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Protect Pennsylvania's forests

Protect Pennsylvania's forests

Congress should make sure the tax code supports family-owned woodlands

Raul Chiesa and Janet Sredy own forest land in Forward Township, Allegheny County. They are certified tree farmers and were recognized in 2015 as the National Outstanding Tree Farmers of the Year.

House and Senate Republicans have announced their tax bills and the debate is on.

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Many of us in Pennsylvania would be glad to see a simpler, more streamlined tax code. But as this overhaul is negotiated, I hope our representative and our senators, Democrat Bob Casey and Republican Pat Toomey, will consider how taxes affect a key constituency of rural Pennsylvania: family forest owners.

Across America, one in four rural Americans is a family forest owner. In Pennsylvania, more than half our forests are owned by families and individuals.

Just as important as the amount of forest land in private hands is the impact of privately owned forests on everyone in the commonwealth. Family owners’ efforts to care for forest land provide wildlife habitat and support Pennsylvania’s intricate web of rivers and streams. The forest industry generates more than $5.5 billion in economic activity and makes up more than 10 percent of the state’s manufacturing workforce.

We know this firsthand because we are two of those forest owners. We own a 110-acre tract of land in a rugged part of Forward Township in Allegheny County. Prior to assuming control of the land in 2007, soil erosion from poor agriculture practices in the early 1900s, illegal dumping and other damaging activities created challenges requiring active intervention to address the health of our woods.

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To restore the land and maintain its health, we must make investments each year, in addition to working hard to build sweat equity. We are middle-class Americans, and for us to continue to create wildlife habitat and protect clean water, our land must pay for itself. That’s why we operate a tree farm as a small business.

The tax code has been crucial to our ability to care for our land.

As our senators and representatives work out a tax package, they should keep in mind that the tax structure needs to promote the management of family-owned woodlands so that we and other forest owners can continue to care for the environment and contribute to the economy. Accordingly ...

First, Congress should continue to allow landowners to deduct forest management and restoration expenses. Most landowners, like us, fall in the middle-income tax bracket, making less than $100,000 annually. Without these deductions, most forest owners could not afford vital investments in things such as creating firebreaks and installing culverts for streams that keep our forests healthy. In a new survey from the American Forest Foundation, 89 percent of landowners surveyed need these deductions to maintain good management practices.

Second, Congress should continue to allow landowners to treat timber income as a capital gain. Most landowners harvest trees only once in a generation, yet they have annual expenses and take on the risk of tornadoes, insects and wildfires during the 20 to 50 years it takes to grow a tree. Because of this, Congress should continue to treat timber income as the long-term investment it is.

Third, Congress should simplify the code by clarifying that forest owners managing their land long-term, even if they don’t receive regular income, can be treated as businesses and therefore be eligible for business tax deductions. Caring for forestland requires investments much like farming or agribusiness. Landowners need a forest-management plan, a forester and equipment to assist in caring for the land. While they might not receive income annually, they contribute to the economy annually like other small businesses.

Fourth, Congress should allow landowners to deduct more of the losses they suffer when natural disasters strike. While those of us managing forests in Pennsylvania may not be in the hurricane belt, we still experience wind and storms that can devastate our trees. The American Forest Foundation has found that more than 62 percent of landowners struck by disasters have been unable to deduct their losses.

Finally, it is important that landowners can pass on their land to future generations. Therefore, Congress should work to eliminate the estate tax burden on forest owners and continue to allow them to adjust the value of their estates for their heirs so as to reduce capital-gains taxes.

If our senators and representatives are serious about supporting rural America, then they must put in place tax policies that support rural forest owners.

First Published: November 14, 2017, 5:00 a.m.

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