Contact: Antonia Ferrier (202) 224-5344
Friday, January 27, 2006

WASHINGTON, D.C. – Today, U.S. Senator Olympia J. Snowe (R-Maine) announced that she is supporting the Timber Tax Act of 2005, legislation that would help timber growers be more competitive by eliminating a tax bias that heavily taxes U.S. companies’ long term timber investments. This legislation was introduced by Senator Gordon Smith (R-OR).

“Maine’s timber industry is integral to providing jobs to our residents and improving our economy,” said Snowe. “Given the many hurdles that growers must overcome, the fact that they are heavily taxed - to the point where their viability is threatened - is unfair and unreasonable. If our nation’s timber industry is to remain viable and internationally competitive, Congress must level the playing field and pass the Timber Tax Act.”

The U.S. timber industry is facing significant overseas competition and increased job losses. The current tax code puts the U.S. timber industry at a disadvantage against international competition because U.S. corporate timber and forest products companies are subject to significantly higher corporate tax rates than their overseas competitors. Currently, U.S. forestry companies’ tax burden is 16 percentage points higher than the tax burden of other foreign forestry companies.

Timber takes between 20 and 70 years to grow before it is ready to sell. Timber growers’ long holding periods and inherent natural risks of managing forest lands have been accepted as justification for allowing timber sales to be taxes at the long term capital gains rates. However, there is a significant difference between individual owners’ capital gains rates (15 percent) and corporate capital gains rates (35 percent) which significantly disadvantages corporate timber growers. The Timber Tax Act of 2005 would eliminate these differences.

Maine has 2.6 million acres of industrial forest and this bill would help forest companies operating in Maine to be more competitive and provide timber jobs and related goods to the Maine economy. The bill would benefit the employees of firms with Maine timber operations.

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