130 REPORT OF THE FORESTRY COMMITTEE 



fairly every year, without considering the growth thereon, and to apply the rate 

 arrived at above, multiplied by the number of years ensuing before cutting, to the 

 actual value of the crop when cut. 



The owner is relieved of annual taxation on the timber, although not on the 

 land. The community gets a sustained land tax and later the present rate applied 

 to the actual value at time of cutting, thus exactly and automatically getting its full 

 share of increased values. If stumpage goes up it gains greatly because this final 

 rate and value applies to every previous year during which values were less and 

 less could have been collected under the general property tax. This loss is com- 

 pensated to the owner to some extent by his relief from interest on taxes paid 

 annually. Were such compensation exactly equal, both community and owner 

 gain equally at the expense of the money lender. In all probability the community 

 will gain more than the interest, through increase of stumpage values, while the 

 owner will profit, in spite of losing this difference, by not being forced into 

 sacrificial management and financing and by being relieved from uncertain jump- 

 ing of his valuations by the assessor from time to time. 



There still remains to be provided some safeguard against accumulation 

 of taxes beyond the ability of the crop to pay and against altered relations to other 

 taxation due to possible change of public sentiment affecting the latter. If, for 

 example, increase of income, franchise or corporation taxation, increase of assess- 

 ment values, or other causes, result in lowering the community's property rate, the 

 forest owner continuing the old rate on a full valuation would be unjustly taxed. 

 Nor is it likely that a yield tax even on virgin timber, after land taxation has been 

 met annually, should ever go much higher than 10 per cent, which would be 

 reached in 35 years by a rate of 4 mills stepped up annually. Consequently there 

 should be provision for periodic adjustment, say every 10 years, never to raise 

 the rate, for this will be unnecessary, but to lower it if requisite to compare fairly 

 with other taxation or to postpone somewhat the date at which an unbearable 

 percentage will be reached. This latter point might also be met by a limit specified 

 in the law, as is commonly provided in eastern plans, but it would seem that where 

 the relation of desirable or enforced cutting period to carrying costs is uncertain, 

 it might more wisely be left somewhat to tax commissions and receive legislative 

 adjustment in perhaps 25 years. 



The plan of taxing mature timber just described is less sound theoretically 

 than totally dismissing the general property tax and striking out boldly on grounds 

 of strict justice. While remedying one error of the present system — exaction of 

 tax before there is revenue with which to pay — it perpetuates another grave 

 error in unequal taxation. If timber cut in 10 years is worth no more than other 

 timber cut today, it will pay 10 times as much tax on the same timber value. This 

 is an injustice under both present and proposed systems which tends to hasten 

 cutting and is hard to remedy except by an absolute income tax. 



One of the most serious problems in any yield tax plan on the Pacific coast, 

 usually minimized elsewhere because there is less cutting, is the determination of 

 amount and value of the harvest. Three plans are usually proposed : assessment 

 by the usual local officials, assessment by State forest officials for the sake of 



