THE FOREST INDUSTRIES AND THE INCOME TAX 

 By Carl M. Stevens 



The work of the Timber Section of the Bureau of Internal Revenue 

 has a great deal of interest for foresters because it is concerned ex- 

 clusively with the forest industries and because it considers and con- 

 tinually studies the basis economic factors which control those indus- 

 tries. Though the Timber Section is in its infancy and is just coming 

 to a full appreciation of its own problems, the work has developed 

 sufficiently to form a background for its larger work. The manner 

 in which the preliminary work has been carried on is particularly 

 worthy of close study, as indicative not only of a careful and thoughtful 

 plan, but one which has in it the true elements of the function of a 

 representative government. 



The Timber Section is entrusted with the administration of the 

 Federal income and excess profits taxes as they afifect the forest in- 

 dustries. These industries require special consideration because there 

 are particular provisions in the law applicable to them. Being assigned 

 its work thus definitely by law the section starts and completes its 

 activities within the bounds of a certain clear-cut field. Thoughts back 

 of the law are beyond its province. 



Only a few years ago very few of us, comparatively, knew there was 

 such a thing as an income tax and those few did not know it from 

 personal experience. It is usually helpful to form first an historical 

 background for a consideration of present-day affairs. There are, too, 

 certain fundamental governmental functions which it is well to recall. 

 This is especially important when we stop to think that before income 

 taxation could be adopted by the Federal Government of the United 

 States an amendment to the Constitution was required. 



The United States Federal Government is a government of limited 

 powers ; that is, each State of the federation is a sovereign government 

 by itself limited only by the Federal Constitution. All governmental 

 functions which are not expressly granted by the Constitution to the 

 Federal Government are inherent in the States. 



Among other things the Federal Government has been granted the 

 power to tax in a very vital way. There is only one exception to this 

 power and there are only two qualifications. The exception is that 



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