594 MISC. PUBLICATION 218, U. 8. DEPT. OF AGRICULTURE 
CONCLUSIONS 
The actual burden of the adjusted property tax plan would be not far 
from that of an income or net-yield tax at an equivalent rate—a rate 
that gives the same tax as the property tax when applied to a property 
with sustained annualincome. ‘The only important advantage of the 
income tax not granted by this plan is relief from the necessity of 
financing tax payments when taxes are due in advance of income. 
The small amount of the immediate tax reduction provided for by 
this plan may, of course, be disappointing from the viewpoint of forest 
owners who, hard pressed by the current (1932-33) depression, are 
hoping for substantial immediate relief from high taxes on their timber 
holdings. This disadvantage is inherent in any plan which has the 
merit of avoiding the accumulation of tax liabilities against forest 
properties. It may be presumed, moreover, that as times grow more 
nearly normal, sound enterprises could borrow money to pay taxes 
under this plan. 
The adjusted property tax plan possesses a number of outstanding 
advantages. It comes as close as practicable to giving forest property 
the benefits of an income tax and thus removes the principal disabili- 
ties of the property tax. It is applicable to all kinds of forest property 
in all regions of the United States. It is peculiarly fitted for States 
where there are large bodies of old-growth timber. By retaining the 
forms of the property tax it provides a stable revenue, requires no 
change in assessment, and necessitates no radical departure from the 
customary methods of levying and collecting taxes. Its adoption, 
without change in the property tax rate, would involve no sharp 
decrease in tax receipts. 
DEFERRED TIMBER TAX 
THE NATURE OF THE PLAN 
The equivalent of an income or net-yield tax may be approached 
also by a plan which provides for the deferment of the entire property 
tax on timber. This plan involves dividing the assessed value of 
forest property into land value and timber value. The annual prop- 
erty taxes, determined in the ordinary manner, would be paid on the 
land value. Payment of the annual taxes on the timber value, also 
determined in the ordinary manner, would be deferred so far as the 
owner of the timber is concerned until income was realized through 
the cutting or sale of timber and other forest products. 
An amount equal to the annual taxes levied on the timber value 
would be paid by the State to the various units of government which 
levied them. A special fund, known as the State timber-tax fund, 
would be set up and drawn upon for this purpose. In this way dis- 
turbance to local government revenues would be avoided. 
Upon receipt of income from timber and forest products, the owner 
would be required to pay to the State timber-tax fund the deferred 
timber taxes, accumulated without interest, the amount of which had 
been paid by the State on his property, together with the taxes of the 
current year. The amount of this payment in any one year would be 
limited to a fixed portion, stated in the law, of the stumpage value of 
the products cut or sold. Any deferred and current timber taxes in 
excess of this amount would be carried forward as a charge against 
the income of succeeding years. The principles governing the choice 
of the limiting rate will be discussed at a later point. It is assumed 
