576 MISC. PUBLICATION 218, U. 8. DEPT. OF AGRICULTURE 
yield tax of general application. In particular the ready acceptance 
of the yield- “tax principle in certain States has without doubt been 
impelled by the belief that no substantial yield tax would have to be 
paid on second-growth stands for a long time to come. If ever the 
adoption of a yield- tax plan of broad application—compulsory like 
other tax laws, and relating to both growing and mature timber—is 
seriously considered, it is certain that its adverse effects upon certain 
forest owners, its lack of any definitely indicated uniform rate, its 
disturbance of local revenues, and its administrative difficulties and 
costs will demand careful attention. In view of the availability of 
other plans which in large measure avoid these difficulties, the yield 
tax cannot be recommended. 
ADJUSTING THE PROPERTY TAX TO THE NATURE OF FOREST 
PROPERTY 
It has been made clear that forest property suffers under the prop- 
erty tax, not only on account of its faulty administration, but also 
because of its inherent nature, which produces discriminatory results 
that would persist even though the tax were perfectly administered. 
These results are the consequence of a lack of conformity between the 
sequence of required tax payments and the flow of income from cer- 
tain types of forest property. The property tax adapts itself to 
forest property only when the income is regular and annual. When 
all or any portion of the expected flow of income is deferred, the 
property tax is unduly burdensome in proportion to the amount 
deferred and the length of deferment. When the flow of income is 
ereater than can be sustained without depletion of the capital, the 
property tax is unduly light. In thus characterizing the property 
tax, the standard referred to is the ordinary tax on net income, being 
that form of taxation under which tax payments obviously conform 
most closely to the flow of income. It should be remembered that, 
as pointed out in part 3, the income tax thus used as a standard in 
this discussion is not the existing United States Federal income tax. 
It is, on the contrary, to be regarded as a substitute for the property 
tax and as applied to properties rather than to persons. It is con- 
sequently assumed that each property is taxed as a separate entity 
and that the tax is calculated with respect to that property alone 
regardless of the financial situation of the owner or of any limitation 
on his equity in the property. It is therefore necessarily assumed 
that this tax is levied at a flat rate and is not a progressive income tax. 
Such an income tax might be termed a “‘net-yield tax.” These are 
principles which have been fully demonstrated in part 3. 
The solution of the problem of so modifying the property tax as to 
correct its inherent lack of conformity with the several types of forest 
property depends on certain adjustments which will vary with the 
character of the income stream flowing from the several types of 
forest. For forests that yield a regular annual flow of income and 
expense no adjustment is required, except that, as intangible benefits 
might come to be reflected in the value, the question of special con- 
sideration for the forests in question would be raised, as has been 
pointed out. (Seep. 526.) Where the income is deferred, the annual 
tax payments should be less than required under the property tax in 
proportion to the amount deferred and the length of deferment. If 
the income is so large that the capital is being depleted, the annual 
