FOREST TAXATION IN THE UNITED STATES 581 
other than taxes from the calculation of the tax base. It would be 
impossible to determine these costs for different forests by any 
method applicable in actual tax administration. | 
The exemption of the adjusted value increment is theoretically 
applicable to all types of forest. Thus it has been stated that where 
the income is deferred, the annual property-tax payments should be 
reduced in proportion to the amount deferred and the length of defer- 
ment. If this reduction is accomplished by exempting the adjusted 
value increment from the property tax, a burden will result which is 
exactly equivalent to that produced by a net-income tax. This prin- 
ciple is proved mathematically in part 3. 
It has also been stated that where the income is regular and annual, 
as in an annual sustained-yield forest, no adjustment in property tax 
is required. In a property of this character there is no adjusted 
value increment, and obviously the general exemption for all forests, 
including annual sustained-yield forests, of the adjusted increment 
will not alter the tax burden of such sustained-yield forests. 
Finally, it has been stated that if the income is so large that the 
capital is being depleted, the annual property tax payments require 
to be increased. In this case the adjusted value increment is a nega- 
tive quantity, and the exemption of a negative quantity would result 
in an addition to the taxable value and hence a tax higher than would 
be occasioned by the unmodified property tax. 
If a negative deduction were recognized under this plan and a corresponding 
additional tax imposed, it would be necessary to provide that, for the purpose 
of calculating the negative deduction, all current costs should be deducted from 
the yield. The reason for this provision will be apparent from consideration of 
the situation of an annual sustained-yield forest in case effect were given to the 
negative deduction. The annual yield in such a forest necessarily exceeds the 
adjusted value increment, as above defined, by the amount of the annual expenses 
other than taxes. In other words, the yield must be sufficient exactly to balance 
interest and taxes on the current value and all other current expenses as well. 
Thus, unless these other expenses were deducted from the yield, contrary to 
the practice in calculating positive deductions, a negative value increment 
would always appear in the case of an annual sustained-yield forest, and there 
would always be an additional tax on such a forest above that imposed by the 
unmodified property tax. A similar difficulty would occur in the case of forests 
where the income was so large that the capital was being depleted, since in such 
forests it is proper to consider that there has been no depletion of the existing 
capital unless the yield exceeds the interest on the capital plus taxes and other 
current expenses. It is evident, then, that giving effect to negative deductions 
would involve the serious administrative difficulty of determining current 
expenses, other than taxes, for the forests affected. 
Such additional tax, when there is a value decrement instead of a 
value increment, might serve to carry out, to logical completeness, 
the principle of adjustment of the property tax to all types of forest, 
producing in this case the extra burden theoretically indicated for 
the forest whose value is being depleted by cutting. However, the 
application of this extra burden would be highly impractical if the 
property tax form is to be maintained. It would result in requiring 
the payment of an annual tax never less than the property tax of the 
year in which the proposed adjustment of the property-tax plan was 
first in effect. This extra tax, higher than the property tax, would 
continue to be levied until the original value had been restored, or 
until the forest was entirely dissipated. The extra tax could not be 
collected as is the property tax, for in the case of destructive cutting 
the bare land would not be sufficient security for the tax. There 
