Tax Reform

Tax Reform:  Congress unveiled its so-called “unified plan” for overhauling the tax code in late September. FRA will be active as negotiations move forward in a number of areas of the tax reform debate, including the following:

  • Equitable Treatment of S Corporations: The focus of tax reform talking points from Congressional leadership has focused on the need to reduce the overall corporate tax rate or rate for C Corporations. FRA strongly supports this concept. However, S Corps and other pass through structures currently represent a higher percentage of the GDP.   FRA is advocating that any effort to lower the corporate rate also include reductions for S Corps, a tax structure popular in the forest products value chain. 
  • Preserving Private Forestlands: Maintaining existing incentives for timberland owners to keep their lands as working forests is a priority for organizations representing landowners and FRA is supporting these efforts.  Private lands provide the vast majority of the industry’s raw materials.  These provisions include capital gains treatment for standing timber, as well as the current deduction for timber growing costs.  Right now forest landowners can deduct operating costs in the year in which they were incurred, rather than capitalizing these costs over time. We are also advocating for preserving the deduction and amortization of reforestation costs.  Currently, forest owners can deduct up to $10,000 of reforestation costs per stand. In addition, they can amortize the remaining costs over seven years.  We believe these incentives are critical for addressing the inherent risk landowners incur when growing what is essentially a crop with at 30-50 year rotation. 

Elimination or Reduction of the Estate Tax: Family-owned businesses are prevalent in the forestry and forest products sector.  Consequently, there is strong interest among business owners in passing ownership to the next generation.  We believe any tax reform proposal must reduce or eliminate the estate tax rate to help facilitate a seamless intergenerational transfer of family assets.

Fairness and simplicity in our nation’s tax code is important to the forest products supply chain.

  • Current tax policy has stifled growth and made it harder to compete globally.
  • Preserve existing tax incentives for forest landowners to keep working forests working.
The tax code must recognize the critical contribution that small, family-owned businesses contribute to the economy, particularly in rural areas.

Revised October, 2017