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Tax

AF&PA supports a federal tax system that promotes economic growth, job opportunities and the
competitiveness of U.S.-based businesses. We believe the tax code should provide a level playing
field for business activity and avoid picking “winners and losers” among economic players. The
fundamentals we believe should be provided within the tax code are:

Lower tax rates. A tax system with the lowest possible tax rates for all businesses is desirable to
foster capital investment, jobs creation, exports, and economic growth. A significant reduction in
U.S. statutory corporate income tax rates to approximately 25 percent, which would be more in
line with the average among other OECD countries, is needed for U.S.-based companies to be
able to compete in the United States and abroad. Additionally, preferential treatment of capital
gains and dividends for individuals should be retained.

Business investment. Appropriate treatment of depreciation, interest expenses, and research
expenditures to ensure capital intensive manufacturers — such as paper and wood products
companies — invest in new and more efficient equipment.

International tax rules. The U.S. international tax rules should be reformed to include a competitive
territorial tax system like those of many other countries, which would allow U.S.-based companies
to compete on a level playing field in vital global markets.

Employees benefit provisions. Favorable treatment of employee health insurance benefits and
employee retirement contributions are integral to the forest products industry’s continued ability
to provide these benefits to its workforce.

Retroactive tax increases and transition relief. Any major change in federal tax policy could
have a negative impact on existing business investment and create considerable uncertainty.
Appropriate transition relief should be provided for major changes to the tax law and retroactive
tax law changes are unfair and should be avoided.

Energy tax provisions. Tax code provisions that subsidize markets for renewable energy and
pick winners and losers should be avoided. Where they exist, provisions should ensure equal
treatment between new investment and existing facilities.

Forest fiber. Appropriate tax treatment to ensure a sustainable supply of forest resources for
manufactured products is good for the environment, the economy and society.

Alternative Minimum Tax. Repeal or significant reform is needed to achieve a competitive tax
code.