FOREST TAXATION IN THE UNITED STATES 561 
resulted from the breakdown of the property tax as applied to the 
public utilities. 
In the case of the public utilities, local assessments for property 
taxation have been found generally unsatisfactory because of the 
difficulty of ascertaining the value of properties such as railroads, 
power lines, and telephone systems, by individual taxing districts. 
As a result, where the property tax has been retained, assessment 
and equalization by a central State authority are usually provided. 
In other cases, the property tax has been abandoned, entirely or in 
part, and a tax on earnings substituted. Gross rather than net 
earnings are the usual base, on account of the need of regularity of 
income, as well as of certain difficulties in determining real net 
earnings. The conclusions of this investigation, pointing to the nec- 
essity of centralized assessment of the property tax and recommend- 
ing modifications of the property tax to adjust it more satisfactorily 
to the nature of forest property, are in harmony with the first line 
of attack upon the problem of taxing the public-utility companies. 
On the other hand, the substitution by certain States of earnings 
for property as the basis for the taxation of the public utilities may be 
taken as a precedent for considering the possibility of removing forests 
from the property tax, although this would be a new departure for 
landed property on a large scale. The natural substitute for the 
property tax would be some form of income tax, since the chief 
theoretical objection to the property tax as applied to forests arises 
out of the necessity of paying taxes in advance of income. As net 
income of a forest could be determined only if proper accounts 
extending over a long period had been kept, and most owners would 
not have such records, the gross income is the only readily available 
base for an income tax. Such a tax is known as a forest-yield tax. It 
is generally limited in application to the stumpage value of forest 
products when severed from the land and, when so limited, is a form 
of the severance tax. The forest-yield tax has been widely advocated 
in the United States and, as has been shown (pt. 9), has been applied 
in a limited way in a number of States. 
The purpose of the yield tax, as above indicated, is to escape from 
both the administrative and the inherent disadvantages of the prop- 
erty tax and to make the payment of taxes coincide with receipt of 
income. 
PURE AND MODIFIED FORMS 
The essential feature of the yield-tax plan is the substitution for 
the property tax of a tax based on income. If this substitution 
involves the entire property, land and timber, it is proper that all 
current income be subject to the yield tax, not only the stumpage 
value of forest products when cut, but also all other receipts such as 
those from hunting or grazing. This form of the plan is called the 
pure yield tax. There is also a modified form, which involves only 
the timber element of the forest property, leaving the land subject to 
an annual tax. In this case the yield tax applies only to timber or 
other products of the trees. 
_ The pure yield tax has certain obvious advantages of directness and 
simplicity. It would go the whole way in relieving the grower of 
forest products from the problem of financing tax payments in advance 
of income and from the uncertainties inherent in property tax assess- 
101285°—35 
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