590 MISC. PUBLICATION 218, U. 8. DEPT. OF AGRICULTURE 
increasing in value at a rate just equal to the rate of interest plus the 
tax rate—and were correspondingly assessed—the annual tax payable, 
while subject to changes in the tax rate, would not increase on account 
of the increase in value of the forest. In other words, the situation 
would be the same as though the property had been. given a fixed 
assessment. If the property were increasing in value at a rate in 
excess of the sum of the interest rate and the tax rate, the tax under 
the proposed plan would be the same as would result from the ordinary 
property tax if, in assessing the property, no account were taken of 
the increase in value due to the expected deferred yield, the assess- 
ment being increased only on account of value increases due to other 
causes—such as an added element of land value or an unexpected 
rise in stumpage prices. Whether the tax decreased or increased or 
remained constant would, of course, under those assumptions depend 
on the tax rate. Should the tax rate not decline, the tax would 
increase. The tax would always be less than it would have been 
under the unmodified property tax. If, on the other hand, the 
property were increasing in value at a rate less than the sum of interest 
rate and tax rate, or were declining in value, the proposed plan would 
produce a result. equivalent to that which would follow an annual 
reduction in the assessed value. If this condition were to continue 
long enough, the tax would be reduced to a tax on the land value. 
The amount of the tax would again depend on the tax rate. Should 
the tax rate not increase, the tax would decline. In any event it 
would be lighter than under the unmodified property tax. In every 
case greater tax relief is given the longer the timber is held uncut. 
APPLICATION TO SECOND-GROWTH FORESTS 
A second-growth forest not under sustained-yield management, but 
nevertheless being held for forest growing, would obtain the full 
benefit of the adjusted property-tax plan if no supplementary annual 
income were received from the property. The effect of the plan would 
be exactly the same on an unorganized second-growth forest held for 
future disposition. The amount of taxes payable annually would 
fluctuate with the annual tax rate and with circumstances that caused 
a change in the assessed value, but with the fundamental restriction 
that the adjusted tax base w ould not be increased on account of the 
approach of the expected deferred yield. The annual taxes in 
ordinary cases would thus be fairly constant. 
The sustained-yield forest, the income from which was received in 
periods of a length greater than 1 year, would obtain a concession 
under the plan, which would tend to place it on an equality with the 
annual sustained-yield forest. A cumulative deduction from taxes 
would be allowed during the years between the periodic yields, but 
this deduction would be wiped out when the accumulated growth 
was harvested. 
Ordinarily an annual sustained-yield forest entirely within one 
assessment district would not be affected by the operation of the 
adjusted property-tax plan. The deductions would be reduced to 
zero each year as a result of the previous year’s income received. 
The annual tax payments would fluctuate with changes in forest 
values and changes in the tax rate, as in the case of property in 
general under the unmodified property tax. 
