HARDWOOD RECORD 



31 



Separating Tkees and Land for Taxation 

 puri'oses 



The plan which Is today attracting most atten- 

 tion, and which seems to be rapidly gaining in 

 favor consists of the separation of land and trees 

 for purposes of taxation, the former being taxed 

 annually on a moderate valuation as bare land, 

 while the trees are untaxed till cut and then pay 

 a tax on the yield. This plan is distinctly a case 

 of the half-loaf. It continues many of the evils 

 of the present system and only partially secures 

 the advantages of the single tax on yield. Never- 

 theless it is an improvement. And it is a step 

 in the right direction. This step once taken 

 further progress will be easier. Some of the 

 immediate practical dilficulties of the tax on 

 yield are minimized by this compromise. I feel 

 that the movement for such a plan of taxation 

 should be encouraged and deserves success. 



I confess to a very diHerent feeling when we 

 turn to another plan which still finds some 

 favor. I refer to the plan of tax exemptions, 

 rebates, bounties, etc.. in the interest of the for- 

 ests. Here we have the evidence of much actual 

 experience. A dozen states now have such laws 

 on their statute boolts. In a few other states 

 where such laws formerly existed they have been 

 declared unconstitutional. This is the case in 

 Pennsylvania and Indiana. The uniform result 

 of these laws has been practically zero, and they 

 ai'e today scarcely more than dead letters. In 

 some states such. laws have been in operation for 

 a long time. Massachusetts, for example, has 

 had an exemption law over thirty years. Yet a 

 legislative committee which investigated its work- 

 ings in 1906 reported that the law had been a 

 failure : one member of the committee reported 

 that he could hud in the whole state only sixteen 

 acres that had been affected by the law. With- 

 out going into the reasons tor the failure of these 

 laws, the lesson of practical experience is cer- 

 tainly against this plan of reform. Furthermore, 

 this plan seems to me to be a step in the wrong 

 direction and away from the ideal method of for- 

 est taxation. It savors of paternalism and spe- 

 cial favors. As such it is likely to alienate pub- 

 lic opinion and make more difficult the obtaining 

 of a sound system of taxation in the future. 



Kecent Developments in Taxation Methods 



Although it is less than a year since I enjoyed 

 the privilege of addressing you on this subject 

 the intervening time has witnessed some develop- 

 ments of importance in the tax situation. In the 

 lirst place, it is evident that interest in the sub- 

 ject is not declining, but is greater than ever. 

 Di-scussion in the forestry magazines, the lumber 

 trade journals, in meetings of various associa- 

 tions, and in the general press shows that the 

 question is still a live one. 



I have seen nothing in the events of the last 

 year to weaken my confidence in the conclusions 

 which I presented to you last summer. Espe- 

 cially interesting and gratifying has been the 

 clearly growing sentiment in favor of the tax 

 on yield, either with or without an annual tax 

 on the land alone. There is also apparent a bet- 

 ter understanding of the fact that the real prob- 

 lem of forest taxation is in connection with the 

 investment of capital in forest growing. 



The progress of the movement for uniform 

 state legislation, while not directly connected 

 with the problem before us, can not fail to be of 

 great advantage to the movement for reform In 

 forest taxation. An important national confer- 

 ence on uniform state laws, the first of its kind, 

 was held in Washington in January. At the 

 same time and place there was held a conference 

 of governors at which steps were taken looking 

 toward some definite organization of the gov- 

 ernors of our states. Such an organization has 

 long been needed. It has the oportunity to ac- 

 complish valuable results in the way of better 

 state legislation. Another efficient agency in pro- 

 moting tax reform is the International Tax Asso- 

 <lation. This young organization was founded in 

 inu7 and has done good work along the line of 

 state and local taxation. It has already given 

 consideration to the subject of forest taxation. 

 Such developments as these show that the senti- 

 ment for better and more uniform state laws is 

 growing and is gradually finding expression in 

 effective organization. The outcome can not fail 

 to be of profit to the movement for better forest 

 taxation. 



Late Legislation on Forest Taxation 



As to actual legislation, a number of laws relat- 

 ing to forest txation were passed in 1909, though 

 nothing of great importance. Alabama, Maine 

 and Massachusetts have reenacted their exemp- 

 tion laws with some amendments ; in Minnesota 

 a constitutional amendment allowing tax exemp- 

 tion in encouragement of reforestation has been 

 submitted by the legislature to the people : Penn- 

 sylvania has imposed an annual charge of 2 cents 

 an acre upon forest reserves exempt from taxa- 

 tion for the benefit of the school districts, and 

 South Dakota provides for bounties for forest cul- 

 ture paid by the counties. 



