THE STATE REVIEW. 



consume wood. The law of Massachusetts 

 provide- for taxing the growing timber with 



tin.' i 



The Result of Tax Methods. 



nre of forest products is the di- 

 ll of the present methods of taxation, 

 "flic mo-t obj.-riiunable feature of our system 

 is that it for taxing the growing crop, 



the land upon which it, grows. In 

 the . :i ordinary agricultural crop the 



value of the crop is not taxed, but in the case 

 of crop the land is taxed and, 



in addition, the Crowing crop is taxed, not 

 01,1 . but year after year at an 



incn- Illation until it is out, when the 



valuation is reduced to that of the land with- 

 out the crop.' This induces the owner to 

 cut his crop before it has reached its greatest 

 value to him and to the state. 'While the 

 tax on tlie crop may not seem large in any 

 one year, on a given parcel, it acts as a strong 

 influence through a long series of years; and 

 this influence is hostile to the forest and its 

 proper management. The more capable and 

 faithful the assessors are under the present 

 law. the more effective the law becomes in 

 causing premature harvesting of the forest 

 crop. Such a tax hinders the increase of 

 wealth by cutting it off at its source; and, 

 aside from the economic question involved, it 

 discriminates against forest crops as compared 

 with field crops, giving a decided advantage to 

 the field crops. In this respect it is not fair.' 



Recommendations Made. 



"Recommendations, based upon the conclu- 

 sions reached by the Massachusetts commis- 

 sion, are: 



"First That the law should relieve the 

 crops from taxation, except a fair rate on the 

 general annual cut. The value of the land 

 without the crop to be assessed as cut-over 

 land. 



ond That the law be restricted in its 

 application to wood-lands which the owner 

 agrees to manage under a forest-working plan, 

 which fixes the average annual cut. is approved 

 by the state forester and subject to his in- 

 spection. That the working plan be revised 

 .at least once in ten years at the expense of 

 the owner. 



"Third That that law be restricted in appli- 

 cation to 100 acres or less by any one owner, 

 and to 200 acres located in any one town in 

 . ly one year; and, that the law be restricted 

 mis valued at twenty dollars and under 

 .icre, exclusive of the crop. 

 "These recommendations, in my judgment, 

 are only in part applicable to the conditions 



ing in this state. 



"The principal value for us. in this Massa- 

 chu-ett- di-eu--ion. is that intelligent men per- 

 a very exhaustive examination of 

 taxation in Europe, as well as in the 

 United States, have reached the conclusions 

 that the present system of taxation has been 

 a mo.-t important factor in reducing forest 

 land- to their present meager dimensions and 

 nificant value, both to the owners, to the 

 industries and to the state. That one 

 oiling principle of taxation shall be the 

 taking of the land without the crop, and that 

 the crop be relieved from taxation, except from 

 nservative and scientifically ascertained 

 : '1 production.' The condition- in 

 clr be met and remedied by the recorn- 



i ttioiis of their commission, are quite sim- 

 [ ilar to the agricultural counties of Michigan, 

 and I believe may be found valuable in dealing 

 with the problem of taxation as applied to the 

 small tore-uil areas the farm wood-lots of 

 those counties. Thev are not. however, ad- 

 equate to fill the requirements of our 'absolute 

 lands' the cut-over pine lands ot the 

 northern part of this lower peninsula, and the 

 same kind of lands in the upper peninsula. 



Mr. Gaskill's Article. 



"Mr. Gaskill says of the general present 

 methods of taxation, as applied to forests, no 

 other question concerning the wood-lands of 



the country, save that of fires, is so important, 

 'We shall make little substantial progress in 

 the effort to induce private owners to maintain 

 their forests until the present conditions shall 

 ; have been relieved, and the forests so rated 

 that they shall bear no more than their fair 

 share of the cost of government.' The real 

 need is for laws, that, recognizing the public 

 utility of forests, adjusts the necessary tax 

 levies to the facts and conditions that govern 

 tree growth, and to the long periods of time 

 that are required to produce timber. 



" 'True forest-land is not farm-land neg- 

 lected, and a forest is not the crop of a sea- 

 son.' The problem concerns itself chiefly with 

 those areas which in their nature are fit for 

 tree growth and with a crop representing the 

 accumulated investment of the owner for as 

 many years as are required to bring the trees 

 to maturity. 



Forest Serves the Public. 



"The forest serves the public by providing a 

 common necessity wood and by the benefi- 

 cent influences that it gives freely. It is thus 

 apparent that forests should occupy a separate 

 place on the tax lists; that they need to be 

 treated differently from farms and town lots 

 and mines. It will be necessary to show that 

 growing trees should be considered personal 

 property not real estate, as they now are by 

 practice or law. in virtually every state of the 

 Union. 



"Mr. Gaskill generalizes, from his study of 

 the tax systems adopted in European coun- 

 tries, two conclusions; first, that the systems 

 of taxation there are so radically different 

 from ours that only their general principles 

 can be applied here; and, second, that the as- 

 sessments are always based on the actual value 

 of the forest, or on the earning power of the 

 land that is, its yield. 



