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Tax system snares landowners Changes create different rates, much confusion By SUZANNE MARTA The Associated Press SALEM -- As the state issues coordinator for the Oregon Small Woodlands Association, Terry Lamers knows the state's new timber taxation laws backward and forward. The laws change the way private forest lands are taxed and create different systems for large and small landowners. Small forest landowners can choose between the two programs, but figuring out which is best is complicated. It's so complicated, in fact, Lamers isn't sure what he's going to do. He and other small-lot landowners have to decide whether to join the new tax system with large private forest landowners for the 2000 tax year, or wait to see how the Legislature will change the rules for small landowners. Lamers manages 460 acres of forest land near Dallas. Previously, timberland owners were taxed annually on 20 percent of their land value, not including the potential value of the timber. A special "privilege" tax was levied at harvest time to account for the other 80 percent of land value. The value of the timber is assessed a separate forest products harvest tax. New laws now require large landowners to be taxed on 100 percent of their land value annually. The privilege tax has been eliminated. Small landowners, those with less than 5,000 acres, can either stay with the old system or join the system now used for large landowners. The 2001 legislature is scheduled to create a revised system for small landowners. "The new program is an unknown because it hasn't been developed yet," Lamers said. Having two owner groups leaves some leeway for small owners using the forested property as a long-term investment. Unlike small owners, large operators such as Weyerhaeuser have steady income from harvests. The tax changes are considered an administrative boon for large forestland owners, who by 2003 will no longer grapple with the privilege tax. Depending on the price received for their timber, a company could sometimes end up paying more than the deferred land taxes, said Ray Wilkeson, legislative director for the Oregon Forest Industries Council. "That made sense when you were logging trees that were there when we got there," Wilkeson said. "Now we're growing trees. It's a cycle just like an ag cycle; it just takes longer." That isn't to say the tax deferral program is right for all small woodland owners, Lamers said. People who plan to harvest large portions of their land could benefit from the large landowner program. "If the market really skyrocketed in the next year, or the year after, we could move into the large landowner program because we'd kick up our harvest," Lamers said. Dalton Rock co-owner Jock Dalton also decided to stay in the tax program for small landowners. The Dallas resident owns 550 acres of forest land with his brother, Brian. The family's rock quarry operates on part of the property, with about 90 acres available for quarry expansion. Dalton is doing some thinning in his forest land, but not enough to jump into the large landowner program. "We're going to wait and see," Jock Dalton said. "Our timber has reached the age where we're thinning and it generates a steady income. The question is, what will the Legislature do for the small woodland owners." "These trees are like a savings account for many people. If they changed the system so they had to pay all the property tax now, a lot of people would have to cut down the trees to afford the taxes." Today's Edition : News | Sports | Business | Weather | Tempo | Classifieds Mail Tribune Copyright � The Mail Tribune 2000, Medford, Oregon USA