A few suggestions as to the proper conduct of 

 the campaign for tax reform, offered with all 

 modesty for what they are worth, may not be 

 out of place on this occasion. 



In the first place, If the movement for reform 



in the method of forest taxation is to succeed 

 it must be carried on in a broadminded spirit, 

 both as to its aims and its methods. It must not 

 be forgotten that three parties are interested. 

 These are : First, the forest owners and lumber 

 manufacturers ; second, the public treasuries of 

 our states, counties and towns ; and, third, the 

 general public, with its vital interest in conser- 

 vation and the best use of the nation's forest re- 

 sources. Each of these parties looks at the 

 matter from its own viewpoint, of course, but 

 looked at broadly these viewpoints are not neces- 

 sarily antagonistic. There is no reason why a 

 plan of reform should not be devised which will 

 work to the advantage of all interests concerned. 

 Any plan which does this and is properly advo- 

 cated is sure of ultimate success. Any plan 

 which does not is doomed to failure, and ought 

 to fail. 



Special Favors for Forest Property Not 

 Desired 



For this reason I have little confidence in the 

 plan to secure special favors for forest property 

 in the shape of tax exemption, or a rate of taxa- 

 tion lower than is borne by other kinds of 

 wealth. I am aware that a fairly strong argu- 

 ment may be constructed in favor of such a 

 policy in the public interest. But, whatever may 

 he the merits of this argument, as a matter of 

 practical policy the proposal seems decidedly 

 ill judged. It is human nature to try to escape 

 taxation, and the public will naturally be sus- 

 picious of a so-called reform whose result would 

 L-e to relieve the tax burdens of one class of 

 luoperty owners at the expense of the general 

 body of taxpayers. Such a proposal surely in- 

 vites the very antagonism which ought to be 

 avoided. We have bad enough of special favors. 

 Let the forest owner ask for simple justice, 

 something to which he is entitled, and which 

 can l)e advocated without evasion or apology. 

 And indeed equitable taxation is really all that 

 is needed. Special favors are not the solution of 

 the problem. The kind of favors which the 

 legislatures will grant are useless ; and the kind 

 which would do any good will never be granted, 

 and aught not to be granted. 



In this same connection. I believe that in- 

 discriminate complaint against tbe present tax 

 burden is likely to do harm rather than good. 

 Individual cases of excessive taxation are con- 

 stantly occuring. and, when the facts are well 

 established, ought to be complained of and reme- 

 died. But this is a different matter from general 

 denunciation of tbe tax system on the ground 

 that forests are suffering from excessive taxa- 

 tion. As a simple matter of fact, this is not 

 true in the majority of cases and in most parts 

 of the country. In general forest properties 

 have been treated leniently. We have already 

 seen that this is not the true charge against 

 the general property tax. Charges of this sort 

 are likely to lead the public to the conclusion 

 that all the talk about reforming forest taxation 

 is after all nothing but the good old-fashioned 

 game of tax dodging at which we all take a hand 

 now and then. The public must be made to see 

 that what is sought is not a decrease in the 

 present amount of taxes but a change in the 

 method of taxation which shall guarantee forest 

 owners against arbitrary, uncertain and excessive 

 taxes in the future. 



Tax Reform Beneficial to Farmers and 



TiMBERMEN 



One other matter seems to need looking into, 

 lest it become an obstacle in the way of tax 

 reform. The local problem of forest taxation 

 seems often to resolve itself into a conflict be- 

 tween the timber owners and the farmers. This 

 result is perhaps a natural one in many localities 

 where it appears that whatever may be wrested 

 from the timber owners is clear gain to the 

 farmers, and vice versa. The case is aggravated, 

 of course, where the timber owners are largely 

 nonresidents. I incline to the opinidn that the 

 ultimate solution of tbis difficulty must come 

 through state administration of the forest tax. 

 In the meantime, however, the attitude of hos- 

 tility is a most short-sighted and unfortunate 

 one for both parties. It is undoubtedly the fact 

 that, of all classes of the population, the class 

 that suffers most from the general property tax 

 is the farmers. Yet whenever it is proposed to 

 amend the general property tax by putting some 

 substitute in the place of tbe farcical attempt 

 to tax intangible personalty the farmers are the 

 most active opponents. Ignorance of the true 

 merits of the question of tax reform has pre- 

 vented the farmer from seeing where his inter- 

 ests lie, and the same cause is in danger of 

 leading the forest owners in.to a short-sighted 

 policy. Farmers and forest owners are the 

 ones having the most vital interest in the amend- 

 ment of the general property tax. They ought 

 to make common cause instead of blocking each 

 other's efforts. 



