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



Mississippi 33 percent of county revenues came from the property 

 tax, and in Washington 33.8 percent was from this source. In 

 Oregon, on the other hand, property tax payments made up 71.7 

 percent of the total county revenues, and in Idaho 63.7 percent of 

 county revenues came from the property tax. The counties financed 

 by grants rather than property taxes can better afford to reduce the 

 land tax on classified land than can those that depend on taxes as the 

 principal source of revenue. 



Leaving both the assessment and the tax rate to the local authorities 

 would appear to deny the landowner any security of fixed or uniform 

 tax payments for the future, but such an arrangement can be justified 

 in States where local authorities work in close cooperation with the 

 State forestry organization and can be depended upon not to dis- 

 criminate against the owners of classified forest land. 



In all States which provide for the assessment of forest land under 

 the general property tax law it is necessary to have a separate 

 appraisal of the land and timber values. Administratively this may 

 be difficult to achieve in an entirely equitable manner. The alter- 

 native is to provide in the law for a fixed assessment or a fixed 

 annual fee. 



It is impossible to resolve the conflict between flexibility of tax 

 revenues and certainty of tax cost to the landowner. In States where 

 a large part of the tax revenue is derived from forest land there is a 

 strong argument for leaving the tax on land subject to periodic 

 change in the interest of stability of government functions. But in 

 States where the tax from forest land is a minor part of the total 

 revenues, and where the inability to adjust forest land taxes would 

 have little influence on total revenues, a fixed annual fee that would 

 stabilize the owners' tax costs would seem to be clearly justified. 



THE YIELD TAX ON PRODUCTS HARVESTED 



The yield tax is a substitute for the general property tax as a 

 method of obtaining revenue. It is not additional revenue from 

 forest land, but is rather a collection of taxes that would have been 

 paid on growing timber if it had not been exempt from the property 

 tax through classification. In determining the rate of the yield tax, 

 attention generally is given first to the amount of revenue foregone 

 because of the exemption of timber from taxation. But this is not 

 the only consideration. If a fixed annual fee in place of the general 

 tax on bare land has resulted in a further loss of revenue an attempt 

 may be made to recover this loss through the yield tax. On the other 

 hand it may be thought desirable, as an inducement to better forest 

 practice, to establish total payments under the yield tax principle at 

 a lower level than would be paid under the general tax law. Thus 

 the yield tax, considered along with the land tax, may represent a 

 compromise between revenue needs and the stimulation of forestry. 



One of the important problems in connection with the yield tax is 

 the determination of the rate to be applied. Other problems relate 

 more to administration than to principle, such as the basis of the tax, 

 the method of assessment, the means of collection, the exemption of 

 certain products harvested, and the disposition of tax revenues. 



Basis of the tax. — The yield tax may be measured either as a 



