FOREST YIELD TAXES 45 



imposition of a yield tax on their harvest, as is done if a uniform scale 

 of values is used in assessing the tax, adds to the cost of stand improve- 

 ment and discourages the best practice of forestry. These low-value 

 trees removed in the interest of stand improvement could well be 

 exempt from the yield tax. The same is true of young trees removed 

 in a thinning operation and of salvage, often of low value, removed 

 in post-logging operations to reduce fire hazard and increase the 

 utilization of forest material. 



The yield-tax laiv should provide continuity of relationship. — 

 If a yield-tax law is to improve the economic environment under 

 which forestry operates it must establish relations between the owner 

 and the taxing jurisdiction that are of fairly long duration. An owner 

 faced with the alternative of liquidation of his timber or management 

 for continuous crops, or one who is considering alternative methods 

 of forest management, must estimate future costs and returns. Some 

 of these estimates must contain large elements of uncertainty. Among 

 them are the unknown risk of loss from fire, insects, or disease; an 

 unknown future market; and other uncertainties. But the removal 

 of any uncertainty will help, and the yield tax can do this by deter- 

 mining future tax liability for land and timber. 



Many of the present laws give classified lands a continuing status. 

 Others provide for long contracts, such as for 50 years, with the right 

 of renewal. But a few limit the period of certainty to a relatively 

 short period — a period shorter than the time required to bring a 

 young stand to financial maturity. Such provisions may defeat one 

 of the main purposes of the yield-tax law. 



Continuity of classification is not enough, however, if during the per- 

 iod of classification there is a possibility that the owner's taxes may be 

 increased. The owner has greatest security under a long-term contract 

 that establishes the rate of the yield tax and that sets a fixed annual- 

 acreage payment on the land in place of the property tax. Pie has a 

 little less security if the assessed value of the land is fixed but he is sub- 

 ject to variations in local tax rates. He has even less security if both 

 the assessed value of his land and the local tax rate are subject to revi- 

 sion. He has greatest security in absolute terms if the yield tax is a 

 fixed sum per thousand board feet cut, but greatest security in a relative 

 sense if the tax is fixed as a stated percentage of value. Under the lat- 

 ter situation his security is greatest if he pays the tax on the actual mar- 

 ket value of the products harvested, as determined by himself or by a 

 board that considers local or individual variations in the value of prod- 

 ucts. He loses security if the value of products harvested is established 

 by a board or commission without reference to local values or with 

 power to set values not in accord with true market values. 



A good yield-tax law should provide the owner with the greatest pos- 

 sible degree of continued certainty of tax liability consistent with other 

 considerations. The principal other consideration is the need of taxing 

 jurisdictions for stable or increased revenues. This aspect will be dis- 

 cussed later. 



The yield-tax law should provide for equitable taxation. — During 

 recent years the strongest criticism of the general property tax on forest 

 land has been that it is inequitable. Certain classes of owners complain 

 about discrimination in assessment. Absentee owners are said to be 

 assessed at higher values than resident owners, big corporations claim 



