FOREST TAXATION IN THE UNITED STATES 591 
Figure 10 is illustrative of the operation of this plan on a forest 
property having an initial value of $2,483 and consisting of land with 
trees of various age classes. The owner is converting the property 
into an annual sustained-yield forest. In the fourth year of this 
management he secures a better distribution of age classes by cutting 
out trees which have a total stumpage value of $200. In the eighth 
year of this management he obtains another yield amounting to $200. 
In the twelfth year he finds that he has a surplus of growing stock for a 
sustained-yield forest and so makes a cutting which has a stumpage 
value of $800. After waiting 4 more years, or in the sixteenth year 
after the inauguration of this management the owner attains an annual 
ustained yield, and finds that he can begin his new program calling 
or an annual cut yielding a constant annual net income equal to the 
50 
ie) 
2) 
TAXES (OOLLARS) 
«4 TAXES UNDER PROPERTY TAX TAXES UNDER UNMODIFIED 
ADJUSTED TO DEFERRED INCOME PROPERTY TAX 
FIGURE 10.—Comparison of adjusted property tax with unmodified property tax on a forest being converted 
to sustained yield. (Yield of $200 every year beginning with the sixteenth year, with intermediate 
yields of $200 in fourth year, $200 in eighth year, and $800 in twelfth year. Interest rate 3 percent, tax 
rate 1 percent, annual administrative expense $50.) 
annual value increment. The owner incurs an annual administrative 
expense of $50. The district tax rate remains constant at 1 percent, 
and the rate of interest earned on the investment is assumed to be 3 
percent. Under the adjusted property tax plan, the annual taxes are 
almost unchanged in amount. They increase only by the amount of 
the property tax on the added investment in the property consisting 
of administrative expense until such time as the property is recapital- 
ized as a sustained-yield forest. After the sixteenth year of this 
illustration, when an income is received each year equal to the incre- 
ment in value, the taxes increase annually due to the decreasing cumu- 
lative adjusted value increment until they equal the tax which would 
be levied under the unmodified property tax. 
As a contrast it is interesting to trace the effect of the application of 
the unmodified property tax on this same property. Assuming the 
same yields, tax rate, and interest rate, the property could not have an 
initial value of $2,483. The adverse effects of the property tax on this 