We sometimes hear the complaint that certain 

 taxes are unjust because the taxpa.ver receives 

 little or no benefit from the expenditure of the 

 money which he has paid into the treasury. Such 

 complaints are made in ignorance of the fact 

 that the apportionment of taxation is not nowa- 

 days based on the benefit received from the gov- 



ernment by the taxpayers. The benefit theory 

 would lead to absurd results and visionary 

 schemes utterly incapable of practical administra- 

 tion, and has been generally abandoned. The 

 true principle of apportionment is the ability to 

 pay. If each citizen is taxed fairly, according 

 to his ability, the mere fact that he may pay 

 taxes in one place and live and enjoy the bene- 

 fits of government in another place involves no 

 injustice. The attempt to deny the obligation 

 to pay taxes under such circumstances puts the 

 forest owner in an untenable position and weak- 

 ens his just demand tor an equitable system of 

 taxation. j ^ «t 



More Knowledge of Subject Desirable. 



Finally, the need of more knowledge on the 

 problem of forest taxation is still great Accu- 

 rate knowledge alone can prevent the dissipation 

 of energy in a struggle for supposed reforms 

 which will later prove to be useless. Accurate 

 knowledge is necessary to show the character of 

 the problem, the reform which is needed and 

 the most effective way of accomplishing this 

 reform. " 



The United States Forest Service has been 

 actively engaged during the last two years in 

 securing information on this subject. This work 

 has involved the sending of hundreds of letters 

 of inquiry to forest owners and lumbermen as 

 well as to state and local taxing oflicials Re- 

 ports have been called for from tbe field force of 

 the Forest Service all over the country. A care- 

 ful intensive study has already been made in 

 one state and similar studies soon will be made 

 in other states. Cooperation from the state for- 

 estry departments has been secured in two cases 

 Cooperation on the part of all who are interested 

 in the problem will be most valuable and thor- 

 oughly appreciated. 



The problem of forest taxation has not been 

 a pressing one tor very long. It is still too soon 

 to expect radical results. Yet even in this short 

 time progress undoubtedly has been made That 

 something is wrong with present methods of for- 

 est taxation is becoming better recognized every 

 day. Popular discussion of plans of reform is, I 

 believe, gradually converging upon the correct 

 solution of the problem. Perfection is not to be 

 looked tor in human affairs, least of all in the 

 realm of taxation. But there is good ground for 

 the hope that the near future may see some real 

 reform accomplished in the taxation of the 

 forests. 



UTILIZATION OF WASTE IN FOREST 

 AND MILL 



Address of John B. White of Kansas 

 City, Mo. 



In assigning to me the suDjecc, •utilization of 

 Waste in Forest and Mill," the president has I 

 find, assigned to me that which leads into the 

 entire subject and science of forestry. This is 

 what called forestry into existence. This is what 

 forestry stands for. conservation by wise use and 

 the changing from a condition of uncontrolled 

 forest waste to one of practical, intelligent and 

 systematic supervision, necessarily governed by 

 the commercial market value, wliich always in 

 the last analysis determines what constitutes 

 waste. Our material resources in America have 

 been so stupendous that we. as a nation, have 

 become too prodigal in our habits, and nave 

 tailed to foresee the famine that we are approacn- 

 ing with our present methods. The cry for 

 conservation has come none too soon. 



To uselessly destroy or permit to be destroyed 

 something of value is to commit waste. If the 

 article or commodity manufactured is rendered 

 more valuable than the cost of the labor expend- 

 ed upon the raw material, and there is a market 

 tor the product, then the margin between cost 

 and value is a legitimate profit to capital for 

 the risks and hazards of business, and the wise 

 man of affairs saves and conserves. Unless some 

 profit will accrue from saving, there is no induce- 

 ment to save ; nay, there would be no opportunity 

 for saving, no way in which to conserve If 

 the manufacturer of lumber sells everything he 

 can find a market for. or that he caii by any 

 human ingenuity provide a market for, he can 

 not be accused of ruthless waste in leaving in 

 Ihe woods or in sending to the burner as refuse 

 that which has no commercial value 

 Forest Legislation 



We are going to have legislation upon this 

 subject, and all forest legislation is for the pur- 

 pose of limiting and preventing waste, and to 

 foster, protect and preserve the forests. In 

 I< ranee, forest legislation began about 1560, and 

 in 1S24 the Forest School at Nancy' was estab- 

 lished. Germany and Denmark began forestry 

 about equally early, and before the unification of 

 the German empire. They then had eight acad- 

 emies teaching forestry. Of course, in these 

 countries the states own the greater part of the 

 forests, and through the foresight and enthusi- 

 asm of men like Gifford Pinchot the United 

 States awakened just in time to prevent still 

 more of our forest land getting into private 

 hands. 



But neither this nor future generations will 

 suffer from the private ownership of forests if 



