278 MISC. PUBLICATION 218, U.S. DEPT. OF AGRICULTURE 
Past trends in forest taxes have been definitely upward, even on 
the basis of a standard monetary value, but the average rate of 
increase is generally no greater than the rate of increase in all State 
and local taxes in the United States. The pressure is very strong at 
present (1933-34) for governments to decrease expenditures; on the 
other hand, there is an almost universal tendency for governmental 
activities, and therefore taxes, to increase. The periods of retrench- 
ment have generally been relatively short as compared with the peri- 
ods of expansion, and the amount of the savings involved in the 
former periods have been much less than the increased expenditures 
in the later periods. In any case, the uncertainty as to the future 
burden of taxation, because of the relatively long time it takes to 
grow timber and the implications of the past upward tax trend, is 
particularly unfavorable to the forest enterprise. 
In short, it has been shown that under the present tax system indi- 
viduals contemplating entrance into the business of growing timber 
must usually face a heavier tax burden than those in other enter- 
nrises. This discrimination is reduced as the forest approaches 
financial maturity and as the income cycle is shortened. Owners of 
partially grown stands of timber or of stands which have been so 
organized as to return incomes at short periods do not face such great 
tax hazards as do the owners of bare or recently cut-over lands. 
Thus, where a choice remains, there is a substantial tax advantage in 
beginning the practice of forestry before the growing stock is depleted 
below that required to produce a regular annual income. 
In spite of the heavy burden of the property tax on forests, taxa- 
tion is not the most important cause of excessive liquidation of old- 
growth timber. It is a contributing factor, however, since the prop- 
erty tax favors old-growth timber properties operated as a ‘‘mine”’ 
and tends to accelerate the cutting of timber on such properties. 
But the item of interest on invested capital, in general, greatly over- 
shadows taxes as a carrying charge, and it is the fear that the forest 
investment will not earn this interest in the future that is the prin- 
cipal factor leading to excessive cutting. A timber owner who is 
not prevented from promoting his own best interest by financial or 
psychological pressure will cut his timber when, and only when, he 
has become convinced that the increase in its value will no longer 
keep pace with the carrying charges. Taxes constitute only a part 
of these carrying charges. 
In the case of old-growth forests under conversion to sustained- 
yield management, the property tax offers no inherent obstacle pro- 
vided deferment of income is not required. In the case of second 
erowth and of situations suitable for forest planting, where defer- 
ment of income is involved, it may operate to discourage the use of 
land for the growing of timber. In any case, the property tax is a 
major item of cost. Nevertheless, there are other costs and risks 
which would frequently prohibit the growing of timber even with an 
appropriate tax system. Where there is no prospect of realizing an 
income sufficient to pay charges other than taxes, including a reason- 
able return on the investment, a complete remission of taxes would 
not bring about the practice of forestry. 
Even if deferred-yield forests were given an appropriate tax 
system, therefore, it does not follow that forestry would be univer- 
sally practiced. In this connection it is necessary to sound a note of 
