WHAT IS A BASIS FOR YIELD TAX? 



By F. Roth 



Professor of Forestry, University of Michigan 



With more than 60 years' supply of merchantable timber now on 

 hand and with supplies in the West which may last beyond a hundred 

 years, it is not surprising that the matter of forest taxation is de- 

 cidedly a burning question over large districts, and promises to con- 

 tinue so for a long time. 



For the wild woods, unorganized and merely held for speculation 

 and future exploitation, the yield tax as a fair and just form of taxation 

 appeals to our people as does no other form of tax. That this yield 

 tax should be reinforced by a land tax is merely a matter of compromise 

 to secure continuous income for local development. 



But what shall the yield tax be? Shall it be 5, 6, or 10 per cent of 

 the stumpage value of the timber cut? And if the yield tax is made 

 10 per cent of stumpage cut, how does this tax compare with the $12 

 per $1,000 which the farmer generally pays in the United States on a 

 two-thirds assessment of his land; in other words, does the forester who 

 pays a yield tax of 10 per cent pay as much or more tax per $1,000 

 worth of property than does a farmer who pays $8 per $1,000 {i. e., 

 12 per cent on two-thirds assessment) ?^ 



Pennsylvania, in her new law, places the yield tax at 10 per cent; 

 Massachusetts at 6 per cent ; Connecticut at 7 per cent for wild woods 

 and 10 per cent for plantations. Massachusetts alone makes an effort 

 to determine the basis for the tax rate and to place it in harmony with 

 general taxation of property in that State. The method employed by 

 Massachusetts assumes an average tax rate for the State ; a Y^ of $240 ; 

 a rotation of 50 years, and then makes a combination of yield tax and 

 land tax in such a manner that the basis fails entirely at any reasonable 

 rotation, say at 80 or 100 years. In my Forest Valuation, pages 117 and 

 118, an attempt is made to develop a proper basis for a yield tax by a 

 comparison in which a regulated forest, with yearly income, is assumed 

 to be taxed like a farm, on a basis of its income value and the general 

 tax rate of $12 per $1,000. 



1 The U. S. Dept. Agr., in C:r. 132- A, 1913, places the tax rate for United States 

 farm property at $6 per $1,000, which is probably nearer the true average than 

 $8 per $1,000. 



