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



The need for such relief would seem to be greatest in areas still con- 

 taining large volumes of financially mature timber and particularly 

 in States where a mandatory yield-tax law is enacted. Of the four 

 States with a graduated tax, Massachusetts and Washington have laws 

 that were originally intended to bring in large areas of classified land 

 by providing for the initiation of classification by State or town 

 action. On the other hand, Mississippi and New Hampshire, the only 

 States with real mandatory provisions, have not seen fit to use the 

 graduated schedule of taxes. Probably little hardship has resulted, 

 however. In Mississippi the rate of the yield tax is relatively low ; 

 and in New Hampshire there are few if any holdings consisting pri- 

 marily of merchantable timber. 



Little can be said except in a general way regarding the success of 

 the different States in establishing yield-tax rates that will equate 

 taxes on classified and unclassified land or that will provide encourage- 

 ment to better forestry. The laws of Missouri and New Hampshire 

 have been in effect too short a time to provide a sound basis for judge- 

 ment. In a number of States, of which Alabama is a good example, 

 the tax payments on classified land are greater than the average 

 payments on unclassified land, and entries under the yield-tax law 

 have been few. In other States — Oregon and Washington are ex- 

 amples—classification appears to be an advantage for some holdings 

 but not for others, and the owner must determine for each of his 

 properties where the advantage lies. 



Mississippi is one State in which county revenues have increased 

 under the yield tax. Prior to the enactment of the tax law in 1940 

 most of the forest land was assessed as "noncultivatable" land and 

 timber values were generally ignored. The exemption of timber 

 from property taxes meant only a relatively small loss in revenue, 

 estimated by the Mississippi Tax Commission at about $50,000 annu- 

 ally. Under the yield tax, collections have run from $250,000 to 

 $450,000 annually. Since the counties receive two-thirds of these 

 sums, most of them are better off than they were formerly. 



In Louisiana owners of unclassified land are subject to a general 

 severance tax on timber, which is about the same in amount as the 

 yield tax on classified land. For new classifications the established 

 assessed value for land is about the same as for land and timber under 

 the general law. So the owner's payments on newly classified land 

 tend to be about the same as they would be without classification. 

 And since the parishes receive nothing from the severance or yield 

 taxes, their revenues are about the same whether lands are classified 

 or not. 



In most of the other States with optional laws, county revenues 

 from forest land have probably been less under yield-tax laws than 

 they would otherwise have been. Several States refuse to classify 

 land stocked with merchantable timber and in the other States the in- 

 terest of the owners is in entering lands with 3 7 oung stands rather 

 than with mature timber subject to harvest and yield taxes within a 

 short time. As a result, yield-tax collections have not been substan- 

 tial, though they will increase as the timber on classified lands reaches 

 financial maturity. Four States have recognized this situation in 

 providing for reimbursement payments to counties or towns because 

 of revenues lost through classification. 



