The Impact of Property Taxation on Urban and Timber Investments

The traditional justification for preferential property tax treatment of timber properties stems from the belief that unmodified timber property taxes burden landowners more than agricultural property taxes. This paper compares the tax burden of fully regulated forests to urban commercial properties of equal value, both generating identical annual income. Surprisingly, our analysis reveals that unmodified property taxes slightly burden forest properties less than urban commercial properties, regardless of productivity. As most US forest landowners benefit from low tax burdens, advocating preferential tax treatment for timber properties may require emphasizing the significant differences in services received compared to urban commercial properties.