Impacts of forest tax programs on property tax rates in Michigan's Upper Peninsula and Northern Wisconsin
Date of Award
Open Access Master's Thesis
Master of Science in Forestry (MS)
Administrative Home Department
College of Forest Resources and Environmental Science
Committee Member 1
Committee Member 2
Committee Member 3
Committee Member 4
Forest tax programs offer reduced property taxes to private forest owners as incentive to sustainably manage their forests and to encourage the provision of ecosystem services. They also protect forests from conversion to other land uses and ensure the viable supply of timber for forest products industries. Despite the benefits that these programs provide, they can negatively impact local municipalities by reducing the property tax base, which can then cause local governments to increase tax rates for non-preferential properties in order to maintain revenue needed to run their services. This shifts the tax burden from participating properties to nonparticipating properties. The purpose of this study was to simulate and analyze the effects that increases in enrollment in the Commercial Forest and Managed Forest Law programs have on township millage rates in the Upper Peninsula of Michigan and the northern region of Wisconsin. Tax data were collected from the year 2018, and a deterministic model with hypothetical future scenarios was run to estimate the changes in the millage rate with 5%, 10%, and 15% increases in program enrollment. Such increases in enrollment resulted in the average township needing to increase the tax rates on non-enrolled properties by between 0.002% to 64.7%, depending on the magnitude of increased enrollment and pre-enrollment forestland values, to maintain a constant revenue. In general, the magnitude of the increase was rather minimal, but there was a range in sensitivity across townships with some experiencing much higher tax rate increases. Rural townships, with a low population and a smaller tax base were seen to be most sensitive to changes in program enrollment. Possible policy changes to the forest tax programs and the states’ reimbursement policies may need to be considered to help mitigate any loss in tax revenue in the township and to lessen its sensitivity. However, this study only focuses on one side of the issue. Future research is needed to study the economic benefits that are received by the townships from enrollment in these forest tax programs, and to study if the benefits outweigh the costs of the programs.
Schwartz, Elsa, "Impacts of forest tax programs on property tax rates in Michigan's Upper Peninsula and Northern Wisconsin", Open Access Master's Thesis, Michigan Technological University, 2021.
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