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By Michelle Chen
The NewStandard
To butter up Senate votes, lawmakers pushing to roll back taxes for the ultra-wealthy are throwing a tax break for timber into the mix - and drawing the ire of public-interest advocates.
As the Republican leadership in the US House of Representatives works to gut the federal tax on dead millionaires' estates, the hunt for tax breaks has moved from the coffers of the ultra-rich to the nation's forests. An estate-tax reduction proposal passed by the House last Thursday contains a "sweetener" provision to cut taxes for timber companies, tacked on in hopes of greasing the bill for Senate approval.
But the move to ax taxes for big timber has riled environmental and taxpayer watchdog groups. They say that while lightening taxes for loggers might make estate-tax reform more palatable to industry-funded politicians, it will come at a bitter cost to the public.
The proposed timber-tax reform would benefit lumber and paper companies by exempting 60 percent of the profits generated from growing and logging trees. The legislation would effectively reduce the industry's capital-gains tax rate from 35 percent to 14 percent. Based on congressional budget projections by the progressive think tank Center on Budget and Policy Priorities, the tax break would sap some $940 million from federal funds over the first two years, before coming up for renewal at the end of 2008.
Critics of the measure view it as doubly craven: it not only lavishes corporate welfare on an already-subsidized industry, they say, but goes further to entice potential estate-tax swing votes by helping senators pander to their timber-industry connections.
Although it targets a different tax base than the estate tax, the timber-tax cut dovetails neatly with the parliamentary horse-trade over its parent bill. The measure was introduced separately last year with the co-sponsorship of several Democratic senators from the major timber-producing states, including Maria Cantwell and Patty Murray, both from Washington, Mark Pryor of Arkansas, and Louisiana's Mary Landrieu.
Those lawmakers helped kill the controversial Senate proposal to repeal the estate tax, which was defeated by three votes earlier this month. But if they switch sides on the pending, modified bill, they could achieve the 60-vote majority needed to move the legislation forward.
"It's all a political ploy to try and garner votes for the package that passed the House," said Joel Friedman, an analyst with the Center on Budget and Policy Priorities.
The forestry and forest-products industries pumped over $3.6 million in political contributions into Congress during the 2004 election cycle, according to the Center for Responsive Politics, a nonpartisan organization that tracks campaign contributions.
Friedman noted that the proposed cutbacks to the estate tax, which is taken out of the assets of extremely wealthy individuals upon death, are projected to cost the public more than $750 billion over the first full decade. "One would hope that the members [of Congress] wouldn't be swayed by in essence what's a narrow special-interest tax break to somehow influence their consideration of a broad and costly tax-policy change," he told The NewStandard.
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