PART 3. THEORY OF FOREST TAXATION WITH 
SPECIAL REFERENCE TO THE PROPERTY TAX 
CONTENTS 
Page Page 
Relation of taxes to the three types of income_- 39 | Relation of taxes to the value of forest invest- 
Two types of tax base_-_--.-------------- 39 TTD CTD GS es ee eT Se 
Three types of income---_-_---_----------- 40 General statement_-_--...-----.-.-------- 47 
Relation of unanticipated taxes to the General definitions__-_.......--.-------- 48 
three types of income____--_-.--------- 40 Income |taxt ae eee eee eee 50 
Effects of capitalization of an established Unmodified property tax___--_._-------- 52 
ROPER Cex eo ie A ee 43 Certain modifications of the property tax 
Tax ee eaication and deferred incomes. 45 for deferred- and sustained-yield forests_ 64 
SUMMA 2 oes ee cakes See SALLE Rae. Lean 46 SY S1O) LRG 2a Kee aU aN Lees ee a Re 72 
Applica tionse wwe Pee ee Bers 76 
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RELATION OF TAXES TO THE THREE TYPES OF INCOME 
TWO TYPES OF TAX BASE 
In the apportionment of direct taxes among the several subjects 
(taxpayers) two bases are predominant, namely, (1) the possession of 
property (capital), and (2) the receipt of income (services rendered 
by capital or free persons). 
Income from capital means the services rendered by capital. These 
services may take the form of money returns, returns in other tangible 
forms (such as products used by the owner, for instance), and intangi- 
ble returns through the primary uses of the capital (such as the 
shelter furnished by a dwelling house) or in more remote forms (such 
as the pleasure of ownership, the consciousness of commendable 
public service, the respect of associates, and the like). The sum 
total of these different forms of return constitutes income in the 
economic sense of that term. 
Most capital occasions also certain disagreeable events, such as 
the necessity of making repairs, paying taxes, and all burdens that 
possession of capital places upon the owner. ‘These events may all 
be included in the general term costs. Mathematically, costs may be 
regarded as negative income. Like income, costs may be in the 
form of money payments, sacrifices in other tangible forms, or in- 
tangible burdens. 
The difference between income (1. e. , gross income) and costs is net 
income. It is the expectation of net income that gives value to 
capital. Wherever in the following discussion reference is made to 
this relation between capital and income, it will be understood that 
net income is implied. 
The meaning of income in common business usage is, of course, 
somewhat different. Intangible income is generally. not ‘considered, 
nor do all forms of tangible income, not in money, always get into the 
picture. Thus, in the business terminology, a private park which 
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