FOREST TAXATION IN THE UNITED STATES 617 
The adjusted property tax is regulated on the same principle. There- 
fore these tax plans give slightly larger tax ratios when the time 
between outgo and income is longer, as happens with longer income 
cycles. Under the deferred timber-tax plan, the tax ratio is equal or 
very close to the tax ratio under the income tax or adjusted property 
tax In every case where the income cycle is 15 years or less (tables 
160 and 162). It becomes moderately higher where there is unus- 
ually long deferment of income, as in the case of single-aged forests 
managed on rotations of from 30 to 60 years (tables 159 and 162). 
The reason for this result is that the land value is a relatively larger 
_ part of the total forest value the longer the income cycle, and the 
taxes on this value, which are not deferred under this plan, accumulate 
for a longer time 
If the deferred timber tax allowed deferment of taxes on land value 
as well as on timber value, it would impose in these examples precisely 
the same tax burden as the adjusted property tax. In spite of the 
retention, for practical reasons, of the annual land tax, the tax burden 
on forest property in the aggregate might be no greater under the 
deferred timber tax than under the adjusted property tax. The re- 
payment of deferred timber tax is limited to a fixed portion of the 
yield, but there is no corresponding limitation on the adjusted 
property tax. In these examples, representing typical cases, the 
assumptions are such that the limitation on payment of deferred 
taxes never applies, but in practice there would be cases in which this 
limitation would have the effect of reducing the tax burden. There- 
fore the advantage to the forest owner which the adjusted property 
tax offers in comparison with the deferred timber tax, apparent in 
these hypothetical examples, would not necessarily be realized in 
practice. 
The differential timber tax plan with a 50-percent reduction factor, 
under the conditions illustrated in tables 159 and 161, where the 
income cycles are 30 years or over, gives tax ratios between the income 
tax and the property tax, but closer to the income tax. The tax 
ratios are very close to those of the income tax for the 30-year rotation 
and income cycle, and increase moderately in comparision with the 
income tax as the rotation and income cycle are lengthened. The 
increase over the income tax is caused by the limit of 50 percent placed 
upon the reduction factor. In order that the taxes on all the forests 
in this example might agree with the income tax, the reduction factor 
would have to be somewhat higher than 50 percent, increasing as the 
rotation period lengthened. Hence, the use of 50 percent as a maxi- 
mum reduction factor is conservative, being slightly favorable from 
the point of view of public revenue. 
In tables 160 and 162 three different reduction factors were used for 
each income cycle. For the 5-year income cycle the 10-percent factor 
gives a result equal to the income tax. ‘The other two factors produce 
too small a tax burden. For the 10-year income cycle the 20-percent 
reduction factor seems the best; for the 15-year income cycle the 
30-percent gives closest adherence ‘to the income tax. These results are 
in harmony with the set of reduction factors enumerated in the section 
where this plan is developed. 
It is evident (tables 160 and 162) that quite a large difference in the 
reduction factor makes a relatively small change in the tax ratio. 
For example, in the case of forest F-3, with a rotation of 60 years and 
