FOREST YIELD TAXES 47 



The yield-tax law should provide for effective administration. — The 

 experience of many States demonstrates that the purpose of the yield 

 tax can be defeated by poor administration. The law itself cannot 

 assure good administration, but the provisions of the law can be such 

 that the incentive to poor administration is reduced. 



If the assessment of land values is left to local officials and is subject 

 to periodic revision, taxes on classified land may be higher than on 

 unclassified land. Many local assessors are not convinced of the de- 

 sirability of the yield-tax principle. They resent the removal of pro- 

 perty from their tax rolls. To continue in office they find they must 

 maintain or increase tax revenues. Many owners have found that 

 their land taxes after classification have been as great as the land and 

 timber taxes were before classification. Fixed assessments or fixed 

 acreage fees are solutions to this administrative difficulty. 



The difficulty is not entirely solved by fixed payments on classified 

 land, however. The assessor may feel that any individual should pay 

 a certain amount in taxes. If, through classification, the payment on 

 forest land is reduced, the assessor may increase the assessment on 

 other property of this owner to make up the loss. The true solution 

 of this problem is better standards of assessment, but these are slow to 

 come. The Missouri law attempts to prevent inequitable assessment 

 by providing that "the assessor shall not increase the valuation of 

 property other than forest lands owned by any person so as to make up 

 for loss of taxable property value because of the forest crop lands tax 

 relief herein provided for." Such a provision might or might not be 

 effective. It does not remove the incentive to increase the valuation 

 of other property. The New Hampshire law removes the incentive 

 by providing for the reimbursement of cities and towns for the amount 

 of revenue lost through the exemption of timber. This may be the 

 most effective way to protect the owners of classified land. 



Under an optional law which sets up standards of eligibility for 

 classification, administration may be good or poor. Local administra- 

 tion may defeat the purpose of the law if local officials are opposed to 

 it and refuse to approve applications for eligible land. Or lack of 

 proper inspection may result in the classification of lands that are not 

 being devoted to forestry. For uniformity in administration the 

 function of inspection and approval should be carried on under the 

 authority and supervision of a State board or commission, acting- 

 through local representatives who can apply uniform standards to 

 local situations. 



The yield-tax law should provide for declassification of forest 

 land. — Under an optional law an owner should be permitted to with- 

 draw his lands from classification if he desires to use them for some 

 purpose other than forestry. Under either an optional or general law 

 the State should reserve the right to place any property back under 

 the general property tax if its use is not consistent with the purpose of 

 the law. 



A declassification tax should be imposed. If withdrawal is made 

 by the owner the fairest method is to require payment of the difference 

 between the amounts paid while the land was classified and the amount 

 that would have been paid under the property tax. The assessment 

 of the yield tax on the merchantable timber at the time of withdrawal 



