FOREST YIEID TAXES 7 



forestry on such lands. Stable ownership, generally held to be a con- 

 dition essential to good forestry, is not specifically required by the 

 laws, and there are no provisions that prevent the sale or other 

 disposal of classified lands. It is assumed that the payment of a 

 yield tax in place of annual property taxes will make it possible for 

 an owner to hold his land even though it is not producing income 

 currently. Apparently this assumption is correct. There has been 

 relatively little delinquency or reversion of lands classified under 

 the yield-tax laws. 



Beyond the common requirement that land eligible for classification 

 under yield-tax laws shall be suited to the production of forest crops 

 there is little uniformity among these laws regarding the practice 

 of forestry. The laws of some States contain no requirements for 

 forest practices. In these States the objective of the tax law is to 

 remove one obstacle to the practice of forestry — the payment of 

 annual property taxes on timber. Any direct stimulation of forestry 

 must come through other laws, aids, education, or economic conditions 

 favorable to forestry. In the majority of the States, however > the 

 owner of land classified under the yield-tax law is required to practice 

 some degree of forestry as a quid pro quo for the special tax treatment 

 given him. A detailed discussion of these forestry provisions is given 

 later. 



YIELD-TAX LAWS IN EFFECT 



At the end of 1951, 14 States had yield-tax laws in effect. These 

 States and the dates of the enactment of their laws, are as follows : 



Year 

 yield-tax 

 law 

 State : enacted 



Alabama 1923 



Connecticut - 1913 



Idaho 1929 



Louisiana 1922 



Massachusetts 1941 



Michigan 1925 



Minnesota 1927 



Year 

 yield-tax 

 law 

 State : enacted 



Mississippi 1940 



Missouri 1946 



New Hampshire 1949 



New York 1926 



Oregon 1929 



Washington 1931 



Wisconsin 1927 



In two States, Mississippi and New Hampshire, the law provides for 

 the exemption of all growing timber from the property tax and for 

 the payment of a yield tax on forest products harvested. The other 

 States follow procedures under which eligible lands may be classified 

 under the law and become subject to its provisions. In most of these 

 12 States classification is initiated by the landowner. 



APPRAISALS OF THE YIELD-TAX PRINCIPLE 



The report of the Forest Taxation Inquiry 3 contains an appraisal 

 of the yield tax which has served as the basis for a large part of the 

 subsequent discussions of the subject. In favor of the yield tax the 

 report has this to say : 



The yield-tax plan would attack directly the major defects of the property tax 

 system as applied to forests. It would apply the income tax principle, modified 



3 Fairchild, Fred R., and Associates, forest taxation in the united states. 

 U. S. Dept. Agr. Misc. Pub. 218, p. 573. 1935. 



