606 MISC. PUBLICATION 218, U. S. DEPT. OF AGRICULTURE 
statement setting forth by legal descriptions the location and area of 
all of the old-growth timberlands owned by him within the county on 
the basic date when the plan became effective, certifying that these 
included all such lands owned by him in that county at that time and 
that no commercial cuttings had taken place on these lands since the 
basic date and prior to thelast assessment date next preceding the time 
of the statement, would be allowed to compute the taxable value of 
the timber which he then owned by applying a reduction factor to its 
current assessed value. This reduction factor would be in any year 
5 percent times the number of years which had elapsed since the basic 
date when the plan became effective, with a maximum equal to the 
second-growth reduction factor. This 5-percent rate is a conservative 
estimate of the theoretical expected rate of value increment in a forest 
(pure interest plus taxes plus other annual expense). 
Properties acquired since the basic date should also be given the 
benefit of this reduction factor upon a similar showing that they also 
had been held free from commercial cutting subsequent to acquisition. 
Salvage operations on account of fire, insect, or other damage, where 
such operations were necessary to the conservation of the property, 
should not operate to prevent the allowance of the reduction factor. 
The limitation of the reduction factor to the fixed second-growth 
rate has the appearance of being arbitrary but would be desirable both 
to maintain the tax revenues and to provide ultimate uniformity in 
the reduction factor. After a virgin timber property had been held 
intact long enough to profit by the maximum reduction factor—10 
years if that factor should be 50 percent—there should be no great 
hardship in continued payment of taxes on this reduced basis. If 
there were such hardship, it should be possible to begin cutting or to 
merge with an operating property, thus providing an income. In any 
case, this relief from the unmodified property tax would be all that 
would be justified for the sake of removing the property-tax handicap 
to the holding of timber for a period of years and should be immedi- 
ately effective in reducing the tax incentive to overproduction of forest 
products. 
- Old-growth properties receiving some income from cuttings, but not 
enough to pay carrying charges, would theoretically be entitled to 
some relief from the property tax. There would be no way of providing 
for such cases under this plan without destroying its simplicity. Such 
cases would be very rare, and the degree of discrimination would be 
so small that it could well be ignored. 
Under most conditions a transition period of 20 years would be 
sufficient. If, however, after such period so much of the old-growth 
timber remained that the revenue loss would be embarrassing to 
many communities, the transition period could be extended. _ 
It is necessary to make provision against evasion which might be 
accomplished by transferring the nonoperating parts of a forest to 
dummy ownership, which might then claim differential assessment 
while operations were being conducted on the part retained in the 
original ownership. To this end, corporations, trusts, and other 
legal entities claiming the benefit of this plan, would be required to 
report actual ownership, and all properties under substantially the 
same ownership would be treated as a unit for the purpose of deter- 
mining the right to differential assessment. 
