634 MISC. PUBLICATION 218, U. 8. DEPT. OF AGRICULTURE 
MODIFICATIONS IN OTHER TAXES 
GENERAL INCOME TAXES 
Outside the realm of the property tax, there are only three types 
of taxation from the modification of which any significant relief to 
forestry may be expected. These are the general income tax, the 
death taxes, and the severance tax. 
As has been pointed out, the income tax presents no serious prob- 
lem of forest taxation, being by its nature most favorable to forestry. 
No change in the general structure of the income tax is therefore 
recommended. 
It is true that the provisions of the Federal income tax relating to 
depletion are not entirely correct in theory. But they work fairly 
well and they are not unfavorable to forestry under present condi- 
tions. Whenever sustained-yield forestry comes to be more gener- 
ally practiced, it would doubtless be well to recognize more suitable 
methods of accounting for depletion. Two such methods are 
suggested in an early section of this part (p. 530). 
DEATH TAXES 
As to the death taxes, there is no reason for any special treatment 
of forest property, except in one particular; and even here the change 
might well be recommended in behalf of all classes of property. 
Heavy death taxes may have the effect of disrupting a going business 
concern or of depriving the heirs or associates of a control which they 
would otherwise have retained, by compelling sale of a part of the 
capital in order to pay the tax. This is a hazard, which, as has been 
shown, is especially serious in the case of a forest- -growing enterprise. 
It is therefore to the interest of forestry that death taxes be kept 
moderate as to rates. Whatever the rates, it is recommended that 
permission be granted to pay the death taxes in moderate annual 
payments. 
As the Government income from death taxes fluctuates greatly, 
because the taxes are levied intermittently, these taxes have no close 
relation to Government needs, and the rates are fixed quite arbitrarily. 
For this reason it is possible for the Government to fix high rates or 
moderate rates. It has been suggested by the national committee on 
inheritance taxation (in its report to the National Conference on 
Estate and Inheritance Taxation in 1925) that the sum of Federal 
and State death taxes should in no case exceed 15 percent of the value 
of the property, which would ordinarily not exceed the normal income 
for 3 years. 
As regards payment, it is recommended that the death tax on the 
value of forest property, where the rate exceeds 2 percent, should be 
payable in equal annual installments of not less than 1 percent of the 
value of the forest. These installments should continue to be paid, 
whether any yield is received from the forest or not, until the entire 
amount due had been paid or until the death of the new owner. If 
the new owner should die before all of the installments are paid, the 
remaining installments should be canceled; the property should be 
reappraised and the death taxes again levied, but upon the new base. 
However, if the timber is being cut, the annual death-tax installments 
should not be less than the full rate of the tax times the value of the 
cut. 
