INFLUENCE OF TAXES ON BUSINESS 

 FORESTRY. 



PREMISES : The premises are just as in foregoing problem^ 

 QUESTION : To what figure do the taxes (paid from the first 

 to the 90th year of the forest) accumulate up to the time at which 

 the timber is mature, namely, up to the 90th year f 

 POINTS: 



1. Taxes in the year o of the forest are 



I r 00 1 " 21 

 '7X;r ^^t:^ . „.9o which, discounted to 

 100 <- 100 J 1.04™ 



21 f go I " 



the year 00, amount to — ^2. 



' ^ ' 100 L 100 > 



2. Similarly, tbe taxes paid in the year i of the forest accrue 



to 



21 

 100 



90 



2 of the forest accrue to 

 3 



21 



I J and the taxes paid in the year 



r go "1 '" 

 — ^^- and so on. 

 100 ^ 100 > 



Thus the discounted values of the taxes form a geometrical 

 99 



progression of 91 numbers, with -^^ for the constant factor. 



EQUATION : Sum of taxes equal to 

 LiooJ 



I- 100 J 



=21 



PI' 

 LioqJ 



RESULT: The sum of taxes paid, accrued at compound 

 interest is $12.60, and thus takes away 60 per cent, of the final 

 yield obtainable. 



It is especially noteworthy, that the rate of interest used does 

 not influence the accrued sum of taxes in the least. The sum simply 

 depends upon the number of years required to develop merchantable 

 timber out of seedling trees. 



It is safe to say that, under the conditions now prevailing in 

 America, the taxes consume over one-half of the value of the yield 

 derivable from forestry, if they are "justly" imposed. No wonder, 

 then, that people are averse of engaging in forestry. 



If the rotation is 150 years, the taxes curtail the final yield by 

 77 per cent ! 



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