FOREST YIELD TAXES 37 



but from a postponement of taxes and a degree of certainty as to 

 future obligations that are lacking under the general property tax. 

 Sometimes the relationship between forestry and taxes is direct, as 

 under the New Hampshire law. Here tax abatement is definitely re- 

 lated to good cutting practices and the relation is clearly understood 

 by the landowner. Perhaps forestry will be improved in order to 

 obtain a reduction in taxes. It will be interesting to study the re- 

 sults of this law after it has been in operation for a few years. 



REIMBURSEMENT OF LOCAL GOVERNMENTS 



Four States make provision in their yield-tax laws for payments to 

 counties or other local governments on the basis of the area of forest 

 land classified. These payments are made in recognition of the fact 

 that the local governments will suffer at least temporarily a loss of 

 revenue through the exemption of timber from the general property 

 tax. It is not their purpose to provide a subsidy. 



Michigan and Wisconsin provide for payments of 10 cents an acre 

 annually to counties for privately owned lands classified under the 

 yield-tax law. Wisconsin also pays 10 cents per acre annually on clas- 

 sified lands owned by the counties. Missouri provides for a payment 

 to counties of 2 cents an acre annually for land classified under the law. 

 New Hampshire pays the amount of revenue the city or town has lost 

 because of the exemption of timber from the property tax, less amounts 

 collected in yield taxes and other payments. 



The funds for payment to local governments are provided for by 

 appropriations and the amount paid is subject to the appropriation 

 of funds for this purpose. New Hampshire has appropriated a fund 

 of $300,000 for reimbursement to cities and towns and has provided for 

 the issuance of bonds whereby this fund may be built up. 



The purpose of these reimbursement provisions is to provide rev- 

 enues to the local governments during a period when harvests from 

 immature stands may be small and revenues from the yield tax rela- 

 tively insignificant. An indirect advantage is that the assurance 

 against a loss in revenue removes much of the incentive to increase 

 the assessment of other property of the owner of classified land to 

 make up for the loss of timber taxes. Thus the full benefits of the 

 yield tax may be assured to the owner of classified land. 



The principal problem associated with the reimbursement of local 

 governments is the determination of a payment which will equal the 

 loss of revenue and at the same time will not constitute a drain on 

 the State treasury. To accomplish this the yield-tax collections must 

 eventually be as great as the payments to local governments. If 

 yield taxes fail to equal these payments the reimbursement provisions 

 may be considered as a subsidy to the local governments with sub- 

 stantial areas of classified land, and the nonforested regions may re- 

 fuse to continue the necessary appropriations. 



The flat rates provided for in the Michigan, Wisconsin, and Mis- 

 souri laws may approximate the revenues lost by the local governments 

 but they cannot be expected to be exactly equal to these losses every 

 year. The New Hampshire provision is based on a certification of 

 lax loss by the local government and thereby provides for reimburse- 

 ment of the exact amount lost through exemption of timber. The 

 yield taxes to be collected in the future may or may not repay the 

 State for these advances. 



