FOREST TAXATION 



159 



TABLE IV 



PERIODS WITHIN WHICH PROPERTY TAX ON TIMBER BECOMES EQUIVALENT 

 TO TAX ON SOIL VALUE 



The indicated period is found by looking up the factor i.op x 

 in the table of values for 5 per cent (Table VI) . The value cor- 

 responding to the factor is found opposite the year indicating 

 length of period. 



In the owner's mind these periods will be lengthened if he 

 bases his standard of value on the capital value of the forest 

 rather than on the soil, and would be shortened in proportion to 

 the back taxes which he has paid. Increasing prices for forest 

 products would lengthen the period, and future increases in the 

 assessed value of the property would shorten it. But at some 

 future date, not very far distant for mature timber when taxed 

 at full value, the timber must be cut or the process of confisca- 

 tion begins. After the year in which the accumulating cost of 

 annual taxes equals the equitable proportion of value available 

 for taxation, the tax steadily confiscates an increasing per cent 

 of the capital value. 



With the tax of 2 per cent on soil value, the per cent of "net" 

 income appropriated was shown to be 40 per cent. This in effect 

 appropriates 40 per cent of S v , so that for forest land worth 

 $10.00 the owner's equity amounts to but $6.00, and the state 

 has taken $4.00 in value for taxing purposes. 



But with assessed value increased at lo-year periods the per 

 cent of the net future income taken for taxes is 82.5 per cent. 

 Since this net income is the basis of capital value of soil, the 

 state thus appropriates $8.25 in land value, leaving the owner 

 a residual value of $1.75 exclusive of the sum required to reim- 

 burse his costs and taxes with interest at 5 per cent. But if he 



