We Play, You Pay: Boring Taxes & Forest Sustainability

By Ryan Trapani, Education Forester, Catskill Forest Association

My job as Education Forester for the Catskill Forest Association (CFA) enables me the opportunity to attend a wide variety of meetings across the Catskill Region concerning environmental issues: water quality, endangered species, riparian corridors, forest health, wildlife management, scenic corridors, etc. Most gatherings attract the usual suspects or “stakeholders” from an alphabet soup of non-profit and government organizations: NYS DEC, NYS DOT, APHIS, NYS Agriculture & Markets, USDA Forest Service, various planning agencies, this conservancy and that conservancy, this preserve and that preserve, this animal and that animal, you get the point.

Please don’t misunderstand; these organizations include passionate and devoted staff members for causes many would find worthwhile; CFA is one of those organizations at the table. However, there seems to be one stakeholder that never seems to be represented in any significant way, yet it’s the one that has the most at stake. He or she is paying for most of the ecological services most of us benefit from: water quality, forest cover, wildlife habitat, local wood products, fuelwood, maple syrup, the scenic pastoral views on your way home, the scenic forested views on your way to work.

You, the Landowner

I’m talking about you, the landowner. Over 85% or more of the land you see out there is owned by you, the private landowner, and most of you are on average 18 acres around; at least in the Catskill Region.

Sure you’re not perfect, but you’re a good deal, you’re cheap. In fact, you make the rest of us money. You pay for the roads. You pay for the schools. You pay for that transfer station that exports all our unsightly garbage somewhere. You are – for the most part – what make the scenic byway, well, scenic. We just put up the sign, really. You pay for that hay-field. You pay for those beautiful cherry blossoms, those beautiful serviceberry or apple blossoms too. You paid for that nice deer I bagged last fall that had been browsing your arborvitae the previous winter. You paid for the turkey my friend shot early this May in your cow pasture, or the black bear the guy down the road got that made a daily pilgrimage to your black cherry stand you thinned out 10 years back. You grew that nice red oak that now serves as our flooring. Pancakes? Sap from your trees we boiled down into syrup.

Taxing a Good Thing

However, it seems that word hasn’t spread about your sacrifices, perhaps since you make up a minority of the general population. Instead of encouraging you to preserve or expand upon the ecological services or locally-made products you provide, we instead penalize you. Currently, landowners are forced to make decisions that are not always in alignment with their goals for environmental stewardship. One article from the Journal of Forestry in 2010 [click for PDF] claimed that federal incomes taxes alone can reduce investment into forestland by up to 79%. In other words, instead of re-investing money into one’s forestland for needed timber stand improvement or wildlife habitat enhancement, money is diverted literally out of the woods. Estate taxes may seem like they only impact the rich and famous in faraway places, but significantly influence forest landowners – by a margin of 38 to 28 – according to the same article. It doesn’t take much forest land (or farm land for that matter) to add up to over $1 million and qualify an unlucky individual – who's money poor and land rich – with recently deceased parents for a 30% plus tax bill. Twenty-two percent of heirs are forced to sell timber – in many cases the best growing trees – in order to simply pay the taxes. Nineteen percent are forced to sell some portion of the property, leading to parcelization and fragmentation that many of the passionate and dedicated individuals of environmental groups scorn.

Unintended Consequences

Reading about the consequences of taxation in an article by the Journal of Forestry is one thing, but experiencing it is another. Most of my job is extremely fun and interesting since I get to communicate with a variety of people who feel strongly about their woodlands throughout the six counties of the Catskills; it’s been extremely educational to say the least. Prior to this contact, I used to think forests and taxation had nothing to do with each other. The forest was a place to forget about such mundane things as taxation; I was wrong.

Unfortunately it’s not uncommon to hear about a struggling elderly landowner who cannot pay their taxes. A typical story begins with a phone call. She wants to know if there are any trees on her property worth cutting; she’s never been back there; after all her husband was the hunter and handled the forestry matters. She’d rather not cut any trees, but now is forced to pay the taxes. We have an awkward conversation about high-grading and unsustainable cutting practices, but I know she needs the money and is weighing leveraging the property, not growing wood fiber or bunny rabbits years down the road. A timber harvest may delay the process for a few more years, but if she dies her heirs may be levied a sizable estate tax. Often the reaction is another poorly timed timber harvest or worse the sale of some or all of the property. If the property lies inside New York City’s watershed for drinking water, then surely the city’s buzzards will be circling soon over another rural tragedy to buy the old farm and the back forty, especially in a depressed real estate market where fewer private buyers exist. If the desperate landowner’s timing is right, they might strike it rich by tapping into the deeper pockets of the state’s taxpayers – State Forest Preserve – and sell to New York State Department of Environmental Conservation. For some, this sounds like a great idea, but the opportunity costs of selling land to the DEC or DEP must be considered. That is land where local wood products could have been harvested, local beef, dairy, fruits, vegetables, wind power, or a family raised. Nothing is really preserved; these products will have to be ascertained from someone else’s forest. Even if forestland is to be viewed without utility, state land for recreational purposes unfairly competes with private land that could have been used for recreation, but that’s another conversation.

Private Land vs. State Land

Landowners have the greatest stake in their land, yet are not being treated as stakeholders at many of these meetings. It’s true that not all landowners are the best stewards of their land; some could care less and ask me, “Why should I care about these trees, I’ll be dead soon.” However, land that is owned in-trust – by government agencies – cannot claim they are doing better with less money. Forest regeneration, biodiversity, and wildlife habitat are also suffering from lack of management on publicly-owned lands, and at an exorbitant price tag, whether or not you visit state land to take the dog or the gun for a walk through the wilderness. The main problem with state land is that no one individual or family owns it; therefore no one really takes responsibility or a stake in it. On private land, one is rewarded for investing in their property and penalized – via lower prices – if not; that individual or family bears the risk of their decision since it’s their asset and their money. In other words, what I have learned from working on both state and private land is that no one cares more for their property than one who owns it (most of the time). Some of the most passionate and dedicated people I have encountered are private forest landowners that back their devotion and passion for their land with their own time, labor, sweat, and economic risk. Since each landowner has differing goals from their neighbors, diversity is more prone to occur on the private landscape as well. The nicest timber, the best brook trout streams, and best hunting I have encountered occur on private land; and that’s not an accident.

Peeling Back the Band-Aids

As landownership continues to mature in the Catskills (average age is over 60), conflicts between taxation, landownership, and environmental stewardship may worsen. Currently there are tax breaks for owning forestland over 50 acres, but that does not include the majority of forest landowners, or the existing problems in those programs. Organizations that seek to preserve wildlife habitat, open spaces, biodiversity or forest products may have to peel back the band-aids to see where the bleeding is coming from. Taxes are boring; they’re not really as sexy as a campaign to save bald eagles or designating a new wilderness area, but they are having tremendous effects on landownership and the environment. Any system that penalizes an individual or his family for improving his house or the back forty may be the least sustainable. We should not be surprised that private lands are often considered “unprotected” when the costs of owning land are so high. Perhaps we should be talking more about tax policy and the merits of private property when it’s more affordable to pass onto the next generation if we are to also be stakeholders for forest stewardship. www.catskillforest.org