14 CIRCULAR S9 9, U. S. DEPARTMENT 0^ AGRICULTURE 



umes of merchantable timber. Nor could these laws be expected to 

 provide any great benefit to holdings that are being managed for 

 sustained yield. Beyond a consideration of the purposes of the laws 

 it must further be recognized that results have been limited by the 

 failure of local officials to cooperate and by other administrative diffi- 

 culties that have been encountered. 



In view of the limited results that have been accomplished it may 

 be fair to ask what justification there is for the retention of existing 

 yj eld-tax laws or for the adoption of new ones. Granting a limited 

 direct application of the laws it is true that for many classified prop- 

 erties the yield-tax provision is resulting in a postponement of the 

 heaviest part of the tax burden until the time when income will be 

 received. This is important in making it easier for some owners to 

 hold their lands in a productive condition. It is also beneficial to 

 owners who are trying to block up timberlands and increase the 

 stocking of timber to a point where the sustained yield from these lands 

 will be adequate to support their manufacturing operations. A large 

 investment in timber and land is required for this purpose. Even for 

 an operating company any reduction in costs such as results from the 

 reduced current tax on classified lands encourages the acquisition and 

 management of timber holdings. 



For all owners Avhose forest land is classified under yield-tax laws 

 there is greater certainty of future tax costs than is provided by the 

 general property tax. For those who are making a sincere effort to 

 practice good forestry classification means the removal of one of the 

 uncertainties in estimating costs and returns. 



The owners who have classified their lands are not the only ones 

 who may benefit from yield-tax laws. For the owners of many un- 

 classified properties in States having optional laws the result has been 

 a more equitable assessment of their forest properties. Moreover, 

 even though these owners have withheld their lands from classifi- 

 cation because they found no present tax advantage in coming under 

 the yield-tax law. the opportunity to do so at any time enables them 

 to establish a maximum tax cost that can be used in calculating 

 prospective costs and returns from forest management. 



These justifications of the yield-tax principle cannot be applied 

 uniformly to all the laws in effect. Statutes vary greatly in their pro- 

 visions and in the methods by which they are administered. Some pro- 

 visions are working to the advantage of forest landowners while others 

 may be defeating the general purpose of the law. For this reason 

 it seems worth while to examine in more detail the specific provisions 

 of the many yield-tax laws now in effect in order to discover which 

 provisions and combinations of provisions are best adapted to the 

 purpose of the yield tax. 



SPECIFIC PROVISIONS OF YIELD-TAX LAWS 



The great amount of variation in the specific provisions of the 

 14 yield-tax laws now in effect might seem rather surprising in view 

 of the common objective of these laws. A certain amount of variation 

 is to be expected. State governments operate under different adminis- 

 trative and legislative systems to which the yield-tax law must con- 

 form. A difference in the relative emphasis placed on revenue or 



