If a Tree Falls in the Woods is it Taxed?

If a tree falls in the wood, will it be taxed? In West Virginia that would be a yes, and the tax would be called the Timber Severance Tax. State code defines a severance tax as a tax on the privilege of engaging in a specific business. The fact that our state government feels it is granting businesses a “privilege” is one of the very reasons West Virginia is ranked 50^th in economic opportunity. That is backwards — the privilege is actually granted to the state by the business when it chooses to locate here.

Winston Churchill once said, “Some see private enterprise as a predatory target to be shot, others as a cow to be milked, but few are those who see it as a sturdy horse pulling the wagon.” In West Virginia our business tax structure shoots both the horse and the cow and then the government wonders why the cow quit giving milk and the economic wagon stopped moving forward. We cannot continue on this course of economic self destruction.

For the past 60 plus years West Virginia has created policies that have destroyed our economy to the detriment of all citizens. The evidence lays in the census data. In 1950 West Virginia made up 1.3% of the US population and now we make up only 0.6%. We have been cut by more than half. The severance taxes are one of the very things holding us in last place. It is simply double taxation. The severance tax is on top of the income tax already paid on the same product or service.

If you’re in the timber industry and have your choice of locating in West Virginia or a state that has no timber severance tax, then you’re going to use a little common sense and locate in a state where you can be more profitable. If your timber business is already located here, then the severance tax is simply taking away money that can be used to expand your business. It is plain to see that severance taxes are shots being fired that are killing businesses.

The proponents of the severance tax will claim, “We will have to replace that revenue lost if the severance taxes are eliminated.” They are wrong; the economy will replace those taxes without intervention from government. History tells us exactly what will happen if the burden of the severance tax is removed from the timber industry. The industry will see an increase in revenue and that revenue will be plowed back into the businesses. The expansion will increase business, which will increase corporate taxes paid. New timber businesses will enter the West Virginia market place, further increasing corporate taxes collected by the state. Going back to the Churchill quote, you don’t increase the amount of milk you get from the cow by milking it more often — you increase the amount of milk by increasing the size of your herd.

Fewer taxes will cause growth in the economy, including employment growth. Growth in the economy will increase tax revenue. This has been proven over and over again through history. The current West Virginia government has proven the opposite — years of high and double taxation have helped push West Virginia into last place.

One of the sturdy horses pulling the economic wagon of West Virginia is our timber industry. My grandfather had a saying: you whip the horse that pulls. Let’s whip the timber horse by removing the severance tax to start down the road to economic growth in West Virginia. We need to change.