120 PRACTICAL FORESTRY IN 



FRED. R. FAIRCHILD, Professor of Economics, Yale University, 

 member International Tax Conference: Probably nothing more 

 effectually discourages investment than uncertainty as to future costs. 

 And whatever may be said of the present system of taxation, there 

 can be no question of its arbitrariness and uncertainty. If to all the 

 other risks of forestry \ve add uncertainty as to what the taxes are 

 going to be, we cannot blame investors for some hesitation in embark- 

 ing on an enterprise which may have to pay taxes fifty years before 

 the returns come in. And more than this; the investor cannot safely 

 base his calculations on the continuance of the present lenient adminis- 

 tration of the property tax. As has been shown, the tendency today 

 is toward a stricter enforcement of the law and a heavier burden of 

 taxation. 



State constitutions stand today in the way of many plans for 

 reform in State and local taxation. The movement toward their 

 amendment is growing ;is part of the general programme of tax 

 reform. 



The real problem of forest taxation is in connection with the future 

 of our timber lands rather than with their past. The preservation 

 of the forests is a matte*: of the utmost importance. So far our 

 forests have been exploited with little or no regard for the future. 

 But the present methods cannot last much longer. Forestry must 

 come some time, and its early coming is a thing greatly to be desired. 

 And whenever we are ready to seriously undertake it we will find our 

 present methods of taxation a severe handicap. Strictly enforced, 

 according to the letter of the law, the annual tax on the full value 

 of the laud and standing timber is almost sure to result in excessive 

 taxation, and the timber owner cannot count on the continuance of 

 the present lenient enforcement of the law. Even if the tax might 

 not be excessive, its uncertainty would be a serious obstacle to invest- 

 ment. We can hardly hope to see the general practice of forestry as 

 long as the present methods of taxation continue. 



To be equitable, taxation of timber lands like taxation of anything 

 else should be based on income or earning power. 



With regard to its effect on revenue, there is little to be feared 

 from the tax on yield. Eventually, revenue will be increased by a 

 method of taxation which does not prevent the development of 

 forestry. Forests paying a moderate tax are better than waste lands 

 abandoned and paying no tax at all. 



The tax on yield has many decided advantages. It avoids the evils 

 of the general property tax. It is equitable and certain. It is in 

 harmony with the peculiarities of the business of forestry, and will 

 be a distinct encouragement to the practice of forestry. Its adoption 

 by the States would remove one obstacle to the perpetuation of the 

 nation's forest resources. 



