WHAT IS A BASIS FOR YIELD TAX? S87 



This comparison is based on the following generally accepted prin- 

 ciples : 



1. The forest property should not pay more taxes than other similar 

 property. 



2. If it is fair to assess farms on the basis of the crop which they 

 produce or the income which they can make, this same method is fair 

 for the forest. 



3. If it is fair and customary to use 10 per cent to capitalize the 

 income of a house and lot in town, or the income of a farm to find the 

 value of these properties for purposes of loans or assessment, then it 

 is also fair to use 10 per cent in valuation of forest properties. The 

 principle here evidently has always been that the estimate should be 

 conservative ; that the bank takes risks ; that the owner takes risks, while 

 the State takes none. 



4. A yield tax which is fair for a rotation of 60 years should be fair 

 for any other reasonable rotation. What is reasonable here is evident ; 

 it means any rotation which gives a fair income or keeps a fair pro- 

 portion between income and expenses. 



5. A yield tax which is fair for one stand should be fair for any other 

 stand, or for any combination of stands of timber, regardless of the 

 methods of silviculture or regulation. 



In the volume referred to, a short table is added to show how this 

 comparison appears for a regulated forest with rotations of 50, 75, or 

 100 years. 



The following table shows the same on a little different premises : 



Yield Tax Based on 12 per Mill Property Tax at Full Value Assessment 



Premises : Spruce, site II ; clear cut and planted. 



Gross income = 1/2 (Yr-t-ST.^) as per Schwappach. 



Planting cost, $10 per acre. 



Current expenses, $i per acre and year. 



Rotations, years 60 80 100 120 



Area (minimum) of regulated 



forest, acres 60 80 100 120 



Gross income =: ( Y, + S T, ) for 



r acres $320 $654 $915 $1,135 



Yearly expenses on r acres $70 $90 • $110 $130 



Net income from r acres $250 $564 $805 $1,005 



Income value of r acres on basis 



of 10 per cent $2,500 $5,640 $8,050 $10,050 



Tax as property ta.x, 12 per mill, 



on r acres $30.00 $67.50 $96.50 $120.60 



Property tax per acre $0.50 $0.84 $0.96 $1.00 



Yield tax, /. e., property tax as 



per cent of cut 9-4% 10.3% 10.4% 10.6% 



Property tax as an income tax 



on net income 12.0% 12.0% 12.0% 12.0% 



