[Congressional Record (Bound Edition), Volume 145 (1999), Part 3]
[EX]
[Page 4369]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     REFORESTATION TAX ACT OF 1999

                                 ______
                                 

                           HON. JENNIFER DUNN

                             of washington

                    in the house of representatives

                        Thursday, March 11, 1999

  Ms. DUNN. Mr. Speaker, I am introducing today the Reforestation Tax 
Act of 1999 along with 16 of my colleagues who are deeply concerned 
about the future of our forest products companies. With the global 
marketplace becoming more competitive, we must take positive steps to 
remove barriers to our companies' ability to compete abroad. In the 
case of forest products, one of the largest impediments to success is 
our nation's tax code.
  Beginning with changes brought about by the Tax Reform Act of 1986, 
America has been struggling to competitively produce timber in a global 
market. Despite a tax system that gives U.S. forest products companies 
one of the highest effective tax rates in the world, they have been one 
of the most visionary sectors in helping to expand trade into new 
markets. During the recent negotiations over sectoral liberalization in 
the Asia Pacific Economic Cooperative forum, forest products companies 
worked closely with Congress and the Administration to try to develop a 
long-term agreement to benefit American workers. Unfortunately, this 
process has not come to fruition due to disagreements among competing 
nations, something common when we solely rely on multilateral trade 
agreements to increase our competitiveness. It is time to focus on what 
we can do unilaterally: adjust our tax code so that our companies are 
not disadvantaged in the global marketplace.
  The Reforestation Tax Act recognizes the unique nature of timber and 
the overwhelming risks that accompany investment in the industry. It 
will reduce the capital gains paid on timber for individuals and 
corporations by 3 percent each year up to 50 percent. Because this 
reduction would apply to all companies, we minimize the current 
inequity whereby neighboring tracks of the same timber are taxed at 
different rates simply because of the business form of their 
investment. For timber companies, the capital gain on these forest 
products can be enormous. In some regions, tree farmers must wait more 
than 50 years from the planting of a relatively worthless seedling to 
the harvest of a mature tree. No other industry faces the extreme risks 
from wind, fire, and disease in protecting their asset over such an 
expansive period of time so they can realize a profit.
  In addition, the Reforestation Tax Act rewards those environmentally-
conscious companies that choose to use their dollars for reforestation 
of their lands. By extending tax credits for all reforestation 
expanses, and shortening the amortization period for reforestation 
costs, Congress encourages and assists those companies that are making 
a conscious effort to operate in an ecologically-sound manner.
  The Reforestation Tax Act represents the best of tax, global 
competitiveness, and environmental policy. I urge my colleagues to 
support this important initiative.

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