588 MISC. PUBLICATION 218, U. S. DEPT. OF AGRICULTURE 
statement of the income would have no effect on the deduction. 
On the other hand, he would lose, to the extent of the under-statement 
of income from timber cutting, the full effect of his reported cut in 
causing a reduced assessment of the property. It is true that the 
gain in the increment deduction would be cumulative and more or 
less permanent, while the loss on the assessment might be corrected 
in a later assessment. Still, the net result would ordinarily offer 
little or no inducement to understate the income. Finally, should 
the owner exaggerate his income, he would injure himself by decreas- 
ing his increment deduction, up to the point where it was wiped out 
entirely; after that the effect on the deduction would be nil. But 
he would gain through the effect of his report on the assessment of 
the property. In most cases the adverse and favorable effects on 
the taxpayer would about neutralize each other. 
On the other hand, statements showing a yield sufficient to more 
than cancel all accumulated adjusted value increments—i. e., showing 
that that forest was being depleted by cutting—would need to be 
checked carefully, on account of the effect on the assessment. Also, 
where conditions made income possible from thinnings, turpentine 
leases, recreational privileges, grazing, or other uses that might not 
have any appreciable effect in reducing the assessed value, special 
care in checking would be necessary. 
Where uses compatible with timber growing, such as grazing, 
hunting and fishing, or camping, were common and had a recognized 
value, it would be necessary to take account of income from such 
uses whether realized by the owner in cash or not. If the owner 
-used his forest land to graze his own animals, or to meet his own 
needs for hunting and fishing or other recreation, the annual value of 
this use should be appraised by the assessor in accordance with what 
is received when similar privileges are disposed of on a rental basis, 
and the amount included in income for the purpose of calculating 
the adjusted value increment. 
In certain States an assessment of property is not made annually 
when there has been no sudden change in value, such as would be 
caused by the cutting of timber. The adjusted property tax base 
need be computed only when an assessment is made, as, under the 
property tax, the value increments are not taxed in the interim 
between assessment dates. When an assessment is made following 
an interval of 2 or more years, the adjusted tax base must again be 
computed in the usual manner, except that, in place of the adjusted 
value increment for the preceding year, the adjusted value increment 
for the interval between assessments will be employed, being computed 
by multiplying the previous assessed value by the interest rate by 
the number of years, adding the taxes paid during the interval, and 
subtracting the sum of all incomes received during the interval. 
The compounding of the interest for this short interval may be 
neglected for the sake of administrative simplicity. 
The property tax rate is at present determined by dividing the 
property tax portion of the local budget by the total assessed value 
of the district. Under the adjusted property tax plan, the property 
tax portion of the local budget would be divided by the sum of the 
adjusted tax base for forest property and the assessed value of all 
other property in the district. The resulting tax rate would be 
applicable to all property in the district. 
