FOREST TAXATION 143 



no corresponding reduction of taxes by increasing the assessed 

 valuation. 



In practice, sale value is made the basis of valuations for 

 assessment purposes, and since sale value may not coincide with 

 expectation value ( 17, 59, 69), this may cause both assessed 

 value and taxes to depart widely from the desired ratio. 



A tax on sale value secures the desired ratio of net income 

 most accurately when property is producing this income annu- 

 ally. When the income is intermittent and deferred, great dis- 

 crepancies and inequalities are almost certain to exist in the 

 ratio between taxes and final income. 



152. Taxable Value of Property. The taxable value of 

 property is the value determined from future net income, or its 

 capital value ( 62) calculated by disregarding the future expenses 

 represented by the proposed taxes, but deducting the discounted 

 value of all other future expenses. The net income which rep- 

 resents this net value is then divided between the owner and 

 the taxing power, and the owner's final net income is what is 

 left after paying his taxes. 



153. Effect of Taxes on Property Values. This net taxable 

 value is merely the sum of values belonging jointly to the owner 

 and the taxing power or public. Nominally the complete 

 ownership is vested in the proprietor. Practically the power 

 to take income carries with it and is a manifestation of the sov- 

 ereign right of ownership, and on failure of the owner to pay 

 taxes this right is exercised by confiscating the property. But 

 the payment of the tax results no less in an actual transfer of 

 value from owner to public. The residual value after sub- 

 tracting the taxes from net income is the real value of the prop- 

 erty to the owner, who is justified in considering it as worthless 

 when the total net income is absorbed by taxation. 



It might be assumed that in absence of taxation, property 

 would be worth the additional value represented by the capi- 

 talized taxes. This is literally true when property is exempted 

 from taxation and at the same time receives all the benefits of 

 governmental activities. Just as business expenses are expected 

 to result in income greater than the expense, so the benefits of 



