Forest Landowners Tax Council

A Statement on Forest Taxation Research

Non-industrial private forest (NIPF) landowners need legislation to update the tax code in order to meet growing societal demands for multiple products from their forests. The Forest Landowners Tax Council believes that intelligent legislation is based upon research, and that there is a growing need to identify tax-based landowner incentives through research. America’s forest landowners need a comprehensive tax structure that eliminates the disincentives of the current collection of tax rules.

Americans and global customers are demanding more and more from private landowners. Our growing population expects:

More/larger/affordable housing;
Affordable materials for home remodeling and repair;
An inexhaustible supply of paper and fiber products.

At the same time, American consumers are demanding:

Clean Air;
Clean Water;
Biodiversity;
Outdoor Recreational Opportunities;
Wildlife Habitat;
Aesthetic Quality.

Forestland competes in a marketplace for capital where the playing-field is not level compared to other forms of investment. A correction in our tax laws is one of the few remedies that government can offer:

Timber is highly illiquid (compared to securities);
Timber often transcends generations (though tax law does not recognize this);
Timber investment risk is not insurable against loss (compared to developed real estate);
Financing is not structured to encourage leveraged investing, yet other commercial lending is structured to fit cash flows.

Our current tax rules impose a disincentive for private forest landowners to meet market and public demands, while practicing sound, sustainable forestland management. For example:

Death Taxes - 55% penalty for dying! Fragmentation. Pre-mature harvests;

Reforestation Costs - cannot be expensed, must be capitalized and carried for 35 – 40 years or longer;
Passive Loss Rules - Complex, confusing, and serve to drive investors away from forestry.

The forestry community knows a great deal about how to grow trees, but very little about how to get people to grow trees – landowners need incentives, including good markets and favorable tax treatments; both offer powerful motivation. We need help, through research, to identify barriers and incentives compatible with the long-term nature of sustainable forest management.

FLTC looks forward to working with any individual or organization on issues affecting NIPF. We encourage the use of the FLTC staff and members as a resource for information on this important undertaking.