INCOME) TAX IN FOREST 



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at only one hundred an acre. Private parks, summer homes, etc., 

 belong in this class. In these cases the sale value of the property is 

 taken in the assessment. 



3. Income tax is a personal tax and takes a certain part, say 

 one-tenth, of the net income. The income is taken as an average of 

 three or five years and all expenses are deducted. In these expenses 

 are included also the interest which the owner of the property is 

 paying on debt. The following case illustrates : 



Area of property, 10,000 acres ; 

 Forest of spruce, all one site; 

 Clear cut and plant, rotation, 100 years ; 

 Yr, $500, yearly cut, 100 acres, worth $50,000; 

 Yearly expenses, $1.50 an acre, or $15,000 total; 

 Tax rate, one-tenth of net income. The taxes are : 

 o.io X (50,000 15,000) or $3,500. 



This amount is seven per cent of the stumpage value of the 

 ripe timber cut during the year so that a yield tax of seven per cent 

 in this typical case is equivalent to ten per cent on net income. 



If in the above case there was a mortgage of $200,000 at 4% 

 on the property the $8,000 of interest would be added to the expenses 

 and the taxes reduced to $2,700. 



4. Where the forest is not regulated it does not produce a 

 yearly income but produces an income only at long 1 intervals, (inter- 

 mittent working of Schlich), as for instance a single plantation, all 

 one age and kind where, if we neglect thinnings, no income is se- 

 cured from time of planting till the stand is ripe. In such cases the 

 method of taxation by income tax is not readily applicable and vari- 

 ous modifications are employed. The simplest of these and most 

 nearly in keeping with the principle of income tax is the postponing 

 of payment until the timber is ripe and then paying a sufficient sum 

 in keeping with the largejncome at that time. 



In other cases the value of the intermittent income is calculated 

 and converted into a yearly income by the formula : 



periodic income _ yearly income 

 i.op r i i. op i 



periodic income 

 . . yearly income = .op. 



But this means practically a return to the ground tax system which 

 in these cases no doubt deserves preference. 



