156 



FOREST VALUATION 



process similar to that of savings.* It is as if the owner of 

 property capable of yielding a definite annual income of $168.49 

 (Table II) allows this income to accumulate, although by so 

 doing the earning power of the property is not increased. The 

 tax assessor promptly adds this increment to the assessed value 

 of the property, whereupon the owner, if he can, as promptly 

 withdraws the surplus to escape this excessive tax. By inspec- 

 tion of Table II it will be noted that the value of the yield just 

 previous to cutting, for an even-aged forest, is $8424.50, which 

 would be the "full" assessed value of the property at that time. 

 After cutting, the assessed value should not exceed $500.95, 

 and in practice will be nearer $250.00 if land sells for $5.00 

 per acre. The average value for the whole period would corre- 

 spond closely to $3239.80. 



The tax assessor, under the present plan, bases his increases 

 upon market or sale value, and as the value of young timber is 

 seldom recognized, this sale value usually equals the value of 

 the soil for other purposes, plus the market value of the timber. 

 In this way the property escapes the full effect of repeated 

 taxation of capital value. 



A comparison of values for the crop used in Table II gives 

 the following results. 



TABLE III 



COMPARISON OF SALE VALUE WITH EXPECTATION VALUE OF AN EVEN- 

 AGED STAND, INCLUDING BOTH LAND AND TIMBER 



The expectation value is based in each instance on the value 

 of the crop at 50 years (Formula GI), and on an interest rate of 



* The Economic Problem of Forest Taxation, by Fred Rogers Fairchild, Yale 

 Review, February, 1909. See also " The Nature of Capital and Income," by Irving 

 Fisher, pp. 249-255. 



