FOREST TAXATION IN THE UNITED STATES 545 
Formula (1) would apply to a second-growth forest where the rotation has 
been established; while formula (2) would be applicable to other cases, and notably 
to the case of an old-growth forest which had not yet become financially mature. 
If, for instance, an old-growth forest in the Pacific Northwest is composed of 
stands of Douglas fir and hemlock, of which the Douglas fir is expected to become 
financially mature in 10 years and the hemlock in 30 years, formula (2) applies 
rather than formula (1). 
aes Y (the hemlock) =$200,000, T (the Douglas fir) =$200,000, L= 
$2, ,000- re =$50,000 and p+r=4 percent. Behe these figures, V= 
$200,000 , $200,000+ $2,000 (1.04)30— ue 
(1.04) (1.04) 30 $50,000 (1.04) y or —V=$135,100+ 562,300 
$34,600, or V=$162,800. 
Both formulas can be expanded to cover as many prospective incomes as data 
may warrant in any particular case. For each additional income an additional 
term must be inserted. Formula (2) applies to selection forests which are being 
managed with a view to developing sustained yield. In such cases, however, y 
represents the years of waiting until the forest is on an annual sustained-yield 
basis, and Y-++S is its value at that time determined by capitalizing the expected 
net yield at the p-+r rate. 
The rate p-+r is, in both formulas, a complex rate, that is, it includes the tax 
rate r as well as the risk-free interest rate p. If the tax rate is 1 percent and p+r 
is 4 percent, the interest rate ‘s 3 percent. The term e includes all annual carry- 
ing charges other than taxes and interest. Risk, which is something allowed for 
in similar calculations by an addition to the interest rate, is better provided for 
by estimating the expected money yield sufficiently low to take care of this 
element. 
A MINIMUM PROPERTY TAX 
It has been pointed out that the overassessment of cheap cut-over 
land has been an important factor in the very large portion of tax 
delinquency in this type of property. Assessors have been hesitant 
in reducing assessed values toward zero eyen though the full market 
value approaches this figure. A 20-acre cut-over property assessed 
at $5 per acre will bear a tax of $11f the rate is 1 percent. It may be 
obvious to all that the property is not worth $5 per acre, but the tax 
levy can hardly be much less than $1 without making the cost of col- 
lection excessive in proportion to the revenue. If the $5 per acre 
value becomes an established minimum for small properties, the 
assessor feels that he must adopt the same minimum for properties of 
larger area in order to avoid the charge of discrimination. 
In order to avoid this situation it is proposed that a minimum annual 
property tax of $1 be imposed on the property of any one owner in 
each local tax district. ‘This proposal would enable an assessor to 
assess any property at its true value without any possibility of creat- 
ing an absurdity in tax administration. A '-acre parcel might have 
an assessed value of $0.50 per acre as well as a 5,000-acre parcel. 
The $1 minimum tax would discourage excessive subdivision of 
very cheap lands and would make legal assessment of such lands 
practical. A minimum property tax is now in force in the wild-land 
districts of Ontario, Canada (159, p. 80). 
COOPERATION BETWEEN ASSESSORS AND TAXPAYERS 
Cooperation with taxpayers to obtain more accurate and satisfac- 
tory assessment calls for tact, judgment, and courage on the part of 
assessors. ‘They should be willing and anxious to explain to the pub- 
lic just how they do their work. Public meetings of property owners 
and assessors have proved successful in obtaining public opinion as to 
unit values of property in the various localities and as to the best 
101285°—35——35 
