526 MISC. PUBLICATION 218, U. 8S. DEPT. OF AGRICULTURE 
If taxes are wholly capitalized at the time of making the invest- 
ment, all of the above-mentioned inequalities are taken into account 
in the initial value of the capital for each type of investment. Thus, 
under this assumption, no injustice between the several owners 
could be charged. Nevertheless, the tax burden in the case of a 
deferred-yield investment is far more uncertain. The higher gov- 
ernmental equity in the deferred-yield property means that unforeseen 
changes in the tax rate have a greater effect on the equity remaining 
in private ownership. Also the value of land for the deferred-yield 
use becomes lower by reason of the higher tax burden. Therefore, 
land which would be used in deferred-yield forest enterprises might 
be more profitably employed at some other use. Forestry might 
have been the more profitable use had there been no property tax. 
In other words the property tax tends to increase the area of land 
that cannot be economically used, under private ownership, for 
crowing forests. | 
As stated before, skillfully organized forests yield annual or short- 
period incomes. A forest yielding an annual net income after taxes 
equal to the interest on the capital is treated by the property tax on a 
basis of equality with property generally. Also it is no more heavily 
burdened by the property tax than by an income, or net-yield tax 
(on both tangible and intangible incomes), at an equivalent rate, 
that is, a rate equal to the property tax rate divided by the sum of 
the interest rate and the property tax rate. However, the ordinary 
income tax is applied only to money income or other tangible income 
with a definite money value. To the extent that the value of an 
annual sustained-yield forest reflects intangible income in addition to 
money and other tangible income, the property tax would be in excess 
of the ordinary income tax. 
The above-mentioned situation is found in certain countries of 
Europe, where sustained-yield forestry is widely practiced under 
private ownership. There, forests are frequently valued not only 
for their money income, but for certain intangible benefits such as 
maintenance of social prestige and consciousness of public service 
through protecting watersheds, making the landscape more attrac- 
tive, and supplying the raw materials for permanent local industries. 
This intangible income would be reached by a property tax based on 
market value, but not by the usual income tax based on money income 
nor by any tax based on capitalization of money income at a rate 
established for property in general. The property tax is thus less 
favorable to sustained-yield forestry than any tax based directly or 
indirectly on money yield, if there are elements of intangible income. 
It may be argued that intangible income of this character ought to 
be taxed, since it is a part of the real income received by the owner; 
or that it ought not to be taxed, because the public derives peculiar 
benefits from private forestry, which it should accept as equivalent 
to a tax on the owner’s share of the intangible income. Seeking an 
answer to this question may well be deferred until sustained-yield 
forestry under private ownership is in effect on a substantial scale 
and the extent to which intangible income is received from such forests 
is determinable. 
The general principle that a deferred-yicld forest is overburdened 
under the perfectly administered property tax, as compared with an 
annual sustained-yield forest or with other property yielding a regular 
fl 
! 
