THE PRESENT STATE OF FOREST TAX 



LEGISLATION 



Bv Fred R. Fairchild 

 Dept. of Economics Yale University. 



CHAT there exists a direct connec- 

 tion between taxation and for- 

 estry has been more or less gen- 

 erally recognized for some time. The 

 exact nature of this connection, how- 

 ever, has never been well understood in 

 this country. Persons interested in for- 

 estry have seen that taxation was a 

 serious obstacle, and legislatures have 

 frequently been willing to give relief by 

 means of special legislation affecting 

 the taxation of timber lands. In the 

 absence of an understanding of the true 

 relation between taxation and forest 

 growing, this legislation has until very 

 recently all gone off on the wrong track. 

 The good results hoped for have not 

 been accomplished and the problem of 

 forest taxation is still unsolved, is in 

 fact more pressing than ever before. 



In what follows I shall undertake to 

 describe briefly the present state of leg- 

 islation in the United States affecting 

 the taxation of forest lands and to show 

 why the special forest tax laws enacted 

 up to the present have not proved ef- 

 fective. 



The taxation of forests is a matter of 

 State and local revenue. There is no 

 taxation of forests by the national gov- 

 ernment. The legislation is all State 

 legislation. The basis of local revenue 

 everywhere in the United States and 

 of State revenue in very many of the 

 States is the general property tax. 

 Everyone is familiar with the principal 

 features of the general property tax. 

 As a rule all property, real and per- 

 sonal, tangible and intangible, is sub- 

 ject to taxation, unless specially ex- 

 empted by law. Forest lands are sub- 

 ject to the tax the same as any other 

 kind of wealth. The law requires that 

 the actual market value shall be as- 

 sessed, which in the case of forests 

 means the full value of land and trees. 



Of course it is a matter of common 

 knowledge that the laws are not en- 

 forced as regards the requirement of 

 an assessment at full market value. 

 The tax is collected annually at what- 

 ever rate is required to raise the neces- 

 sary revenue for the town, county, 

 State, and other public bodies depend- 

 ing upon the general property tax. 



This, in brief, is the normal tax sys- 

 tem to which forests are subject in the 

 United States. Only where there has 

 been special legislation are forests 

 treated dift'erently from other kinds of 

 wealth. Of the forty-eight States of 

 the United States, thirty-four tax for- 

 est lands under the general property tax 

 in exactly the same manner as other 

 lands. 



The other fourteen States have zn- 

 acted special legislation affecting the 

 taxation of forests. These States are 

 Maine, New Hampshire, Vermont, 

 Massachusetts, Rhode Island, Connecti- 

 cut, New York, Alabama, Michigan, 

 Wisconsin, Iowa, Nebraska, North Da- 

 kota, and Washington. The idea in the 

 legislation of all of these States has 

 been to encourage the planting and cul- 

 tivation of trees or the general practice 

 of forestry by offering special induce- 

 ments in the way of reduced taxation. 

 These concessions take the form of en- 

 tire or partial exemption from taxation, 

 rebates of part of the taxes, or bounties 

 to be deducted from the taxes. The 

 method usually employed is that of tax 

 exemption. The plan of a rebate is 

 used in New Hampshire ; North Da- 

 kota uses bounties, while Wisconsin 

 uses both exemptions and bounties. In 

 some of the States there are two or 

 more distinct laws, not always entirely 

 consistent with each other. In most 

 cases the statute is limited to planta- 

 tions, and in five States the forest must 



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