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



be taken out in a salvage operation, or it may be in the form of pros- 

 pective thinnings. The necessity of paying a high yield tax on this 

 timber when it is harvested may induce the owner to wait until these 

 values have been removed before offering the land for classification. 



There is also less advantage in classifying lands that are being 

 cut regularly under forest-management principles than there is in 

 classifying lands that have been clear cut and are restocking. In a 

 forest that is being subjected to frequent light cuts the imposition of 

 a yield tax will be felt soon and regularly. Farm forest holdings 

 that contain merchantable timber and that are logged every few years 

 feel the effects of the early collection of the yield tax the same as do' 

 larger industrial tracts that are cut under management. It is not 

 necessarily true that there is no tax advantage in classifying holdings 

 from which recurrent harvests will be made, but the advantage tends 

 to be less than for holdings on which the harvest cut will not come 

 for many years. 



The owner under an optional law will make at least a rough calcu- 

 lation of the tax advantage or disadvantage under the yield tax as 

 compared to the general property tax. The greatest adavantage in 

 classifying will be found by the owner whose timber values are recog- 

 nized by the assessor, whose property is subject to a high tax rate, 

 and whose income from harvest cuts will be postponed for a long 

 period. The owner who finds the least advantage in classification is 

 the one whose timber values are underestimated by the assessor, whose 

 annual property tax payments are low, and whose stand contains a 

 considerable volume of merchantable timber that would be subject to 

 the yield tax when harvested within a short time. Between these two 

 situations there is a break-even point where the present or discounted 

 value of the total taxes paid during a rotation period would be the 

 same under the yield tax as under the general property tax. The 

 owner who has an option to classify must determine to his own satis- 

 faction whether the total payments under the yield-tax law on each 

 of his eligible tracts falls above or below this break-even point. 

 Whether his calculations are correct, or not, his conclusions may be 

 a determining factor in applying for classification or in remaining 

 under the general property tax. 



Many owners who find no present advantage in classifying their 

 lands recognize that conditions could change so that classification 

 would be desirable. A reassessment of timberlands might result in 

 a discovery of timber values not previously recognized that would 

 increase property tax payments. A change" in the tax rate to bring 

 more revenue to the town or county could have the same effect, or 

 a decrease in stumpage values might have the effect of reducing the 

 total yield tax to be paid at the time of harvest. Though many own- 

 ers who have given serious consideration to this problem of tax ad- 

 vantage recognize that their present favorable position under the 

 general property tax might be changed to an unfavorable one, they 

 are inclined to wait until such change takes place. The opportunitv 

 to offer lands for classification will continue as long as the yield-tax 

 law is in effect. 



General economic considerations. — In addition to the specific rea- 

 sons outlined above there are certain general economic considerations 

 that apply to all forest landowners at the present time. One of these 



