FOREST TAXATION IN THE UNITED STATES 609 
which has been described in part 9. This amendment provides for a 
universal exemption of all immature timber, whereas the land and the 
mature timber are taxable in the same way as is other property. 
THEORETICAL AND PRACTICAL DEFECTS 
It has been pointed out above in the discussion of the adjusted 
property tax plan that, when all or any portion of the expected 
flow of income from a forest is deferred, the property tax is unduly 
burdensome, in comparison with an income or net-yield tax, in 
proportion to the amount deferred and the length of deferment. 
The immature-timber exemption has been advocated as a remedy for 
this condition. 
The theoretical basis for exemption of a portion of the forest value 
for the purpose of offsetting the adverse effects inherent in the property 
tax was set forth in the section of this part dealing with the adjusted 
property tax. It was there demonstrated that what is required is 
the exemption of the ‘‘expected value increment” that appears as a 
consequence of (1) the passing of time bringing expected incomes 
and costs nearer, (2) the payment of taxes, and (8) the receipt of ex- 
pected incomes; with an adjustment on account of unanticipated 
losses. It was also shown that the theoretical modification of the 
property tax requires that no exemption be given the owner on ac- 
count of the values present at the time the modification of the prop- 
erty tax goes into effect. In other words, the expected value incre- 
ment under consideration is that which accrues after the new plan 
goes into effect. No attempt need be made to make adjustment for 
taxes paid in the past. 
Now it is clear that the entire exemption of all immature timber 
would ordinarily go a good deal farther than this. Like the adjusted 
property tax, this plan would theoretically grant the exemption of 
the value increment due to the mere passage of time (pure interest). 
It would likewise grant exemption of the value increment resulting 
from payment of taxes. And, since it holds the taxable value always 
down to the land value, it gives full recognition to the reduction 
in value increment that results from receipt of expected incomes (which 
obviously could never reduce the value below the value of the land). 
But it would go further, in exempting also all value increments re- 
flecting payment of other expenses, as well as value increases due to 
unexpected events except such as increased only the land value apart 
from the trees. This is because, having defined the land value of a 
forest as the value of similar land without tree growth, any such 
value increments would fail of assessment except as they increased 
the value of similar land without timber in the neighborhood; incre- 
ments in forest value generally would not be reflected in the value 
of the land. There would thus be granted an exemption of values 
beyond what the theory justifies. 
Furthermore, the immature-timber exemption would immediately 
remove from taxation all young-timber value present at the time the 
plan went into effect. 
Finally, if at any future time a forest which was without tree 
erowth at the time of the initiation of the plan should come to be 
so managed, by shortening the income cycle, as to contain a perma- 
nent investment in forest stand, the exemption of all the immature 
101285°—35——_39 
