FOREST YIELD TAXES 43 



is true that in the absence of a contract with the owner tax rate9 

 could be adjusted periodically to equate expected payments under the 

 two tax systems; but this practice would have the disadvantage of 

 destroying the certainty of fax payments, which is so important to 

 the owner. 



Before this conflict can be settled it is necessary to decide whether 

 the yield-tax law is to be a forestry measure or a revenue measure. 

 Obviously there is no point in enacting a yield-tax law simply to 

 provide for flexibility in tax rates to accommodate the budget needs of 

 local government units. This flexibility is assured in the general 

 property tax. The nature of the law must be to encourage better 

 forestry. If the people of any State are seriously interested in better 

 forest practices, they must accept the fact that local revenues will be 

 disturbed by the enactment of a yield-tax law and either accept this 

 disturbance or make provision to reduce it. The yield-tax law should 

 offer an advantage to forest landowners, not through a reduction in 

 total tax payments but in imposing the tax at the time of harvest and 

 income. It should be attractive to all owners who are developing 

 immature stands or who are trying to increase the volume of their 

 growing stock to provide increased future timber crops. 



In relation to coverage of the law. the problem of small holdings is 

 particularly troublesome. Properties of less than 5,000 acres each 

 comprise 75 percent of the private commercial forest land in the 

 United States. The 261 million acres in this ownership group is 

 divided among 4,200.000 owners, 97 percent of them east of the Great 

 Plains. The average holding is 62 acres. 



The yield-tax laws of general application include the small holdings 

 but under the optional laws the total classified acreage of small hold- 

 ings is quite small. The reasons for this situation — eligibility re- 

 quirements, ignorance of the law, administrative opposition, 

 complicated classification procedures, and lack of net tax advan- 

 tage — were mentioned previously. These holdings will always pre- 

 sent a problem under an optional law. Even under a general yield-tax 

 law the administrative problem of inspection and collection of the 

 yield tax may be great. There is much to be said for the Wisconsin 

 law which permits special classification of such holdings, imposes a 

 fixed annual fee called the "acreage share'' in place of the general 

 property tax, and levies no yield tax on the harvest. A similar pro- 

 vision could become part of any optional yield-tax law. A general 

 law could provide for this method of taxing all holdings under a 

 specified size. 



The yield-tax law should be simple. — To be fully effective a yield- 

 tax law must be simple in its provisions so that it can be readily under- 

 stood, and it must be simple to administer. The Mississippi law, 

 though it may be lacking in certain other respects, has the virtue of 

 simplicity. This law contains no forestry provisions, but includes 

 them in a separate Forest Harvesting Act. It simply exempts grow- 

 ing timber from taxation and imposes a yield tax (called a severance 

 tax in the law) at the time of harvest. Collection of the tax is 

 handled through the organization administering the sales tax. The 

 larger mills and concentration yards purchasing timber and lumber 

 from small operators deduct the amount of the yield tax from the 



