2 CIRCULAR 8 9 9, TJ. S. DEPARTMENT OF AGRICULTURE 



Until quite recently receipts from the general property tax provided 

 most of the revenue to support local government units and contrib- 

 uted to State revenues. As late as 1932 over 77 percent of the total 

 county revenues came from taxes. But while some counties are rich 

 in property values, others are poor. The poor counties as well as 

 the rich ones need government services. To provide these services 

 the county must have aid from the State or tax rates must be higher 

 than in richer counties. Forest land, as well as other forms of prop- 

 erty, may thus be subject to taxes that discourage continued owner- 

 ship or improvement of properties. The failure of many counties to 

 adopt a sound land-settlement policy and the lack of economy in the 

 administration of some local governments have added to tax costs. 

 Inequitable assessment of property and tax collection procedures 

 that have encouraged tax delinquency have added to the unequal 

 distribution of tax costs. 



These high costs can affect farm land, industrial sites, residences, 

 or any other class of property. But they have been considered par- 

 ticularly burdensome when applied to forest land. This is due in 

 part to the fact that forest land, especially cut-over land, has suffered 

 from unequal assessments. But it is also due to the nature of a 

 forestry enterprise. Most nonforest commercial properties yield 

 annual incomes, and the imposition of annual taxes corresponds at 

 least roughly with the owner's ability to pay. But the length of 

 time required to produce a crop of trees means that income from 

 forestry may often be deferred for years. Payments of annual prop- 

 erty taxes from savings or borrowed funds is a greater burden than 

 payments from current income. Even if the annual property tax 

 is not exorbitant for property in general, the accumulated cost of 

 annual tax payments while small trees are growing to financial ma- 

 turity may be so great as to discourage the investment of funds in 

 forestry. 



High property taxes have been held responsible for the too-rapid 

 liquidation of virgin timber with an accompanying waste of timber 

 and, for a long period of time, a depressing effect on lumber markets. 

 Taxes alone were not responsible for this. Interest charges on in- 

 vested funds, the risk of loss from fire, insects, disease, or theft, and the 

 pressure to clear land for cultivation all contributed to the incentive 

 to harvest mature timber. But the annual appearance of the tax 

 collector with a bill that had to be paid centered attention on taxes 

 as a factor causing accelerated liquidation. 



The argument that high taxes cause liquidation has lost much of 

 its force. Most of the virgin timber in the country has been cut. Our 

 ideas of conservation have changed, and we now recognize that mature 

 timber should be harvested so that the productive powers of the land 

 can be utilized to produce a new crop of trees. The danger today 

 is that old-growth timber that could play an important role in the 

 transition from liquidation to sustained yield if harvested in an orderly 

 manner, may be cut so rapidly that it will all be gone before our 

 timber needs can be met from second growth. To the extent that 

 high taxes are contributing to such cutting practices they are working 

 against the interests of forestry. 



