EDITORIAL 



A NOTABLE REPORT ON FOREST TAXATION 



C^OREST taxaition is rated by many second to forest 

 fire as a deterring hazard to the enterprise of grow- 

 ing timber. The present 'state of our tax daws relating to 

 forests is indeed a sad commentary upon American prog- 

 ress during the past two and a half decades. Failure 

 of our state legislatures to recognize that tax laws, as 

 now generally drawn, tend to tax our remaining forests 

 out of existence and to prevent private individuals 

 from growing new forests, stands today as one of the 

 foremost obstacles to ithe private practice of forestry in 

 this country. 



Because the subject is of such vital importance, Amer- 

 ican Forestry prints in this issue the report of the Com- 

 mittee on Forest Taxation of the National Tax Associa- 

 tion, which was read by Fred R. Fairchild, Professor of 

 Political Economy, Yale University, ^t the annual meet- 

 ing of the Association in Minneapolis on September 19. 

 The report was prepared by Professor Fairchild, Chair- 

 man of the Committee, after consultation with other 

 members of the Committee. It unquestionably is one of 

 the most important contributions to the cause of forest 

 taxation in this country yet to appear and will be read 

 with great interest and profit by all interested in the 

 subjects of forestry, lumbering and taxation. 



In the opening pages, the rep^ort reviews briefly some 

 of the earlier efforts at forest tax reform and points out 

 the reasons why so little progress has resulted from the 

 movemenits. Out of the experience of the past and the 

 progress of taxation in general, the Committee views 

 forest itaxation today as involving two distinct problems, 

 one relating to young, growing forests and the other to 

 virgin or mature forests. Under the plan proposed for 

 growing forests, by which is meant immature trees, all 

 forest growlth, excepting that -vvfiich had reached ma- 

 turity under the criteria of the law, would be exempt 

 from taxation. 



The land on which the yovmg forest is growling, 

 however, would be assessed no account being taken of 

 any forest growth dther than mature timber ^and 

 taxed annually on a parity with similar bare lands in 

 the neighborhood. The tax upon the growing timber 

 would come w*henever any forest products are har- 

 vested, or in the event there is no cutting, when the 

 timber reaches a growth which places it in the class 

 of mature timber. All timber cut before maturity, 

 excepting small amounts taken by the ovmer or tenant 

 for his own use, would be subject to a yield tax at a 

 rate corresponding to the business tax on other busi- 

 nesses. The Committee suggests a rate in the neigh- 

 borhood of five per cent, the tax to be administered by 

 state oflRcials and distributed to it<he towns or counties. 



But should there be no cutting prior to the time 

 when the young forests reach the mature class, it be- 

 comes automatically taxable property under the law 

 proposed for mature timTier. For mature timber. 



the Committee recommends the general property tax, 

 based on principles that 



(i) Mature timber should be taxed as nearly 



as possible on equal terms with other wealth and 



business, 



(2) The individual income tax, where it exists, 

 should apply to forest income the same as other 

 incomes, 



(3) Where there is a special business tax it 

 should take the form of a yield tax in the case of 

 forests, 



(4) The property tax as applied to marketable 

 mature forests should be the equivalent of an 

 annual tax upon the land and trees, assessed in 

 the same ratio to true value as prevails for other 

 taxable property and at the same irates, and 



(5) Where the mature forest is inaccessible and 

 therefore not marketable until some time in the 

 future, the property tax sliould take that fact 

 into account. 



"Taking everything into considei^ation," the report 

 concludes, "your Committee is of the opinion that the 

 only practicable solution of this problem is to seek to 

 make the property tax as equitable and convenient as 

 may be. In particular, every effort should be made 

 to insure a fair assessment of forest property." That 

 the Committee did not think it feasible to distinguish 

 between marketable and unmarketable mature timber, 

 we believe, was a wise conclusion. To attempt such a 

 distinction would at once establish a danger line of con- 

 troversy and iabuse. The property tax applied to un- 

 marketable tracts, if fairly done, will naturally meet 

 the idea of deferred income hy a lower stumpage valu- 

 ation. 



The Committee's plan does not fully meet all the 

 diflRouIt and entangling features of the forest tax situ- 

 ation. Such a plan would be too refined to work under 

 present conditions of American taxation. In the recog- 

 nition of that fact, the Committee rendered its greatest 

 service. It has brought forth a plan which is sane, 

 practicable and simple, and which 'at the same time 

 strikes the great need in forest taxation, namely, as- 

 suring the owner of young growing forests a fair. 

 definite pnd reasonable method of taxation. 



Possibly the main criticism of the plan will be on 

 the grounds that, involving as it does the income tax 

 feature, it will not be apolicable in a great majority of 

 the states without first obtaining t*he necessary consti- 

 tution'al amendments. But as forest depletion advances 

 aVid the public becomes more enlightened on and more 

 insistent for forest legislation, that obstacle will con- 

 stantly become of less and less moment. And with the 

 wav cleared, the Committee's plan fits in easily with 

 the g-oing scheme of taxation, is uniformly compulsory 

 nnd is free of red tape and intricate features, 



