26 CIRCULAR 8 9 9. U. S. DEPARTMENT OE AGRICULTURE 



THE TAX ON BARE LAND 



The yield tax as applied to forest properties is a compromise 

 between tlie principles of the gross income tax and the general property 

 tax. The yield tax in its strict form would postpone all payments 

 until the time of harvest. The imposition of a tax on land and the 

 exemption of timber from annual taxes has been adopted by all States 

 as a means of ejecting this compromise. 



The purpose of an annual tax on land as a part of the yield-tax law 

 is a multiple one. It is designed to provide local governments with 

 some current revenues which are reasonably certain and uniform from 

 year to year. It also gives the owner a reasonable certainty with 

 regard to his annual tax payments. Since the land value is often a 

 small fraction of the total value of timber and land, the annual taxa- 

 tion of land does not defeat the purpose of postponing the greater part 

 of the tax to the time of harvest. 



The problem of meeting these purposes is in effecting a compromise 

 between two contradictory desires : The postponement of tax payments 

 by the owner and the need for current revenue by government units. 

 Another compromise is necessary between the conflicting desires of 

 the owner for certainty of annual tax payments and the desire of 

 local governments for flexibility in revenues to meet ehansinof needs. 



A wide variety of provisions has been incorporated in the different 

 laws to establish the amount of the tax on land values or to determine 

 the manner in which this tax will be measured. Some States provide 

 for a uniform annual payment to be made throughout the period of 

 classification. Other States establish the assessed value of the land 

 but permit the annual payments to vary with changes in local tax 

 rates. Still others permit both the assessment and the tax rates to 

 be changed from year to year according to local assessments and tax 

 rates. 



Four States impose a fixed tax or fee on the land by legislation. 

 In Michigan an annual specific property tax of 5 cents an acre re- 

 places the general property tax on land. In Minnesota the annual 

 specific tax is 6 cents an acre. In Oregon the tax. known as the forest 

 fee. is 5 cents an acre on lands west of the summit of the Cascade 

 Mountains and 2y 2 cents an acre on lands east thereof. The Wiscon- 

 sin tax. called the acreage share, is 10 cents an acre. 



Three States establish by law the value at which classified land 

 shall be assessed. In Idaho and Missouri the established value is Si 

 an acre. In Washington the fixed assessment is SI an acre for lands 

 located west of the summit of the Cascade Mountains and 50 cents 

 an acre if located east thereof. In these States the owner's annual tax 

 payment is not completely certain because a change in the tax rate 

 applied to the fixed assessment would alter his tax. However, a 

 combination of a tax levy limitation act and a fixed assessment such 

 as is found in Washington has the effect of giving reasonable cer- 

 tainty to tax payments. 



In three States where the land value is not established by law there 

 are provisions prescribing the manner by which the assessed value 

 will be determined for the period of classification. In Alabama the 

 assessed value is determined by a joint appraisal made bv the Depart- 



