FOREST YIELD TAXES 17 



application may be made for a tract of land containing less than 40 

 acres. Wisconsin also sets the minimum at 40 acres. In addition the 

 Washington and Idaho laws require the listing of classified lands 

 described by legal subdivisions. These provisions are interpreted 

 to mean that areas smaller than 40 acres are not eligible for classifi- 

 cation unless they can be described as government lots. 



The provisions establishing a minimum area for land eligible for 

 entry under the yield-tax laws are for the purpose of reducing the ad- 

 ministrative expense of hearings, listings, records, inspections, and 

 yield-tax collections. The justification for restricting classification to 

 the larger tracts is that the practice of forestry on small holdings 

 probably would not be improved because of tax concessions granted. 

 If the annual tax were reduced from 16 cents for land and timber 

 under the property tax to 6 cents for the land alone under the yield tax 

 the saving would amount to only 10 cents an acre or $4 a year on a 40- 

 acre tract. The timber would, of course, be subject to the yield tax 

 at the time of harvest. Many owners of small tracts would consider 

 the current saving of $4 insufficient to compensate them for the trouble 

 of classifying their lands and making reports on timber harvested. 

 It is doubtful whether many owners of such tracts would be induced 

 to practice better forestry through such a tax reduction or that a reduc- 

 tion in annual taxes of $4 or even several times $4 would be very effec- 

 tive in removing the financial obstacles to forest practice. 



It may be that the yield-tax principle is not adapted to farm forests 

 or other relatively small forest-land holdings. Wisconsin has ap- 

 parently decided that it is not. The 1949 amendment to the Wisconsin 

 yield-tax law provides for the entry of tracts of land of not less than 

 40 acres located outside the boundary of forest protection districts 

 under a special classification. The yield-tax principle is not applied 

 to these entries. Instead the annual tax on land and timber is set at 

 20 cents an acre and no tax is levied on the harvested timber. The 

 amount of the annual tax corresponds to the amounts received by the 

 counties on lands classified under the forest-crop law. The principal 

 application of the provision for special classification will be in the 

 farm-forest area in the southern part of the State, which is not in- 

 cluded in the forest protection districts. 



The experience in all States has been that small tracts and particu- 

 larly farm forests have not benefited greatly from the yield tax. A 

 fixed-fee law for small tracts and farm forests in combination with the 

 yield-tax provisions for larger industrial holdings would remove one 

 of the serious objections to the present optional laws. 



Value of land and timber. — Four States limit eligibility on the basis 

 of value. In Connecticut land eligible for classification may not 

 exceed $25 per acre in value exclusive of the timber growing thereon. 

 In Louisiana no reforestation contract may be entered into with any 

 landowner w T here the average cash value per acre of the lands included 

 in the application, exclusive of timber growing thereon, is in 

 excess of $8 or less than $3. In Massachusetts lands eligible for clas- 

 sification may not have a value in excess of $25 per acre for both the 

 land and the timber thereon. Missouri will not classify lands for tax 

 relief if the value of the land alone exceeds $10 per acre. 



The advantages of the provisions which establish minimum and 

 maximum values for land or for land and timber are not very clear. 



984409 — 52— 3 



