FOREST TAXATION 



Report of the Committee on Forest Taxation of the National Tax Association. 



For a generation and more there have been com- 

 plaints from those mteresited in forestry of the unfor- 



^, _ , tunate erteots of the American tax 



The Pr6S6nt 



^ system upon forests and tlie enter- 



Probiem ^^.^^^ ^^ forestry. * * * Suflice it 



to say that the earlier study of this problem succeeded 

 in establishing certain conclusions which may be sum- 

 marized briefly as follows : 



(i) That as a rule forests were assessed far below 

 their true value, and ,that, owing to this circumstance 

 combined with lax administration of the tax laws, for- 

 ests had not generally been subject to excessive tax- 

 ation ; 



(2) That barring certain localities and some Individ 

 ual cases, taxation had not been responsible for de- 

 struction of the forests or for failure to reforest cut 

 over lands or to practice forestry. These results have 

 been due to other causes more potent than taxation ; 



(3) That the property tax is fundamentally defective 

 when applied to the total value of land and trees of a 

 growing forest, resulting, if strictly administered, in 

 grossly excessive taxation of forests as compared with 

 otlier forms of property yielding annual incomes ; 



(4) That, if at any time other conditions should 

 become favorable to the practice of forestry as a private 

 bu.siness enterprise, continuance of the prevailing prop- 

 erty tax upon growing forests wou'ld prove an insuf- 

 ferable obstacle; 



(5) That the remedy lay in the relief of growing 

 forests from the rigors of the property tax through the 

 more or less complete application of the yield tax; 



(6) That the attempt to promote forestry by tax 

 exemptions as embodied in earlier legislation, was 

 quite futile ; 



(7) That the mature or virgin forest presented a dis- 

 tinct problem, toward the solution of which little had 

 yet been accomplished. 



Our first task now is to take stock of what progress 

 has been made during the past decade. We note first 

 . . . ,^ . of all that the 



Progress in Forest Taxation .^^. ^ ^^^^j^. 

 During Past Decade ^-^^^ ^^ ^^^^ p^. 



vious committee, as just summarized, have stood the 

 test of time and gained very general acceptance by 

 those who have given attention to this subject, a re- 

 sult in which this Association may take justifiable 

 pride. 



On the practical side of legislative achievement, 

 the result is less gratifying. A few states have passed 

 laws aimed to relieve the forests from the worst hard- 

 ships of the general property tax and in these laws 

 there has been a timid application of the yield tax 

 principle. (Note details of state laws since 1913.) 

 But these laws have not gone to the root of the mat- 

 ter and they have failed to produce any important prac- 

 tical results. They have usually been optional and 



for one reason or another have generally been ignored 

 by forest owners. 



In spite of the general acceptance of the principle 

 of the yield tax as a theoretical proposition, there can 

 be no doubt that the plan of the 



Pure Yield Tax 

 Too Extreme 



pure yield tax, as reconmiended 

 in the Report of the National 

 Conservation Commission of 1909, has been generally 

 regarded as too extreme and involving too many prac- 

 tical difliculties from the view point of the public reve- 

 nue. There ihas developed an unmistakable public opin- 

 ion to the effect that all forests must continue subject 

 to the property tax at least upon the land and that the 

 application of the yield tax must be limited to the .trees. 

 This position was accepted by your former committee, 

 which in 1913 recommended for "new forests" a com- 

 bination tax consisting of an annual tax on the land, 

 valued as bare land and taxed at a rate equal to half 

 the prevailing rate of the general property tax, to- 

 gether with a 10 per cent yield tax upon forest pro- 

 ducts. It is safe to say that the fundamental idea of 

 this plan has gained general acceptance among the advo- 

 cates of forest tax reform. And yet there has been a 

 disappointing lack of legislation along this line. 



On the other hand, the need of reform has increased 

 alarmingly and is more widely recognized than ever 

 _ r., -r- r before. The dependence of 



Forest_ Tax Reform ^^^ ^^-^^^ ^^^^^^ ^^ 



Alarmmgiy Urgent ^^^^^ ^^^^^^ ^^^^^^^^^ ^^^ 



rapid decline of our forest resources, and the impend- 

 ing future famine are subjects which this Committee 

 feels it need not enter into in view of the presentation 

 made by Professor Chapman at the last Conference 

 (1921). These matters are of vital interest to the na- 

 tion ; attention has been given them by such bodies as 

 the United Stajtes Forest Service, the Chamber of 

 Commerce of the United States, the American Forestry 

 Association, etc. The present crisis is not due primarily 

 to taxation. But the burden of taxation has grievously 

 increased in the past ten years and the necessity of re- 

 form, to clear the way for the practice of private for- 

 estry, was never so urgent or so well recognized as 

 today. 



The Committee has therefore set itself the task of 

 answering these questions : Why has the progress of 

 TI71, TT T forest tax legislation been so 



Why Has Tax ^j^^p j^ ^^ pj^^^ proposed 



Legislation Lagged? ^^ ^^^ Committee of 1913 

 still worthy of our recommendation? Is the lack of 

 results to be ascribed to weakness in that plan? If 

 so, how may the plan be so modified as to bring, not 

 merely recognition of its theoretical correctness, but 

 adoption by the legislatures of the states? In all of its 

 inquiiy the Committee has had in view the same ob- 

 jects as were before the former committee, stated thus 

 in its report: 



