158 FOREST VALUATION 



$113.91 X 0.02 = $2.37, annual taxes for last 10 years. 



o ^ = $47.56 ('"). . 



$(34.76 + 47.56) 1.6289 - $47-5 6 = $86. 53, taxes at 5oth year. 

 165. Effect of the General Property Tax on Forest Production. 



The effect upon the owner's profits of the system of taxing 

 sale value annually depends upon the length of time the present 

 owner has held the property, the purchase price, the amount 

 of back taxes already paid and the period which must elapse 

 previous to cutting. The relation of taxes to the value of the 

 property, regardless of ownership, is independent of the purchase 

 price or of back taxes, and deals only with the future. A rapid 

 rise in prices for timber products so enhances the value of stand- 

 ing timber as well as of forest soil that taxes previously paid, 

 on very low values, do not absorb an unfair percentage of pres- 

 ent value. Whatever over-taxation would have occurred with 

 stationary values has been offset by reason of this increase in 

 capital value of the property. A continuous increase in value 

 of forest property at the same rate as in the past would continue 

 to absorb a large portion of the over-taxation due to reassess- 

 ments based on sale value. But it does not absorb the compound 

 interest item which accumulates on past taxes in absence of 

 income from sales. 



Should the owner have paid practically no taxes up to the 

 present year, he can pay annually on full value for a definite 

 period before the amount of his tax with interest becomes 

 equivalent to the taxes paid on forest A. Should he cut his 

 timber sooner, he pays less than this tax. For every year which 

 the timber stands beyond this period, the tax becomes propor- 

 tionally greater than its just equivalent. 



Assuming that the tax of $41.97, the total paid in 50 years on 

 forest A, is just, how long can an owner permit his timber to 

 stand before incurring over-taxation. The sum of annual taxes 

 with interest must equal $41.97. 



E(i.op x - i) = 41-97- 

 Omitting all consideration of back taxes, the results are as follows : 



