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



so as to be of practical application, to the taxation of forest properties. It would 

 permit reduction of the tax cost of establishing sustained-yield forests, either 

 from bare land or from young stands, materially below the cost under the prop- 

 erty tax. Furthermore, its application would relieve the owner of a deferred- 

 yield forest from the necessity of financing tax payments in advance of income, 

 so far as taxes on the timber were concerned. The directness with which these 

 important objectives would be accomplished constitutes the chief merit of the 

 plan. 



The report, however, found serious drawbacks to the yield-tax 

 plan. One of the most important was that the tax, like all taxes 

 based on the receipt of income, would be variable in the amount of 

 revenue it would produce, and would dislocate local finance in com- 

 munities where timber formed an important part of the tax base: 

 Another drawback noted was the difficulty of adjusting the rate to 

 correspond to the tax contributions made by owners of other real 

 estate. The task of determining stumpage values and of checking 

 on quantities of forest products harvested was listed as a disadvantage. 

 The optional feature was held to be foreign to taxation practices. 

 Provisions to safeguard the public interest were believed to make the 

 law distasteful to the taxpayer. Relief under the laws then in effect 

 was offered only to owners of immature timber. In general, said 

 a summary of the report, the yield tax ''cannot be successfully de- 

 fended as just taxation and is not likely to be accepted by the public 

 if it promises to be widely applied." 4 



In attempting to appraise the effectiveness of yield-tax laws in 

 encouraging forestry the only quantitative measure used has been the 

 area of forest land classified under the optional laws. The record is 

 not impressive. Oregon is the only State with more than a million 

 acres classified. Louisiana has about 600,000 acres, Washington 

 about 450,000, Idaho 250,000, and Wisconsin 200,000 acres in private 

 ownership. Four States have between 100,000 and 200,000 acres; 

 three have less than 50,000. The total area of privately owned lands 

 classified under the 12 optional laws is just over 3,000,000 acres. This 

 is 2.6 percent of the total area of privately owned commercial forest 

 land in these 12 States. 



REASONS FOR SMALL AREA CLASSIFIED UNDER THE YIELD TAX 



Investigations conducted by tax-study committees in a number of 

 States and a survey made by the Forest Service of all the States 

 having yield-tax laws have disclosed a large number of explanations 

 for the relatively small acreage now classified under the voluntary 

 laws. These explanations are not uniformly important in all States, 

 and some of them would not be applicable in many States nor to 

 many owners. The explanations are discussed here in a general way 

 and no attempt has been made to indicate the relative importance of 

 each in keeping owners from bringing their forest lands under the 

 yield-tax laws. 



Lack of knoivledge. — It is the usual practice when a State first 

 enacts a yield-tax law to give considerable publicity to the provisions 

 of the new legislation and even to solicit applications for classifi- 

 cation. These efforts to inform landowners of the existence of the 



4 Hall, R. Clifford, the forest-tax problem and its solution summarized. 

 U. S. Dept. Agr. Cir. 358, p. 7. 1935. 



