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



they pay more than small owners, owners of merchantable timber com- 

 plain of higher assessment ratios than are applied to cut-over lands, 

 and many who are neither friends, kin, nor political supporters of 

 assessors complain about inequitable assessments. 



The yield-tax principle can be applied to make forest taxation more 

 equitable, but the law must be drafted properly and administered effi- 

 ciently to do this. Even under a yield-tax law some owners may pay 

 more than others having comparable holdings. The inequities can 

 come from the tax on land or from average values established for timber 

 harvested that fail to recognize local differences in quality, accessibility, 

 etc. 



If the assessed value of classified lands is fixed by law and tax rates 

 are left to local determination the owners of classified land within any 

 given tax jurisdiction will be treated uniformly, but they may pay more 

 or less in taxes than owners of similar land in other towns or counties. 

 A certain amount of variation among local governmental units may be 

 justified on the basis of benefits received, but such variation is not in 

 accord with the ability-to-pay principle. Payment according to this 

 principle can best be accomplished by establishing an annual per-acre 

 fee for land in place of the property tax. 



The yield tax can result in inequitable taxation if values on which the 

 percentage tax is paid are established on a uniform basis for an entire 

 State by a board or commission. Separate values are set for different 

 species, but the average value established for any species need not be the 

 actual market value of timber harvested by any owner. Those harvest- 

 ing timber of lower value will pay a higher percentage of true value 

 than will those cutting timber of higher value. This inequity in the 

 yield tax can be reduced by establishing base values for different zones. 

 It can be eliminated by permitting each owner to assess the value of his 

 harvested timber, and then subjecting his figures to review. 



Inequities may result also in the relationship between taxes on tim- 

 berland and taxes on other forms of property. The objective of the 

 yield tax is not to reduce the taxes paid by timberland owners, unless 

 they have been unreasonably high, but to postpone payment. The to- 

 tal taxes paid on land and products should represent a fair share of the 

 cost of running the town or county. 



The difficulty is not so much in establishing this fair share through 

 tax rates on land and products as it is in maintaining it. If govern- 

 ment costs increase, and if the land and yield taxes are fixed, the tax 

 burden on other property will have to be increased and the equity orig- 

 inally established will be destroyed. The alternative is to increase for- 

 est land and yield taxes, but this removes the certainty of costs so 

 important to the forest landowner. 



The problem may not be as serious as it appears to be. Increases in 

 government costs usually result from an increase in population and a 

 corresponding need for expanded services or from a decline in the 

 purchasing power of the dollar. An increasing population usually 

 results in an increase in taxable values which will offset increased 

 operating costs. A decline in the value of the dollar which raises 

 government costs also increases stumpage values and collections 

 through the yield tax. These effects are not exactly compensating, 

 of course, but they provide an argument for the establishment and 

 maintenance of fixed rates for forest land and products harvested. 



