FOREST TAXATION 147 



income which is realized at intervals greater than one year, may 

 be less or greater than that of a forest producing income of the 

 same total value, but in annual installments. The difference 

 in value is due to the same factors which cause the difference 

 between soil value and forest value, i.e., the income is discounted 

 by compound interest, and the discounted total of future or 

 intervening annual expenses is deducted from value. 



As touching taxation the question assumes this form: Shall 

 taxes be levied on actual present value of property, or shall 

 deductions from this value be permitted, including interest on 

 past costs, in arriving at the net taxable value? And shall 

 taxes paid in advance of income be computed as if drawing 

 compound interest in calculating the per cent of final income 

 which such advance payments of taxes absorb? 



158. Effect of Present Condition of Forest upon Choice of 

 Methods of Taxation. These problems are best presented by 

 a concrete example in which the effects of the two opposing 

 theories are illustrated. 



A stand of Loblolly Pine in Maryland * yields products 

 worth on the stump: 



At 20 years of age $17.81 per acre. 



At 30 years of age 61.14 per acre. 



At 40 years of age 108.91 per acre. 



At 50 years of age 168.49 P er acre - 



Land costs $5.00 per acre. Annual expenses, exclusive of taxes, 

 are 3 cents per acre. The cost of securing reproduction is placed 

 at $5.00 per acre. 



An interest rate of 5 per cent will be assumed for the problem. 



A tax rate of 20 mills on full value will be assumed. This 

 is nearly twice as heavy as the average rate, yet it is exceeded 

 in many forest regions, especially in new and poorly developed 

 localities. 



The area of the forest will be taken as 50 acres, and the total 

 yield in 50 years will be 50 X $168.49 or $8424.50. Three 

 cases are assumed. Case A is for an even-aged stand cover- 



* Bulletin n, U. S. Dept. of Agriculture, Jan. 23, 1914, Table 15, page 19. 



