Tax Avoidance by Big Timber: a Big Problem in Oregon
The Coast Range Association has researched big timber’s property and harvest taxes for the past several years. There are three types of taxes timber companies pay:
1. Property taxes
2. Harvest taxes
3. Income taxes
These taxes either go to support local governments, the state of Oregon’s budget or special state sponsored programs.
Our original goal was to publish an understandable report explaining Oregon’s forestland tax system. After extensive research we concluded this goal was not possible. The property tax system is too complicated to explain in a simple format. Instead, we set out on a much more feasible project: to document local and state taxes paid by forestland owners between 1980 and the current period.
Between 1990 and 2005 taxes on Oregon forest lands were completely changed. Taxes dramatically decreased. Large industrial corporate owners saw their local tax burden (property & harvest taxes) decline by over 80% in inflation adjusted dollars. Harvest and property taxes to either state or local government declined by over 70% in inflation adjusted dollars.
Looking over all the changes in forestland taxation we can only wonder why there are tax breaks and just plain lower tax rates during an era where there is not enough money for local services.
Oregon Timber Tax Collections
The first link below shows the data from the CRA’s analysis of property tax avoidance by the timber industry. We assembled property tax figures from a 2013 Legislative Revenue Office (LRO) report. We then recalculated the timber industry taxes paid for each year adjusted for inflation. We used the Bureau of Labor Statistics (BLS) Consumer Price Index (CPI) calculator. In this way taxes paid in the past can be compared to today’s payments in an apples to apples fashion.
Next you can download the Legislative Revenue Office report we used for our above analysis. See Appendix A, Table A1: Revenue From Privately Owned Forestland on page 12.
The analysis above covers property taxes and timber harvest taxes of all types. The severe decline of taxes paid by the timber industry are concentrated in taxes on the harvest of timber. Over a fifteen year period the Oregon Legislature ramped down taxes on timber harvest. The reduction of timber harvest taxes ended timberland support for local governments (schools, counties, etc.). See our analysis below.
The tables above demonstrate that during a period when timberland ownership transitioned to TIMO and REIT ownership to avoid federal corporate taxation the state of Oregon greatly reduced property and forest harvest taxes for the same corporate owners. What these changes in taxation produced was an increase in profits to timberland investors (the owners of U.S. equities) and a reduction in cash flowing to local communities in support of public services. 90% of U.S. equities are owned by the richest 10% of the population. 25% of U.S. equities are owned by foreign owners – the wealthy of the world.
The above train wreck of public policy is just one facet of an ugly diamond that pits people against people in rural communities and places our greatest natural resources – water quality and carbon dense primary forests – at risk. All of the change in taxation occurred out of public view and unopposed by almost all elected officials of both major parties. Most assuredly, Oregon’s political system is polluted by money.