The U.S. economy has not shown sustained growth for the past three years, which has been particularly harsh on the forest products industry.

Papermaking is the largest manufacturing sector in Maine, accounting for nearly $700 million in direct annual wages paid to nearly 14,000 workers. However, like most manufacturing sectors, the industry is struggling.

In his blueprint for economic stimulus, President Bush outlined changes that would address our problem areas, including an acceleration of the marginal income tax rate cuts and elimination of the double taxation of stock dividends.

While that policy recommendation has become highly politicized, everyone must take an objective look at how this reform would inject much needed capital spending into our domestic manufacturing base.

PriceWaterhouseCoopers recently determined that among paper producing nations the United States imposes the highest tax rate on capital gains, the highest tax rate on dividend income and the second-highest tax rate on corporate income. The total effective tax rate on an investment in domestic paper manufacturing is 62 percent second only to Canada’s 64 percent.

Other major paper producing nations attract capital that might otherwise flow into the United States because of the favorable tax climate they offer investors. Adoption of the dividend cut alone would lower the U.S. paper industry’s effective tax rate to the middle of the pack of our major international competitors, increasing jobs and investment in our industry.

We must look beyond the rhetoric and approve this important package as soon as possible.

F. Michael Craft, mill manager

International Paper, Jay