530 MISC. PUBLICATION 218, U. S. DEPT. OF AGRICULTURE 
taxes, sales taxes, etc., and the Federal Government’s excise taxes and 
customs tariff. There remain only three types of taxation requiring 
brief treatment at this point. These are the general income tax, the 
death taxes, and the severance tax. 
GENERAL INCOME TAX 
By general income tax is meant an income tax levied upon income 
from substantially all sources, as distinguished from any form of 
income tax levied upon forest income exclusively. General personal 
income taxes are imposed (Jan. 1, 1933) by the Federal Government 
and by 20 States, of which 19 are sufficiently broad to include income 
from forestry. A few States tax incomes of corporations only. 
These income taxes are generally levied upon incomes only when 
actually realized in cash or its equivalent. This feature makes the 
income tax most appropriate to the business of forestry, since the 
amount of the tax and the time of its payment are automatically 
adjusted to the irregular character of the income which the unorganized 
forest properties of this country afford. There is no problem of tax 
payments in advance of a deferred income, no burden of interest upon 
taxes paid in absence of current income. The income tax in general 
involves no serious problem of forest taxation. 
It has been shown in an earlier part of this report (p. 406) that the 
provisions of the Federal income tax dealing with depletion of forest 
investments are not entirely correct from the viewpoint of strict logic. 
However, insistence upon a theoretically correct treatment would 
require difficult and burdensome accounting and would not generally 
be favorable to conservative forest management. The present treat- 
ment of depletion is satisfactory as a temporary arrangement during 
the period in which the chief money income from forests is either from 
destructive cutting or from more conservative operations which 
nevertheless involve material reduction in the existing wood capital. 
enever annual sustained-yield forests become more generally es- 
tablished, the Federal income tax should recognize methods of ac- 
counting for depletion more suitable to such forests. One such 
method would be to establish a depletion account for each part of 
the forest which constitutes a management unit. This account 
would be built up and depleted much as under the present regulations, 
except that it would be obligatory to treat all expenses of growing 
timber as capital. Another suitable method would dispense with the 
usual depletion deduction on the theory that an annual sustained- 
yield forest, on the whole, does not suffer depletion of capital. In 
that case, the normal expenses of regeneration and culture would be 
regarded as maintenance and written off annually. Either one of 
these two methods might be required, or the taxpayer might be given 
a choice between the two. 
The State income taxes present no new principles. Their rates 
are quitelow. Their purpose has generally been to relieve the burden 
of the property tax, and, while any absolute accomplishment in this 
direction may seldom be evident, so far as any such effect has been 
accomplished, either absolutely or through avoiding further increase - 
in the property tax burden, the result has been entirely favorable to 
forestry. In 11 of the 20 States with personal income tax laws, the 
receipts from this tax contribute directly to the support of local 
units of government or of the public-school system. 
