FOREST TAXATION IN THE UNITED STATES 593 
$900, is realized during the fortieth year after planting. No further 
income is then received until the end of the sixtieth year after planting, 
at which time the remaining timber is cut, when the entire process 1s 
repeated. The value of the timber cut at this time is $1,736.. Con- 
sidering the yields which are expected, the land has a value of $300 
before the planting is done. The returns from this forest are equal to 
the interest on the investment in land and planting and the annual 
tax payments, both compounded to the end of the 60-year period. 
The net annual tax continues to be $8 until the end of the rotation. 
As a contrast to this tax burden, if this property were to be taxed 
under the unmodified property tax, the annual taxes would increase 
from $4.56 to $30.58 in the fortieth year, when the intermediate yield 
would be received. In the forty-first year the taxes would decrease 
to $14.10 and then gradually mount to $35.50 in the sixtieth year. 
The owner could not afford to pay more than $128 for this property 
before planting, as the interest and taxes, if it had a larger initial value, 
would be more than the expected yield. The adverse effects of the 
unmodified property tax on a property such as illustrated in figure 11 
depreciate the value of the land from $300 to $128 and increase the 
ratio of tax costs to yield from 40 percent to 66 percent. 
EFFECTS ON DISTRIBUTION OF TAX BURDENS 
The operation of the adjusted property tax would have a stabilizing 
influence on the tax revenues of a tax district containing a substantial 
amount of forest property. The normal growth of the forest property 
under the unmodified property tax tends toward an increased tax 
base for the district and a consequent shifting of some of the tax 
burden onto forest property from the other classes of property. Under 
the adjusted property tax, on the contrary, such growth would not 
tend to cause any change or shift in the tax burden. The cutting of 
timber in excess of the annual growth under the unmodified property 
tax tends to result in a decreased tax base and a shiftng of the district 
tax burden, thus increasing the share borne by other than forest 
property. Under the adjusted property tax, however, cutting, even 
in excess of the annua! growth, or the receipt of income would not tend 
to cause a change in the tax base or a shifting of tax burden, unless the 
cutting were heavier than could be sustained without depletion of 
the original capital. 
By comparison with the unmodified property tax, the adjusted 
property tax would result in a progressive lowering of the tax as the 
period of deferred income were lengthened. This lowering of the tax 
below that of the unmodified property tax would never be at a rate 
greater than the sum of the pure interest rate as fixed in the statute 
and the tax rate. For example, if a rate of interest of 3 percent and a 
tax rate of 2 percent are assumed, the maximum total rate of decrease 
would be 5 percent. This decrease in the tax burden below what the 
unmodified property tax would produce would require a tax rate higher 
than if all property were taxed under the unmodified property tax, as- 
suming that the same revenue were to be produced. The receipt of 
income, whether intermittent or regular, would tend to reduce the 
differences between the adjusted property tax and the unmodified 
property tax. Finally, the maintenance of a regular annual yield 
would wipe out these differences entirely. 
101285 °—35——38 
