FOREST TAXATION IN THE UNITED STATES 579 
problem. There is every reason why, under the ordinary property 
tax, the owner should be taxed upon such unanticipated increases in 
the value of his forest, just as he should have a reduced assessment 
on the occasion of a corresponding loss of value. ‘The problem is con- 
fined to what may be called the ‘‘expected value increment’, which 
accrues with the lapse of time. 
In accordance with the general principles already set forth, the 
expected value increment of a forest is, at any given time, the resultant 
of the following events: (1) The approach of the time of expected 
incomes, which tends to produce a continuous increase in value at the 
market rate of pure interest on the present value of the forest; (2) the 
payment of expected costs, which causes on each occasion an immedi- 
ate increase in the value by the amount of the payment; and (3) the 
receipt of expected incomes, which causes on each occasion an immedi- 
ate decrease in the value by the amount of the receipt. The term 
‘‘expected incomes” includes incomes from any source whatever. 
During any period of time the expected value increment resulting 
from these three causes may of course be either positive, negative, or 
zero, depending on the relative magnitudes of the positive and 
negative items. 
The adjustment of the property tax to the peculiar character of 
deferred-yield forests may be accomplished by exempting from 
taxation this expected value increment. Such exemption would 
remove the adverse effects inherent in the property tax when applied 
to deferred-yield forests and would place such forests on an equality 
with annual sustained-yield forests. This adjustment, however, 
requires modification to meet the case of the deferred-yield forest 
which is later converted to a shorter income cycle or finally to an 
annual sustained-yield basis. Otherwise such a forest, after having 
been converted to a shorter income cycle, would continue to enjoy a 
perpetual advantage as compared with a forest which had been on that 
particular income cycle continuously from the time when the adjusted 
property tax was introduced. This would happen because a part of 
the exemption of the value increment accumulated while the growing 
stock was being built up to that which was required for the shorter 
income cycle would be continued indefinitely as long as the property 
remained on the shorter income cycle, as will be apparent later when 
the details of the proposed plan are presented. The extreme dis- 
crepancy would occur when a deferred-yield forest was finally con- 
verted to annual sustained yield. 
It is not desirable that identical properties should permanently 
bear different burdens of taxation on account of the accident of a 
difference in condition at some past time. On the other hand, it is not 
desirable that the tax burden upon a forest should be suddenly 
increased at the time when the income cycle is shortened. Beside the 
serious administrative difficulties involved, there is the conclusive 
objection that such provision would operate to discourage conversion 
of deferred-yield forests to annual sustained yield or to a shorter 
income cycle. In order therefore to make the adjusted property tax 
universally applicable, it is necessary to introduce some modification 
which, while not sacrificing the essential adjustment in the interest of 
the deferred-yield forest, will provide a gradual and automatic 
stepping-up of the tax toward the level of the regular property tax when 
