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



price paid and make the payment to the tax commission. Collections 

 are thought to be almost 100 percent of the amount due. 



The New Hampshire law approaches the Mississippi law in sim- 

 plicity but contains provisions for the abatement of 30 percent of the 

 yield tax if acceptable harvesting practices are followed. It also 

 contains rather complex provisions for reimbursement of local taxing 

 units. These, however, do not complicate procedures for the forest 

 owner. 



By its very nature an optional law cannot be as simple as a general - 

 yield-tax law. It must provide a procedure of application and 

 approval, and if eligibility requirements are included, of inspections 

 or hearings. Beyond this the provisions could be similar to those of a 

 general law and they will be simple or complex depending on how 

 much the law is meant to cover. If forest practices are covered in a 

 separate law they can be left out of the yield-tax law. Complicated 

 methods of assessing bare-land values can be avoided. 



Oversimplification can, of course, result in the omission of provisions 

 needed to make a law effective. Simplicity is not to be emphasized 

 at the cost of other requisites. 



The yield-tax law should be adapted to present methods of forest 

 management. — Several of the yield-tax laws contain provisions exclud- 

 ing lands that bear merchantable timber. These provisions are not in 

 the best interest of improved forest management. The typical forest 

 property in the region east of the Great Plains is understocked. The 

 annual growth is correspondingly less than the growth that is silvi- 

 culturally possible and economically desirable. To bring these 

 holdings to a sustained-yield basis which will yield the maximum 

 economic return the stocking will have to be increased. This can be 

 done only if the annual cut is held below the annual growth, and this 

 means the retention in the stand of some trees that have become 

 merchantable. 



Merchantable timber may be defined as that portion of a stand 

 which can be marketed profitably under given economic conditions. 

 Financially mature timber, on the other hand, is timber that will no 

 longer increase in value fast enough to earn a satisfactory rate of 

 interest. Timber normally becomes merchantable many years before 

 it reaches financial maturity. 



Though merchantable timber can be marketed at a profit, the 

 maximum profit is obtained if timber is held until it is financially 

 mature. To improve forest practice and the economic attractiveness 

 of forestry, owners should be encouraged to build up their stands and 

 to include merchantable but financially immature timber in the stand. 

 This encouragement is not given by denying to owners of merchantable 

 timber the right to classify their lands under the yield tax. 



Another way in which present yield-tax laws may work against 

 forestry is in their failure to exempt from the tax timber that is cut 

 to improve the residual stand rather than for its commercial value. 

 Many stands contain trees of inferior species that have little value in 

 the market, limby trees, crooked trees, or trees otherwise so defective 

 they have little value. Good forest practice requires the removal of 

 these trees to open up the stand for reproduction of sound, well-formed 

 trees of the more valuable species. Frequently the removal of these 

 low- value trees will cost more than the products will sell for. The 



