For decades in northern Michigan there was death. And there were taxes. For all but the wealthiest few, who were forced to pay estate taxes at their deaths, the two remained inevitable and separate.

Now, though, a population boom and the sharp rise in property values has merged death and taxes. Many families who own large blocks of undeveloped property are becoming eligible for the so-called "death tax:" Of all the federal policies that influence the use of land in northern Michigan, the estate tax now ranks among the most damaging.

Here is why. Much of northern Michigan still lies in farms, woodlots, and other large land holdings controlled by families. When farm and forest land was valued at $300 to $500 an acre, even the largest landholders had little to fear from the tax:. Only estates valued at more than $600,000 were required to pay the levy, which ranges from 37 percent to a maximum of 55 percent.

Open land in the region now sells for $2,000 to $25,000 an acre. The consequence is that almost every working family with a home and 100 acres of land near any lake or river in the Grand Traverse region could qualify for the estate tax. Even families who vowed never to sell have now begun to consider the unthinkable: carving up their holdings for strip malls, roads and subdivisions in order to pay the tax.

The situation has gotten so out of hand here and in other beautiful regions of the country that farmers and other land owners united this year to reform the law. As part of the negotiations between Republicans and the White House to balance the federal budget, Congress is proposing to systematically raise the amount sheltered from the estate tax to $1 million by 2007.

Among the lawmakers who supports the measure is Congressman Dave Camp, a Midland Republican and a member of the House Ways and Means Committee, the key -tax writing committee that approved the proposal in June. If it is passed by the full House and Senate and signed by President Clinton, it would be the first increase in the tax shelter level since 1987.

Other proposals to preserve farms and maintain large blocks of land also are gaining prominence in Washington. One measure, considered by the Senate, would give farmers an exclude from a farmers estate up to $1 million more in tax exemptions protected if they donated a permanent conservation easements for their land. "Americans should get something in return for giving farmers a break, and that is a conservation benefit," said Chuck Beretz, the Federal Policy Program Director for American Farmland Trust, a farm conservation group in Washington.

The federal estate tax was never intended to act as a crowbar to pry people off the land. When it was first enacted in the early 1940s, it was directed at the richest Americans, those with assets in excess of $50 million, to help pay for World War Two. But as the government came to recognize the revenue producing potential of a sure thing — taxing the dead — lawmakers increased the reach of the tax by by making smller andmsler estatbes reducing the eligibility level. This year, nearly 40,000 estates — farmers make up 6 percent of the total — will pay $19.2 billion in federal estate taxes.

The debate in Congress has generally focused on one issue: whether estate tax relief is a sop to the rich. Supporters of the reform effort, though, point out that rich people have other means to evade taxes, while everyone else pays the bill. They ask, Why not use tax policy to help land owners, and at the same time produce lasting benefits to rural communities and the environment?

In interviews, farmers agreed. Two of the savviest growers in the region are Percy and Clinton Smeltzer, who raise apples, cherries, asparagus and other crops on 1,600 acres in Benzie and Manistee counties. Now in their seventies, the Smeltzers remain active in their business, Per-Clin Orchards Inc., even as they consider one of their toughest decisions: how to keep their holdings intact for the next generation.

"It’s not just important to us. It should be important to a lot of other people around here," said Percy Smeltzer. "Farm property has to get some kind of relief if we are going to keep farms in the hands of family farmers."