FOREST TAXATION IN THE UNITED STATES 65 
these payments and the flow of income. This plan would give every 
forest property whose income is deferred for more than 1 year a tax 
that would be less than the usual property tax, the amount of the 
reduction being proportional to the deferment of income. It would 
not give equality in tax ratio between deferred yield and annual 
sustained-yield forests, because in the case of deferred-yield forests 
there are expenses other than taxes which must be paid in advance 
of the receipt of income. The income tax is the only widely accepted 
form of taxation under which tax payments conform to the flow of 
100 
60 
TAX RATIO (PERCENT) 
20 
1.0 5 2.0 
TAX RATE (PERCENT) 
1 DEFERRED YIELD (50-YEAR INCOME CYCLE) 
2 ANNUAL SUSTAINED YIELD 
3 DEPLETION YIELD (50 YEARS) 
FIGURE 2.—Tax ratios under the property tax at differént tax rates for deferred-yield, annual sustained- 
yield, and depletion-yield forests, interest rate 3 RGA no expenses, no thinnings. (Sources of data: 
Deferred yield, formula 3; annual sustained yield, eas and depletion yield, formula 8.) 
income, and even under this tax, if applied to property as a substi- 
tute for the property tax, a difference in tax ratio between deferred- 
yield and annual sustained-yield forests would remain because of the 
expense items in advance of income in the case of the deferred-yield 
forests. The adjustment under the proposed plan would give the 
same or approximately the same tax burden as would be sustained 
under such an income tax levied at a rate equivalent to that of the 
property tax. The adjustment consists in reducing the value to 
which the property-tax rate is applied by that part of the entire 
expected value increment which remains after excluding the rise in 
value due to the payment of expected costs other than taxes. Hence 
101285°—35——5 
