TAXATION OF FOREST LANDS 



siderably throughout the country, but the three most com- 

 mon forms are as follows : 



I. The tax is levied upon the forest according to the 

 average annual revenue expected from it : 



a. Gross revenue. 



b. Net revenue. 



The procedure for determining the average revenue is 

 to divide the forests into quality classes; forests that will 

 yield, timber for construction or cordwood or both ; conif- 

 erous or deciduous forests, etc. The market price of the 

 forest product obtainable from one acre is then divided 

 by the number of years that it takes the trees to attain 

 merchantable sizes, the result being the average annual 

 gross revenue that can be expected from the forest. The 

 average net revenue is found by deducting the average an- 

 nual expenditure per acre from the gross average revenue. 



The value of the forest land is found by capitalizing 

 the net or gross revenue at a given rate of interest. 



Thus, if the forest products from a forty-five year old 

 stand on one acre are worth say $100, the average gross 

 revenue is equal to ^=$2.22. Assuming that the aver- 

 age annual expenses in protection and administration of 

 the forest are 20 cents per acre per year, the net revenue 

 per year is $2.02. The value of the land then will be, at 

 a rate of interest of 5 per cent., either ff = $44.40, when 

 the gross revenue is capitalized, or |f = $40.40, when the 

 net revenue is capitalized. 



II. The tax is levied upon the forest on the basis of 

 its actual annual revenue. 



The actual revenue is determined in many ways. Often 

 the actual annual revenue obtained in the State forests 

 within the given locality is taken as a standard and ap- 

 plied to the other forests in that locality, or it is deter- 

 mined by the amount of timber cut down every year. In 

 some cases the forest land is taxed only at the time when 

 the timber is cut, remaining entirely untaxed while the 

 timber is maturing. The tax is levied, after making an 



