FOREST TAXATION IN THE UNITED STATES 563 
or (3) by applying a specified fraction of the property tax rate to the 
regular assessment. The first two limitations have been shown to 
lead to such serious inequalities between taxpayers that they are 
undesirable and, if adepted, not likely to be permanent. The third, 
besides introducing an inequality without theoretical justification, is 
not generally advocated for use in connection with the yield tax since 
it affords no protection from arbitrary assessment. 
It appears, therefore, that the modified yield tax with land value 
remaining subject to the regular annual property tax is the only form 
of the yield tax that deserves serious consideration. 
DETERMINATION OF THE RATE 
One of the weaknesses of the modified yield-tax plan is the difficulty 
of determining a yield-tax rate which would impose a tax burden on 
deferred-yield forest properties comparable to the burden of the 
property tax on real estate which produces a regular annual income. 
Taking the income or net-yield tax (at a rate that would make this 
tax equal the property tax for property producing sustained annual 
income) as the measure of a just tax that is appropriate to forests, it is 
theoretically possible to determine for a second-growth property under 
a given plan of management a yield-tax rate that would, under the 
particular conditions assumed, impose a burden equal to that of such 
a net yield tax. A formula for this purpose has already been developed 
(p. 74, formula 23). It is based on the expected yield, property tax 
rate, interest rate, length of income cycle, number of income cycles to 
the rotation, cost of regeneration, and annual expense. This formula 
has been applied to a number of hypothetical examples assumed to 
cover the range of ordinary relationships between the governing 
factors. The range of yield-tax rates thus indicated is shown in table 
150. The averages of these results for cases where the income cycle is 
one-half or some smaller fraction of the rotation are shown in table 
151. Both of these tables are based on a fixed rate of pure interest, 
assumed to be 3 percent. With a 4-percent interest rate, the yield-tax 
rates would have been in each case about 1 percent lower. 
TABLE 150.—Ranges of yield-tax rates! 
INCOME CYCLE EQUAL TO ONE-HALF AND SMALLER FRACTIONS OF THE 
ROTATION (FORESTS WITH MORE THAN ONE AGE CLASS) 
Yield-tax rates based on a property tax rate of— 
Rotation 
0.5 1 1.5 2 2.5 3 
percent percent percent percent percent percent 
Percent Percent Percent Percent Percent Percent 
BOLV GATS eee een Hee 4-7 13 12-18 15-2 18-27 20-30 
A0iVGATS ie Rs a ee eo 5- 8 10-15 15-21 18-26 22-31 25-35 
ORV CATS Oe ei eR ee 1 7-9 12-17 17-24 22-29 26-34 29-38 
COSY carseilees Sos meme Ue ee ce ee) 8-10 14-19 19-26 24-31 29-36. 32-41 
SOM carsacr acer wenn enn Lay 9-12 17-21 23-28 29-35 33-40 37-44 
DORVEATS Ae ee Ra ee hi ES MIS 2— 6 4-10 5-14 6-18 7-21 7-23 
40 Wears Le raed ete ee 2- 6 4-12 6-16 7-20 8-23 9-26 
DOV CATS zee oe A SBE eu ea 3- 7 5-13 7-18 8-22 10-25 11-28 
GOl years’ 22 Le aby te FS 3- 8 6-14 8-19 10-23 11-27 12-30 
SON CaTS 2a ee a eas 4-9 7-15 9-21 11-25 13-29 14-32 
1 Formula 23 (pt. 3) was used in computing the above rates. 
