520 



AMERICAN FORESTRY 



on investment and all the carrying costs from the be- 

 ginning. Suppose this leaves a profit. The private 

 owner, of course, can use his as he sees fit, just as the 

 growers of grain or com can use theirs. The state 

 can do the same, using its profits to buy more forest 

 land or to build highways, or make other improvements. 



There will be no trouble about using the profits of tim- 

 ber growing either by state or private interests. The 

 important thing is that both be under the same system of 

 taxation, if both state and private forestry are to be 

 carried on. 



While there might not be a profit when the timber is 

 sold in the future, there must be entire liquidation of 

 the carrying costs, taxes and interest. Nobody, neither 

 the state nor private interest, is going to furnish forests 

 for the future at a loss. Whatever the costs, they will 

 have to pay. For this reason a yield tax of lo per 

 cent of the stumpage value of timber may be too high. 

 I am inclined to think it is, because it is greater than 

 the percentage of gross value of other crops taken for 

 taxes, and it simply adds to the price that must be paid 

 for lumber in the future. 



This yield tax, whether it is 3 or 10 per cent, must be 

 considered from the standpoint of the taxation units. 

 They must have certain annual revenue. Under a yield 

 tax on timber a taxation unit may have no annual reve- 

 nue for many years, and it surely will never be certain. 

 To remedy this there should be a flat annual acreage 

 tax on the land, to be deducted from the amount of the 

 yield tax when it is paid. In other words, there should 

 be an advance payment on the land to meet the require- 

 ments for certain annual revenue, the final yield tax to be 

 decreased by the total amount previously paid. Gradu- 

 ally, as the area of forest-growing land becomes stabil- 

 ized and the annual cut of timber approaches uniformity, 

 these two features of such a taxation system will be ad- 

 justed to meet conditions. 



Let us try to visualize an example to show just how 

 such a combination acreage and yield tax would work. 

 Take a county (as a taxation unit), in a state in which 

 there are no national forests, but where the state has 

 ado])ted laws providing for state acquisition of forest 

 lands and their reforestation and protection. 



In this county there are 100,000 acres of land, of 

 which 30,000 acres are forest land. Of this forest land 

 15,000 acres, privately owned, carry virgin timber, and 

 500 acres are being cut over every year, yielding 15,- 

 000,000 board feet of lumber, with a stumpage value of 

 $3 per thousand feet, or $45,000. This timber and the 

 land has been privately owned for 40 years, and the an- 

 nual taxes paid up to this time amount to $5 an acre. 

 The average stand per acre is ^0,000 board feet, worth 

 $90. A yield tax of 10 per cent would be $9, from which 

 the $5 previously paid should be deducted, leaving $4 an 

 acre, or $2,000 on the 500 acres cut, to be paid as the 

 balance due in taxes on that 500 acres. If the amount 



])reviously paid in taxes were $7 an acre, then the re- 

 mainder to be paid would be $2 an acre; if the previous 

 j)ayments amounted to $3, then the remainder due would 

 be $6 an acre, etc. In some cases the previous pay- 

 ments might be more than the lO per cent yield tax, and 

 so nothing would be due the county. The figures for 

 no two taxation units would be the same, and yet it 

 would work out equitably except in those few cases 

 where the previous tax payments were greater than the 

 yield tax. 



The other 15,000 acres of forest land in this county 

 carry young timber, 10,000 acres being owned by the 

 State and 5,000 acres by private parties. All of it is 

 protected from fire and is being brought up to full forest 

 production as rapidly as possible. In addition to the 

 yield tax there is a flat acreage tax of lo cents an acre 

 on all the forest land, which would yield an annual reve- 

 nue of $3,000 on the 30,000 acres, this annual acreage tax 

 to be deducted from the amount of the yield tax at the 

 time when the timber, either original or grown, is cut. 

 It is to be noted also that all this forest land is under 

 the same system of taxation, both the State and privately 

 owned. And why should there be any difference? 



Both the state and the private owner are using land 

 for the production of a necessity. That product is 

 growing under the same natural conditions, whether 

 on state or private lands, requires the same care and 

 protection, and will be marketed finally under the same 

 economic conditions as to use and value. In other 

 words, it will be sold under the laws of supply and de- 

 mand, which will not vary whether the products come 

 from public or private lands. The lands on which these 

 forest products grow, both public and private, are located 

 within the boundaries of a county and both receive equal 

 benefits of the county government, such as the protec- 

 tion of property, the administration of justice, the educa- 

 tional system, the activities for progress and develop- 

 ment, etc. In every conceivable way these benefits will 

 be equal to both the public and private forest land, so 

 why should both not contribute equally to the necessary 

 funds for the county, or other taxation ufiit ? 



Both the state and the private owner are working im- 

 der the same natural conditions to do the same thing 

 grow timber and there is no reason why they should not 

 work under the same economic or financial conditions. If 

 the state forest land is to be exempt from annual taxa- 

 tion, then the annual tax on the privately owned forest 

 land will be doubly heavy. If both are exempt then tlie 

 other taxable property in the county will have to carry 

 the burden, which will be absolutely unjust. As the ulti- 

 mate consumers will have to pay the costs of growing 

 the timber, whether on public or private lands, let these 

 costs include the taxes on all these forest lands necessary 

 to pay their just share of the expenses of maintaining 

 the local government under which the timber was grown. 



