erFort has brought about a change in the situation. Prices 

 ot the less-used species have improved. It is impossible 

 to tell now to what extent the cut of these species will 

 increase as a consequence. However, with the passing of 

 the temporary stimulus there seems to be no present reason 

 why such gains as do occur will not be largely lost, unless 

 in the meanwhile some fundamental change can be made 

 in the competitive position of these species. 



Forest Taxation 



Because the benefits ot government cannot be furnished 

 without cost, it is reasonable to expect forest land to con- 

 tribute, along with other real property, an equitable 

 share of the tax revenue required. 



Many people consider taxes to be the nub ot the forest 

 problem. One cannot brush away the other factors, 

 such as the fire situation and the general attitude of the 

 lumber industry, and say that the property tax has 

 been responsible to this or that degree for the excessive 

 liquidation in the past. Nor can he say with any positive- 

 ness that a relatively heavy tax is unjustified where the 

 private operator is bent upon liquidating his holdings 

 with all possible speed. Nevertheless, the operation of 

 forest taxation unquestionably places private ownership 

 of forest land at a serious disadvantage, amounting to 

 discrimination against the forest owner in comparison 

 with other property owners. 



This situation has its roots in two factors. The assessed 

 values of forest land tend to be high in relation to actual 

 value based on income-earning capacity. .Also, acre for 

 acre, timber produces revenues only periodically. .A third 

 item of importance enters where the cost ot local govern- 

 ment is heavier than the tax base can bear without unusual 

 hardship — a factor which affects all property holders 

 alike and represents no discrimination against the forest 

 owner. \Nhile it is likely that economies in most local 

 governments could be realized without restricting the 

 quality of their services, no authoritative analysis has 

 been made of this phase of the problem in northern Idaho. 



Studies by the Forest Service '^ have shown that, for 

 the Nation as a whole, the tax load on lands held for 

 timber production is generally greater than the tax burden 

 on other classes of property. The ratio between property 

 taxes and realized income for forestry enterprises that 

 must start with cut-over land usually amounts to 5n 

 percent or more. In contrast, the ratio between property 

 taxes and realized income tor all I'nited States corporations 

 was only 11 percent about 1*>30. 



The property tax operates to extract a steady annual 

 income from the landowner, a system suited to a forest 

 property returning a continuous flow of revenue. But 

 tor the person owning largely cut-over land, which will 



'* Kairchild, 1'. R., ami associates, iorkst taxation in the i nited 

 STATF.s. U. S. LVpt. Agi. Misc. Pub. ;i8, ()8I pp., illus. 19.>5. 



not reach the revenue-producing stage tor a long time, 

 the outlay for taxes in the interval before cutting fre- 

 quently represents a discouraging if not impossible burden. 



In 1929, the Idaho Reforestation Law was passed to 

 meet this second basic cause of the tax problem. This law 

 delays most of the tax burden on young forest stands until 

 such time as the timber is cut, thus reducing the investment 

 required to hold timber. Lands classified under the pro- 

 visions of the reforestation law are assessed at $1 per acre 

 up to the time of logging, unless the property also has some 

 value for other purposes such as grazing. In lieu of the 

 additional taxes, which would otherwise be collected year 

 by year, a yield tax of 12.5 percent of full current stumpage 

 price is levied upon the material cut, at the time of logging. 

 One major limitation is that no forest land now bearing 

 commercial stands may come under the provisions of this 

 act until after these stands are logged. The term "com- 

 mercial" in this case is limited largely to the timber ot 

 salable species and quality which is ot merchantable size. 



.At a very rough estimate, there are probably 2 million 

 acres ot privately owned forest land in northern Idaho 

 eligible under the provisions ot the reforestation law. A 

 total of only 11,000 acres bore this classification in 1938, 

 indicating that the law has not justified the high hopes held 

 for it at the time ot enactment. 



Whatever secondary explanations there may be tor this 

 lack ot response, two major underlying causes tor the 

 situation are apparent. The reforestation law does not 

 relieve the pressure where it is greatest. The heaviest tax 

 burden upon the private operator results from his mer- 

 chantable timber. Also even with a minimum tax burden, 

 the carrying charge represented by fire-protection costs, 

 the still great risk of fire loss, and in many cases the long 

 period before revenues can be realized, tend to make the 

 investment-wise iminterested in permanent forestry. 



In passing, the Idaho sustained-yield-districts law of 

 193" shoukl be mentioned. .Among its other features this 

 law provides for the exemption from taxes of young growth 

 and seed trees left for conservation purposes within 

 sustained-yield districts. To date. h()we\er, this law has 

 been completely inoperative. 



There is nothing scientific in the extraction of taxes 

 from the forest owner in northern Idaho. In the first 

 place the tax rates are far from uniform. From county 

 to county the average rates differ, but an even wider 

 range of rates exists between the schiH>l districts and triad 

 districts within the counties. .A complete compilation 

 ot the tax rates on forest land has never been made. How- 

 ever, on 109 scattereil parcels comprising 43,(.X)0 acres, 

 the average rate was approximately .>4 mills or 3.4 cents 

 per dollar of assessed value. There is also little uni- 

 formity among the counties in the basis for establishing 

 land values. F.ach has its own individual system, making 

 comparisons ditticult. In table ~ the avcr.ige assessed 



49 



