Question

How might taxation influence the loss, gain or retention and management of forest land in the South?

Issues

• Consider effects of estate, income, severance and property taxes for non-industrial forest owners.
• Describe the effects of differential income taxes for "C" corporations.
• Describe how the tax structure is known or likely to affect conservation easements or other forms of forest stewardship.

Subregional Issues

• Alteration to county tax bases resulting from afforestation (MAV)
• Altered tax bases resulting from afforestation of private lands and increased public ownership (MAV)

Meta-Issue Manager

John Greene, Southern Research Station, USDA Forest Service

Methods of Analysis

Describe the effect of federal and state income taxes on non-industrial private forest owners: Summarize the findings of ongoing research on the effect of federal and state income taxes on forest productivity and returns to forest management; combine with the results of recently completed research on non-industrial private forest owner knowledge of federal income tax provisions to estimate the overall effect.

• Describe the effect of property taxes, the federal estate tax and state estate and inheritance taxes on harvests from and sale or conversion of non-industrial private forest land:
  Summarize the findings of recently completed research on the effect local property taxes and the federal estate tax on non-industrial private forestland; combine with updated results from existing tax effects models to estimate the overall effect.
• Describe the effect of differential income taxes on harvests from and sale or conversion of forestland held by "C" corporations:
  Summarize the findings of recent research on the economic effect of the differential federal income tax rates paid by "C" corporations and by REITs (Real Estate Investment Trusts) and TiMOs (Timber Management Organizations).
• Consider how the current tax structure affects the use of easements and other conservation mechanisms, sustainable forest management, and provision of ecosystem services:
  Summarize federal, state, and local tax provisions that encourage or discourage sustainable forestry and the use of easements and other conservation mechanisms; combine with the literature review and findings of recently completed research on financial incentives for practicing sustainable forestry on non-industrial private forestland.
• Describe the effect on county governments in the MAV of decreased property tax revenues resulting from the afforestation of cropland and increased public ownership of forestland resulting from property tax default:
  Develop a preliminary case study based on interviews with tax officials in selected MAV counties.

Data and Information Sources

• National Woodland Owner Survey database;
• Research database on the effect of the federal estate tax on forest estates;
• Research database on forest owner knowledge and use of federal income tax provisions;
• Research database on the total tax burden on private forestland in the U.S.;
• Draft annotated bibliography of the literature on the tax, cost-share, and other financial incentives available to non-industrial private forest owners;
• Research database on state agency forester assessments of public and private financial incentive programs available to non-industrial private forest owners;
• Research database on non-industrial private forest owner attitudes toward public and private financial incentive programs; and
• "Financial Incentive Programs for Non-Industrial Private Forest Owners" website.

Products

Narrative report with tables.

Potential Cooperators

• Brett Butler, Research Forester, USDA Forest Service, Northern Research Station, Family Forest Research Station;
• Tamara Cushing, Assistant Professor, Clemson University, Department of Forestry and Natural Resources;
• Terry Haines, Research Forester, USDA Forest Service, Southern Research Station, Economics and Policy Research Unit;
• Evan Mercer, Research Forester, USDA Forest Service, Southern Research Station, Economics and Policy Research Unit;
• Steverson Moffat, Research Forester, USDA Forest Service, Southern Research Station, Economics and Policy Research Unit;
• Tom Straka, Professor, Clemson University, Department of Forestry and Natural Resources; and
• Linda Wang, National Forest Taxation Specialist, USDA Forest Service, Region 8 Cooperative Forestry.