored small growers who could not afford to produce trees without tax breaks.
The committee member did not mention that those small growers include his father, an uncle and several other relatives, who own a total of more than 150,000 acres of timber in southern and central Arkansas.
Based on figures provided by a cousin of Anthony's, one of the two new tax breaks in the amendment would preserve a total of more than $500,000 in annual tax deductions for Anthony's relatives by 1990: it would allow them to write off the cost of maintaining timber stands over five years, rather than over the 40-year life of a tree.
Anthony said in an interview yesterday that he was attending to his timber-dependent district, rather than his family, when he helped write the provision. He said the committee has known for years of his family holdings.
Asked whether he knew that his family's holdings fell just inside the limits of one of the new tax breaks, Anthony said: "I didn't know exactly where they would fall."
Anthony owns no timberland, although his father, Beryl Anthony Sr., and uncle, Clary Anthony, own 40,000 acres of timber through Anthony Forest Products Co. in El Dorado, Ark.
A second cousin, John Ed Anthony, is president of Anthony Timberlands Inc. in Bearden, Ark., which mills timber from 125,000 acres of family-owned land and is one of the largest independent timber companies in the South. John Ed Anthony provided the figures about the family's holdings.
The amendment was written by a five-member working group including Anthony and passed by the committee last weekend.
Much of the timber industry received it, one industry lobbyist said, as "a body blow." While preserving breaks worth $800 million to small growers, it repealed others worth $4.9 billion, most of which benefit large growers and corporations, according to committee staffers.
The amendment would tax timber companies' earnings at the full corporate rate, rather than at the more favorable rate of a capital gain. But it would continue to tax tree sales by individual owners as capital gains -- a maximum of 20 percent.
Anthony's father and uncle own their timber through a corporation and would lose the capital-gains benefit. But other family members own theirs as individuals, according to John Ed Anthony, and would continue to be taxed at the lower rate.
The amendment also would abolish for large growers a system that turns time into money. In the 30 to 60 years a tree requires to mature, growers earn no income and pay no tax, but now they can take annual tax deductions for the cost of pest control, fire protection and other maintenance. These deductions shelter billions of dollars a year of other income, according to Treasury Department officials.
Small growers -- defined in the amendment as owners of less than 50,000 acres -- could write off the costs over five years, but not every year.
Beryl Anthony Sr. and his brother, Clary, jointly own 40,000 acres under Anthony Forest Products, Clary Anthony said in an interview. Cousin John Ed said that while his company oversees 125,000 acres of family timber, no single family member owns more than 40,000 acres.
Consultants familiar with southern timber said that by the fifth year, 1990, the five-year writeoff for small growers would be as valuable as the current annual system. However, they said the accounting would be much more complicated.
John Ed Anthony said he now averages $4 to $5 an acre in expenses, a total of $500,000 to $625,000 on the 125,000 acres he oversees. Clary and Beryl Anthony Sr. take smaller deductions, he said.
"I made it perfectly clear that these provisions would have some impact on a family business . . . ," Rep. Anthony said.