New Means of Analysis Required for Policy Decisions Affecting Private Forestry Sector

EMD-81-18 Published: Jan 21, 1981. Publicly Released: Jan 21, 1981.
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GAO examined the relationship of federal capital gains tax treatment to overall timber production and reforestation by the private sector and the production potential of nonindustrial private forest lands. The forest industry has long contended that the timber capital gains tax provision has encouraged reforestation of the Nation's private forests. However, the tax law does not require that capital gains benefits be applied to reforesting or improving management techniques. Tax benefits are based on income from timber cut rather than on what the taxpayer spends for site establishment, reforestation, and timber management.

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Matter for Congressional Consideration

Matter Status Comments
Congress should support the expanded analytical capabilities which GAO called for in its recommendations to the Secretary of Agriculture.
GAO has no information on the actions taken by the agency.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture The Secretary of Agriculture should take the initiative through the Forest Service to develop a new analytical framework and expand its analytical capability to deal with tax policy, financial and technical assistance, and related considerations as they affect, especially, the performance of the timber industry in the private sector. In striving to develop this capability, GAO urges the Forest Service to take full advantage of the expertise of the Department of the Treasury, particularly in analyzing tax policy options and to elicit, to the fullest possible degree, active collaboration of the private sector.
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