598 MISC. PUBLICATION 218, U. 8. DEPT. OF AGRICULTURE 
Since the limiting rate would occasionally operate to reduce taxes to an amount 
insufficient to pay all deferred timber taxes, there would be some losses to the 
State timber-tax fund to be made up from general State revenues. Obviously 
these losses would be greater the lower the limiting rate. In order to give the 
State adequate protection against such losses, it is believed that a proper limiting 
rate, when the total property tax rates run from 1 to 1!4 percent of actual value, 
would be 30 percent, and where higher property tax rates are common this limiting 
rate should be increased to 40 percent. Where property tax rates are not over 1 
percent, a limiting rate of 20 percent might be admissible. However, the lower 
the limiting rate, the greater the risk to the State of losing part of the deferred 
taxes on properties which suffer extraordinary losses, as will be explained later. 
In the case of extraordinary losses through fire or other casualty 
or through changes in economic conditions, it would be possible that 
the value of the timber might be so greatly reduced in comparison 
to the liability for deferred taxes that, if this liability were not also 
reduced, continued private ownership of the property would be 
rendered unattractive and abandonment would be invited. There- 
fore it is proposed that in case such a loss occurs, the deferred taxes 
carried over from the preceding year should not exceed the current 
assessed value of the timber. In other words, the amount set down 
in column 8, table 156, if greater than the amount of the timber 
value in column 4, should be reduced to that amount. The total of 
such reductions, if any, should be reported each year to the State 
treasurer, who would be charged with keeping a record of these 
amounts, so that the loss to the State timber-tax fund on account of 
this provision would be known. Under this provision, the public 
would have to assume a part of the extraordinary losses from fire 
and other causes, but a smaller part than in the case of an income 
tax. So far as fire is concerned, efficient protection measures would 
reduce losses from that cause to an insignificant total. The amount 
of the losses borne by the State would be affected by the limiting 
rate of repayment to the State timber-tax fund. The lower this 
rate, the greater the chance, if an extraordinary loss should occur, 
that the deferred taxes carried over from the preceding year might 
exceed the current assessed value of the timber. 
It would be necessary to guard against evasion on the part of the 
taxpayer through the concentration of cutting on one parcel and the 
consequent restriction of the repayment to the State timber-tax fund 
to the amount of the deferred timber tax on the current cutting unit. 
This would permit further postponement of repayment to the fund 
on account of taxes on other parcels and thus allow a greater con- 
cession to operating properties than would be justified. Logically 
all forest property in one ownership in the entire State should be 
treated as a unit so far as deferment of income is concerned, but 
the administrative readjustments required would in most States be 
too cumbersome to warrant such treatment. However, a sufficient 
and more convenient safeguard would be to treat as a unit all prop- 
erty in one ownership in a tax-billing district. Thus the deferred 
timber taxes collected on account of income from any part of the 
entire ownership within the tax-billing district would be credited to 
the individual parcels comprising the ownership in proportion to the 
amount of deferred timber taxes charged against each. As previously 
indicated, an exception to this rule would be made in case all the 
merchantable timber has been removed from a given area comprising 
one or more separate parcels. In that case the deferred timber 
taxes collected would first be applied to the payment of deferred taxes 
