It’s easy to take South Carolina’s forests for granted. They cover two-thirds of the total area of the state, and the forest industry is an economic engine that brings $17.4 billion to South Carolina each year. The benefits of our working forests stretch well beyond rural jobs and the economy. They contribute to our quality of life through clean air and water, wildlife habitat and recreational opportunities.
Two-thirds of the state’s forests are owned by family timberland owners who plant, harvest and replant their lands to produce the raw materials for products we use every day, and increasingly, to produce a source of energy. They’ll tell you that theirs is a long-term business and it’s critical for them to operate their business in a climate of certainty. For decades that certainty has been rendered through existing federal tax provisions that allow landowners to deduct the annual costs associated with growing healthy, sustainable timberlands.
But this certainty is threatened by a tax reform package introduced in Congress last year —the Tax Reform Act of 2014 — that would repeal all four of the tax provisions that encourage investments in timberlands and their sustainable management. These proposals would raise taxes on private forestland and flatten our forest economy — perhaps to a devastating degree for many rural South Carolina communities.
According to research by F&W Forestry Services that analyzed the impacts on a small forest land owner in the South, removing these provisions would reduce returns and cash flows by almost one-third. Most timberland owners, especially smaller ones, need cash flow to justify their long-term investment in their properties. Without existing forestry provisions, many timberland owners would potentially be forced to convert their land to other uses.
Recently, a bipartisan letter was sent to the leaders of the House Ways and Means Committee, urging them to consider the important economic and environmental contributions of private timberlands when the committee takes up a comprehensive tax reform proposal. The letter, signed by South Carolina’s U.S. Representatives Jeff Duncan and Joe Wilson and 78 House members from other states, asked Committee Chairman Paul Ryan and Ranking Member Sander Levin to understand that current federal tax treatment of private timberland owners and investors is critical to sustaining the health of forest-related industries, the jobs they support, and the forests themselves.
Those of us who work in the forest industry appreciate the leadership and support of Representatives Duncan and Wilson.
If you agree that federal policy should support an industry that helps both the economy and the ecosystem, please contact your congressional representative. The current timber tax provisions are a great example of how Washington can help, not hinder, growth and prosperity.
The writer is president of the South Carolina Forestry Association.
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