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Frustration boils before Tax Day as protesters blast Weyerhaeuser
Dozens of protesters stood on Federal Way’s street corners Thursday to voice their frustrations at timber giant Weyerhaeuser’s tax burden — or perceived lack thereof.
Just before Tax Day, members of labor unions and advocacy groups waved signs and hung banners on freeway overpasses. Protesters passed out fliers, and a handful of Service Employees International Union (SEIU) representatives attended a shareholders meeting at Weyerhaeuser’s headquarters in Federal Way. At South 320th Street and Pacific Highway, one protester hoisted on his shoulders a stuffed mannequin with a picture of Weyerhaeuser CEO Dan Fulton’s face.
The protesters accused Weyerhaeuser of paying zero taxes and keeping $37 million in 2010 while also failing to create jobs in Washington. Many protesters called for state legislators to make the company pay its fair share of taxes.
“I pay taxes. Why shouldn’t Weyerhaeuser?” asked Federal Way resident Omar Rubi. “They should create jobs for the community if they’re going to take tax breaks.”
Wendy Hall, co-chair of Pierce County Jobs With Justice’s organizing committee, hoped Thursday’s protest will motivate lawmakers to address corporate tax breaks.
“We’re in a budget crunch,” Hall said. “The least they can do is pay their taxes.”
However, despite spreading a message charged with emotion, the protesters’ claims require clarification.
The company recently converted to a real estate investment trust, a tax designation also known as a REIT. This status lowered Weyerhaeuser’s corporate income tax rate to zero on its timberlands, which is the company’s largest asset. As a REIT, the company must distribute 90 percent of its timber income to shareholders, who then pay taxes on the dividends.
Steven Chercover, a senior research analyst with D.A. Davidson and Co. who covers the timber industry, said corporations like Weyerhaeuser have a duty to shareholders to avoid taxes when it’s consistent with tax code.
“Evading taxes is illegal, and avoiding taxes is smart,” Chercover said.
Last year’s REIT conversion put Weyerhaeuser — which had still been paying corporate income tax on timber revenue — in the same category as similar companies like Plum Creek Timber.
“Most people on Wall Street wonder why it took so long,” Chercover said. “Avoiding taxes is smart. Weyerhaeuser is just trying to minimize its tax bill, just like you and I.”
Weyerhaeuser pays taxes on other subsidiaries, including wood and paper products. The corporation also pays sales taxes, payroll taxes, property taxes, harvest fee taxes and business and occupation (B&O) taxes.
The tax savings associated with the REIT status will allow Weyerhaeuser to put money toward job creation, said company spokesman Bruce Amundson. The real estate market crash devastated Weyerhaeuser, whose well-being is partially tied to the housing market. When the market rebounds, demand will increase for logging and wood products to build homes.
“We paid $35 million in Washington state taxes in 2010,” Amundson said. “The real thing that’s affecting us right now, and our tax rates in the state, is the economy.”
Weyerhaeuser is the nation’s second largest owner of timberland and the world’s largest private owner of softwood timberland. The company reported net earnings of $1.281 billion for 2010. That figure includes $1.064 billion from income tax adjustments related to the company’s REIT conversion.