BASIS OF TAX RATES 1 1 7 



An attempt to use the Massachusetts plan on other rotations 

 gives, even with a uniform land price of five dollars an acre, the 

 following yield tax: 



Rotation 50 years 6% 



75 3% 



100 — 10% 



so that the state would be rebating as soon as reasonable rotations 

 are employed. 



3. In seeking a proper basis for any tax rate the following 

 may be assumed : 



The most important point of all is that the tax rate on forests 

 should be no higher than that on other rural property. If farm 

 property generally pays less than twelve per thousand in practically 

 all parts of the United States then forest property should pay the 

 same, but certainly not more. This principle is recognized in the 

 Massachusetts plan. 



Again if the value of farm property universally is judged by 

 the income which it can produce the same measure is fair for forest 

 property. 



A yield tax should be fair not only for one rotation but for all 

 reasonable rotations. 



In judging the value of a farm or forest for taxation by capital- 

 izing the net income the interest rate should be fairly high, since the 

 owner takes all risks and the state takes none. This also seems rec- 

 ognized by the Massachusetts commission, and it is common practice 

 in valuation of real estate. 



If a yield tax is fair for one stand of timber it is fair for any 

 other stand regardless of methods and regulation, and the proper 

 rate may, therefore, be found by a study of the regulated forest. 



That a regulated forest property would pay more taxes, even 

 at the same yield tax rate than a property worked on the intermit- 

 tent plan, is self-evident. 



The following case brings out the relations of property tax at 

 12 per 1,000 and the yield tax for the stands of a regulated forest at 

 different rotations. 



Premises : Yr is taken at about half the normal yield in spruce, 

 site II, as per Schwappach, 



Yr at 50 years $200 



Yr at 75 years 400 



Yr at 100 years 600 



land, $5 per acre, p — io% to capitalize net income and find income 

 value of the property. 



