OPINION:
Hurricanes Harvey and Irma were some of the strongest storms to hit the United States in a dozen years, causing widespread destruction, not just in our big cities, but in remote areas as well. The same type of widespread destruction was seen out West, with more than 8 million acres of forestland having burned due to wildfires this year.
While it may not be making headlines, rural citizens, particularly family forest landowners, were affected too.
While Congress has passed a package to aid both those affected by hurricanes and the wildfires, there is another opportunity to directly support these rural Americans in their recovery: tax reform.
Families own the majority of U.S. forests, not the federal government or corporations.
After disasters strike, such as hurricanes and wildfires, family forest owners not only need to rebuild their homes and lives, but their forests as well. As caretakers of our nation’s forested lands and natural resources, family forest owners should be supported in their time of loss, specifically in the federal tax code.
Growing trees is a business venture, with maintenance, annual costs, contractors and labor over the 20 to 80 years it takes to grow a tree and see a return. Unfortunately, the tax code does not take this into account. While forest owners can claim a loss of their timber, under current law, they can only deduct the cost of the original planting. Ironically, if a family forest owner were to donate their timber the day before the disaster, they would be able to take a much higher deduction for this donation.
According to a new survey from the American Forest Foundation, more than two-thirds of landowners who have suffered from a natural disaster have been impacted by this tax code shortfall. And unlike farmers, insurance for forest owners is so cost-prohibitive, it’s not an option.
The Brooke Family in Hancock County, Mississippi understands this. Their Tree Farm was devastated by Hurricane Camille in 1969. The hurricane, with its 210 miles per hour winds, mowed over nearly all the mature pine trees on their land.
Despite the damage, the family persevered. They began the long, laborious process of restoration and growth. It took more than 35 years to get the trees back to the place where they were of value again.
And then came Hurricane Katrina in 2005. In addition to the damage from its 110 miles per hour winds, the hurricane spawned tornados and tidal surges across Mississippi’s southern coast. Katrina destroyed more than one million acres of forestland, including the Brooke’s. The loss to the forestry industry was $5 billion.
The financial impact to the Brookes was huge. On some parcels of pine, the value dropped 95 percent. Trees that were worth $60 per ton as poles, were now worth $2 per ton as pulpwood. The decades of investment were lost and they had no way to deduct these losses.
While the Brookes were able to scrape their resources together to get back on their feet after the storm, other family forest owners could not. Many decided to throw in the towel, and not replant in trees.
Only time will tell what landowners affected by this year’s natural disasters will do.
This is where a change to the casualty loss provision, allowing forest owners to deduct more of these losses, would be beneficial.
One in four rural Americans owns and cares for forests. A sizable group, these individuals’ ability to care for their forests provides Americans with rural jobs, wood for products, as well as clean water, habitat for wildlife, and more, all at little to no cost to the government.
As Congress debates a tax package, it should consider how it can support family landowners in recovering more of their losses from natural disasters.
This change to the tax law would help family forest owners make the long-term investment in trees, even with the risk they must take, which ultimately, supports all Americans.
• Tom Martin is president and chief executive officer of the American Forest Foundation.
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