FOREST YIELD TAXES 5 



as it applies to forest land has been the enactment of special tax 

 laws by many of the States. These laws provide for the special treat- 

 ment of forest land and either modify or supersede the operation of 

 the property tax. Two periods in the history of such legislation have 

 been noted. The first, beginning about 1860, was concerned chiefly 

 with tax concessions for plantations. These concessions took the form 

 of exemptions, rebates, and bounties. In the second period, begin- 

 ning 50 years later, more recognition was given to the problems of 

 managing planted or natural stands of immature trees, and the yield- 

 tax principle was the basis for most of the new legislation. Other 

 laws provide for the fixed assessment of forest land, for a differential 

 tax, or for a deferred tax on mature timber. The State Forest Tax 

 Law Digest of 1945 summarizes the provisions of all the special forest- 

 tax laws in effect at that time. 1 



THE SPECIAL INTEREST IN YIELD-TAX LAWS 



Interest in the yield-tax principle first became evident about 1890 

 as the limitations of the exemption, rebate, and bounty laws became 

 apparent and as the effects of the general property tax in forcing 

 liquidation of mature timber were realized. It was not until 1911, 

 however, that the first yield-tax law was enacted, in Michigan. New 

 York followed in 1912; Vermont, Connecticut, and Pennsylvania in 

 1913; and Massachusetts in 1914. In all, yield-tax laws have been 

 adopted by 19 States. Five of these laws were later repealed or de- 

 clared unconstitutional. Missouri, in 1946, and Xew Hampshire, in 

 1949, are the'States most recently adopting this form of special forest- 

 tax legislation. 



Laws incorporating the yield-tax principle are being actively spon- 

 sored in several States at the present time. Other States are con- 

 ducting forest-taxation studies to determine the possibility and need 

 of changing the method of taxing timber and forest lands. 



It is because of continued interest in the yield tax as a means of 

 encouraging forestry that the present study was undertaken, the 

 purpose of which is to establish the elements of a helpful and effective 

 yield-tax law. To establish these elements it is first necessary 

 to analyze the yield-tax laws now in effect. This analysis considers 

 the purpose of such laws, the principles on which they are based, 

 the criticisms that have been made of the yield-tax principle 

 and its application, the limitations of such tax laws, and the justifica- 

 tion claimed for this type of legislation. 



More specific consideration is given to the many separate problems 

 associated with the application of the yield-tax principle, the various 

 provisions that have been adopted to meet these problems, and the 

 success or failure of these alternative provisions in practice. The 

 conclusion that many of the past laws have been almost wholly inef- 

 fective does not prove that the yield-tax principle is wrong. It is 

 hoped that this study with its analysis of problems to be met and 

 different methods of meeting them will lead to a better understand- 

 ing of these problems and that any future yield-tax legislation will 

 bring more encouragement to good forestry. 



1 United States Forest Service, state forest tax law digest of 1945. 

 79 pp. 1945. [Processed.] 



