113 REPORT OF THE FORESTRY COMMITTEE 



required to make them do this is wholly fixed by the carrying cost and, while also 

 shortened by other charges against the crop such as interest on the purchase price 

 and cost of protection from fire, is greatly afifected by the burden of annual tax- 

 ation. 



Few people realize, when discussing the rise of stumpage values and the popu- 

 larly estimated profits of timber holders, that under compound interest stumpage 

 must actually double in from six to twelve years, according to circumstances, to 

 afford any profit at all. In some regions of excess stored supply it is quite proba- 

 ble that much must remain uncut until such accumulated costs amount to more than 

 the timber will be worth to anyone. Certainly they will in many regions enforce 

 cutting ahead of American consumption, meaning foreign export of what we wil^ 

 later need badly ourselves. Taxation is by no means wholly responsible for this, 

 but it is one factor and to the extent that it is unjust or excessive is unprofitable 

 to the. public because it hastens loss of both timber and tax revenue. 



In other words, there are two distinct influences upon the rise of timber 

 prices. "/One is a true rise of intrinsic value, due to diminishing supply and in- 

 creasing consumption. This alone affords any basis of profitable investment. 

 fThe other js the accumulation and compounding of carrying costs which, without 

 investment profit, must be constantly added to the selling price to prevent actual 

 loss. To tax that portion of this increase due to interest on purchase price and 

 fire protection is bad enough, but to assess also an increase creiated by nothing 

 but past payment of taxes is clearly unfair. Taxation cannot possibly create 

 value. And it is a process of astonishing progressive ratios, comparatively in- 

 significant when assessments are low, but building fictitious value by taxation, 

 for taxation, with great rapidity as assessment ratios are raised. At the full 

 assessment theoretically contemplated by the general .property tax it might very 

 quickly be absolutely confiscatory. 



The general property tax upon timber, then, has an alarming tendency to 

 become excesive and is additionally difficult to meet beca,use it is imposed an- 

 nually while revenue with which to meet it is deferred. From the individual 

 standpoint it threatens injustice or even confiscation. From the standpoint of 

 the public good it threatens rapid wasteful cutting of mature timber, penalizes 

 the growing of a second crop, and for both these reasons hastens the cessation 

 of all revenue from forest taxation and the consequent imposition of the entire 

 burden upon other forms of property. As stated in the report of the National 

 Conservation Commission, it is far better that forest land should pay a moderate 

 tax permanently than that it should pay an excessive revenue temporarily and 

 then cease to pay at all. 



The general property tax upon forests has been abandoned by all countries 

 that practice forestry. It has been superseded by systems varying in detail with 

 conditions of locality and development, but recognizing the underlying principle- 

 Ithat timber should pay its main tax when it produces the revenue with which to 

 pay^ Any other system means one of these things : That a portion of the property 

 must be sold to pay taxes upon the rest ; or that the- forest owner must engage 