"The first principle in all these laws is that 

 the forest shall be considered and rated apart 

 from the land upon which it stands. This 

 principle finds universal acceptance, in theory, 

 at least, though the practice varies in different 

 countries, and is based upon the fact that a 

 forest is a crop of many years' growth and rep- 

 resents the owner's savings the accumula- 

 tions, capital and interest on a time invest- 

 ment. 



"The practice of rating forests as a part of 

 the land is the fundamental error in every 

 American state. 



Equitable Tax Scheme. 



"Mr. Gaskill thus groups the points espec- 

 ially to be considered in framing an equitable 

 scheme of forest taxation: 



"First Forests are necessary to the public 

 welfare, and the state should bear a part of 

 maintaining them. 



"This means that the state treasuries should 

 assume a considerable part of the obligation, 

 and, as far as it is proper, relieve the counties. 

 Exemptions and rebates do not meet this re- 

 quirement, because the county bears the sole 

 burden. In no case are exemptions justified 

 unle.-- every one who shares the burden of it 

 is correspondingly benefited by it. The state 

 nf Xcw York pays local taxes on land and in- 

 come. 



"Second A forest is a form of property 

 whose value is potential or prospective most 

 of the time; only when the trees are market- 

 ripe can an income be derived from them. 



"Third In consequence' of periodic returns 



the greater part of the tax, to be paid upon a 



. -liottld fall due when the timber is sold, 



and not be a burden upon the other property 



of the owner through many year-. 



urth The deferred tax should bear a fair 

 | relation to the net yield of the property. That 

 is. it should not exceed a sum that will leave 

 the owner the equivalent of a fair annual re- 

 turn on his investment. 



"Fifth Forests occupying land of the kind 

 here considered, grow too slowly in most in- 

 stances to yield, by their annual increment, a 

 rate of interest comparable with that common- 



ly expected from ordinary business enter- 

 prises. 



"Sixth Forests are exposed to unusual risks 

 from fire and depredation owing to their gen- 

 eral use by the public. 



A Final Conclusion. 



"His final conclusion is this From these 

 considerations it appears that the actual situa- 

 tion can be met only by accepting a principle 

 in taxation which shall definitely recognize the 

 piiblic value of growing forests, and in its ap- 

 plication strive to maintain them as the source 

 of material needed for important industries and 

 as valuable climatic factors. This means that 

 private property in forests should be taxed 

 with reference to three considerations: (a) 

 Necessity the support of the local govern- 

 ment; (b) Equity an assessment based upon 

 the actual yield collection of the tax (on the 

 trees, not on the land) deferred until the crop 

 is sold; and a recognition of the peculiar risks 

 (fire, trespass, etc.) to which forests are sub- 

 ject; (c) Encouragement a special rating of 

 the property to compensate the owner for 

 whatever attaches to maintaining the forest 

 that best serves the public interest. 



"What the conditions are, and have been, 

 for the past thirty years, in this state of Mich- 

 igan, you all know they need no recital here. 

 We are all agreed as to the results, which we 

 desire to have accomplished. If we have any 

 differences, as is quite likely, it will be upon 

 the details, not on the general principles. 

 Speaking for myself, and disclaiming responsi- 

 bility of any one else for my assertions, I say 

 what we need here, in Michigan, in view of 

 our general systems of taxation, is: The tax 

 upon the land at the fair average value of simi- 

 larly situated and constituted land in the same 

 neighborhoods; entirely dissevered from any 

 consideration of what it may grow. That is, 

 the treatment of forest land exactly like the 

 treatment of farm lands, with reference to its 

 assessed value.- The, taxation of growing for- 

 ests should not be considered until the state 

 has adopted the principle of the taxation of all 

 crops and incomes. 



"In the European countries where the an- 

 nual product of the forest is taxed, whether 

 it be upon the actual cutting and marketing, 

 or by an estimate of the annual growth and 

 increase, it accords with the principle of the 

 taxation of incomes, whether from invested 

 funds, or the practice of a profession or trade, 

 whether manufacturing or commercial in its 

 character. 



Income Tax Principle. 



"\\ here the income tax principle is applied 

 to all the people it is fair that the income from 

 the practice of agriculture, of both kinds, 

 should bear an income assessment. And then 

 the tax should be taken from the land and 

 placed upon the land's production, under just 

 and scientific regulations to ascertain and ap- 

 ply the apportionment of public benefits and 

 natural risks, from and to the different kinds 

 of products farm and forest; or a low mini- 

 mum land rating by itself, and a separate as- 

 ent upon the product of the soil, each af- 

 ter its own kind. But. this is looking into the 

 future, too far for present practical purposes. 

 It will be time enough to consider further 

 modifications when the principles upon which 

 such modifications must depend are demanded 

 by a public sense of their justice, and are em- 

 bodied in our general system of taxation. So 

 long as anj- branch of agriculture is not as- 

 sessed upon its yearly income, or yearly pro- 

 duction, it is not fair, and it ought not to be 

 legal, as it is not equitable, that the product or 

 income of forest lands should be taxed. 



Mr. Eissell's Conclusions. 



"The foregoing facts and argument lead me 

 clearly to the following conclusions: 



"First Forest land. 



"For the present, the only legislation re- 

 quired is an amendment to the tax laws, pro- 

 viding for a fair and equitable assessment of 

 the land, i. e., as bare or wild land just as 



