FOREST TAXATION IN THE UNITED STATES 245 
TABLE 98.—Relation of taxes to net income for all corporations by major industrial 
groups, 1923-29, excluding 1925 } 
All taxes except Fed- 
eral income tax 
Industrial group Net 
income ? Sy 
atio to 
Amount Teo 
Million Million 
dollars dollars Percent 
Agriculture and related industries_-_--.------------------------------- 499 127 25 
AV LRT E YD ON ENTT LUCY UT AT VAT foe ee ee een er NS A 2, 169 481 22 
Man Ufa churin Come eae me teenies Duiske us Se Wael ke 31, 070 2, 808 9 
WOnSERUICETO TAR a eae er te ee ener ens La Bere ele er SU 930 67 a 
Transportation and other public utilities__.._._--------_.------------ 22, 614 2, 963 13 
PSA GON Syetopi cee cin cry SOC ye fale Ake Be yng cae ees SN Fe EON ke SNA Cae eee 7, 961 941 12 
Service—professional, amusements, hotels, etc__._-------------------- 1, 909 318 17 
Finance—banking, insurance, and related business_------------------ 21, 049 2272 11 
INaturelofibusiness not given2 eee eee ee 125 10 8 
ABO) (RLS eS Sa Ee cee a eR ce 88, 326 9, 987 11 
1 Sources of data: Columns 2 and 3 from (109, 1923, 1924, 1926-29); column 4 by computation from this 
tabl 
e. 
1 Excluding tax-exempt interest but including taxes and interest paid. 
The average tax ratio of corporations in the United States is 11 
percent. The ratios range from 7 to 25 percent, the highest being 
that for agriculture, where a large part of the investment is in real 
estate. The reason that the tax ratios for many industrial groups 
appear low in comparison with agriculture and forestry is that the 
income reported in table 98 is derived from capital much of which is 
normally taxed at a lower rate than real estate for reasons explained 
in connection with table 90. It should be emphasized that inequali- 
ties in tax ratios do not necessarily indicate injustice in taxation 
among different investors, since these inequalities are normally, 
through the process known as tax capitalization, taken into account 
in the initial value of the capital for the different types of investment. 
Tax ratios are, however, a rough indication of the importance of 
taxation in an enterprise besides being a useful measure of tax 
burden as it affects land use, as more fully explained in anearlier 
part of this report (p. 45). 
According to studies made by the United States Bureau of Agri- 
cultural Economics (99, pp. 30-31), taxes averaged 58 percent of the 
net rent before taxes of rented farms in Michigan and 51 percent in 
New Jersey (the only tax ratios encountered which approach those 
for forest property). Five States (Ohio, Indiana, Colorado, North 
Carolina, and North Dakota) are in a group in which farm taxes 
absorb from 30 to 40 percent of net rent, and four more (Washington, 
Iowa, Pennsylvania, and South Dakota) are in the 25 to 30 percent 
group. In Virginia an average of 20 percent is taken by taxes, and 
in the two remaining States studied (Missouri and Arkansas) taxes 
take between 18 and 20 percent. Assuming that the States examined 
are typical of general conditions throughout the United States, it 
may be estimated that during the period 1922 to 1927 taxes took 
about 30 percent of the net income from rented farms. 
A comparison has also been made (99, fig. 7) between urban and 
farm property in certain States. In five States (Arkansas, Colorado, 
Indiana, Pennsylvania, and Virginia), it took a greater percentage of 
net rent to pay taxes on farms than to pay taxes on urban property; 
