A new tax law aimed at encouraging the reforestation of cleared land in order to increase the amount of forested land in a particular region offers lumber companies tax incentives for each unit of cleared land they reforest. One lumber company has accordingly reduced its tax liability by purchasing a large tract of cleared land in the region and reforesting it. The company paid for the purchase by clearing a larger tract of land in the region, a tract that it had planned to hold in long-term reserve.
It will provide lumber companies with a tax incentive that will ultimately be responsible for a massive decrease in the number of mature forests in the region must be true about the new tax law if the statements above are true.