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January 7, 2008

Lawmaker worried Plum Creek will evade taxes

A Maine legislator concerned that real estate investment trusts like Plum Creek Timber Company could avoid paying corporate income tax on lucrative land deals last week submitted legislation that would make Maine the first state to force REITs to pay corporate income taxes.

Rep. Robert Duchesne (D-Hudson) sponsored the bill -- An Act to Reestablish Fairness in Corporate Taxation -- which aims to prevent REITs from reaping profits from the sale of developable land in northern Maine and pushing the public cost of development onto the state's other taxpayers, according to the Portland Press Herald. REITs don't pay corporate income tax, but are required to distribute 90% of their income in the form of dividends, which are taxable in the hands of shareholders. There are currently 20 REITs operating in Maine, according to the paper.

A Plum Creek spokesperson told the paper the company, which converted to REIT status in 1999, already intends to pay taxes on its Moosehead development plan if it's approved, because the development would be carried out by a subsidiary that pays corporate income tax.

Duchesne said the bill is not anti-Plum Creek or anti-development. "To me, it's 'How can our tax policy adjust to the changing land ownership in Maine?'" He told the paper.

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