560 MISC. PUBLICATION 218, U. 8. DEPT. OF AGRICULTURE 
which in its usual form is a substitute for the property tax upon all of 
the forest value except that which is contained in the land. The other 
four plans to be treated are modifications of the property tax, and will 
be called respectively, “adjusted property tax’’, ‘deferred timber 
tax’’, ‘‘differential timber tax’’, and ‘immature timber exemption.” 
Of these five plans, the yield tax and the immature timber-exemp- 
tion plan are not regarded as capable of solving in a satisfactory way 
this phase of the forest-tax problem. Nevertheless, in consideration 
of the wide public attention which these plans have attracted and of 
their adoption in a limited way in State legislation, they will be 
considered in detail at a later point. 
Three plans are thought worthy of recommendation as offering 
sound measures for the solution of the forest-tax problem. The first, 
or adjusted property-tax plan, retains the forms of the property tax, 
but with reductions in the tax that are so adjusted to the deferment 
of income that the resulting tax burden approximates that which 
would be imposed by an income or net-yield tax substituted at an 
equivalent rate for the property tax. This plan best avoids under all 
circumstances the inherent disadvantages of the property tax with 
respect to forest property. The second, or deferred timber tax, 
permits the owners to defer the payment of property taxes on timber 
until income from timber or other forest products is realized: This 
plan also approximates, but in general less accurately than the ad- 
justed-property tax, the tax burden which would be imposed by an 
income tax. It offers the maximum immediate relief to timber- 
holding taxpayers, since it would transfer the entire burden of financ- 
ing taxes on timber in advance of income from the owners of the timber 
to the public. The third, or differential timber tax, retains both the 
forms and the essential characteristics of the property tax, but with 
the timber value in part relieved from taxation as an offset to the 
inherent disadvantages of the property tax. This plan offers a more 
simple way of meet ng the special forest-tax problem than the other 
two recommended plans but imposes a tax burden less closely ad- 
jusied to that of an income tax. These plans will be treated in detail 
ater. 
Throughout the following discussion of plans for modification of the 
tax system with special reference to forests, the reader should keep in 
mind the great importance which this report attaches to improvement 
of the administration of the property tax as set forth in an earlier 
section of this part and should remember that no special tax plan can 
be guaranteed against nullification by faulty administration. Never- 
theless under ordinary conditions the adoption of any one of the recom- 
mended plans would improve the forest-tax situat on, and its adoption 
need not be delayed until the process of reforming the rural tax situa- 
tion is completed. 
THE YIELD TAX 
PURPOSE 
The apparent difficulties in the way of so modifying the property 
tax as to make it appropriate to the business of forestry have given 
occasion for the opinion that the solution of the forest-tax problem is 
the complete, or nearly complete, removal of forests from the property 
tax base and the imposition of a different kind of tax. There is 
precedent for this action in the changes in taxation which have 
