42 CIRCULAR 8 9 9, U. S. DEPARTMENT OF AGRICULTURE 



existence of such, laws has been justified on the grounds that they 

 provide a measure of maximum tax payments an owner would have 

 to make if conditions changed to make classification advantageous. 

 Even with this advantage, it is still true that these laws are not as 

 effective in improving economic conditions for forest ownership and 

 management as they would be if they attracted greater areas for 

 classification. Recognition must also be given to the fact that the 

 existence of these laws tends to hold assessments on unclassified forest 

 property down in some cases. But reliance on these indirect effects is. 

 less desirable than the realization of direct effects from laws with a 

 greater attraction to forest owners. 



The principle of the yield tax is the postponement of timber taxes 

 until the time of harvest. But if only small areas are classified the 

 advantage is not being realized. Yield-tax laws, if satisfactory in 

 other respects, should be so written and administered as to include a 

 larger part of private forest land. 



Mississippi and New Hampshire have taken the direct approach 

 to accomplish this by exempting all standing timber from the prop- 

 erty tax and subjecting all forest products harvested to the yield tax. 

 This approach has much to commend it in States where there is little 

 mature timber in need of immediate harvest and where there are few 

 if any owners who would be subject to heavy yield taxes within a few 

 years without having had the benefit of not paying property taxes 

 on mature timber. This approach could be applied in other States 

 where there are considerable volumes of mature timber if stands over 

 a certain age or containing more than a stated volume of timber were 

 exempt from the law, and stands under these limits were automatically 

 included. Providing for a progressive increase in yield taxes during 

 the first years of classification is another way of dealing with this 

 problem. 



The number of owners and the area of land under classification 

 could be increased greatly in States that wish to continue the method 

 of optional classification now in effect. The reasons advanced for 

 the small amount of land classified have been discussed (pp. 8-13). 

 Removal of these objections should result in a considerably greater 

 area of land being classified under optional laws. 



Many of the reasons for the small area classified are closely asso- 

 ciated with the optional provisions and would disappear under a law 

 of general application. Among these are ignorance of the law and 

 of its provisions ; the red tape associated with applications, inspections, 

 and approval; the opposition or indifference of public officers; and 

 the requirements for eligibility. Even under an optional law many 

 of these reasons for the small area classified could be removed. Some 

 could be removed by changing provisions in the law ; others would re- 

 quire a change in administration and in the attitude of public officers. 



Another obstacle to classification is the lack of tax advantage. This 

 involves the matter of tax rates and requires that total payment under 

 the yield-tax law shall not be greater than under the general prop- 

 erty tax. The removal of this obstacle presents a real problem be- 

 cause, in order for a tax rate to be applicable for a full rotation period, 

 it would be necessary to know future assessments and tax rates under 

 the general property tax and the harvest value to which the yield tax 

 would be applied. Obviously these cannot be known in advance. It 



