three found usage in the South. These taxing mech- 
anisms were exemption laws, yield tax laws, and 
modified assessment laws. 
Exemption laws provide for removal of forest 
land and/or timber from the property tax rolls, either 
permanently or for some specified number of years. 
A timber exemption may apply to all standing tim- 
ber, planted stands, immature stands, trees of a 
particular species, or trees retained for specific pur- 
poses, such as reforestation or windbreaks. 
Yield tax laws provide for a conceptual separa- 
tion of land and timber values. Land values normally 
remain subject to the annual property tax, although 
sometimes in modified form. Timber values go un- 
taxed until the time of harvest. At this juncture, a 
gross income tax, equal to some percentage of the 
stumpage value of the products being cut, is im- 
posed. 
Finally, modified assessment laws provide that 
forest properties are to be valued differently from 
other forms of property. If fair market value in high- 
est and best use is retained as the basic valuation 
standard, forest assessments may be frozen or cal- 
culated using a reduced assessment ratio. Alterna- 
tively, fair market value may be abandoned in favor 
of another valuation standard such as current use 
value. 
In addition to these various "special" forest tax- 
es, all of which represent alternatives to the tradi- 
tional ad valorem property tax, the timber severance 
tax is another tax system which has been employed 
in the South. This taxing mechanism is similar to a 
yield tax in that it is imposed when timber is cut. 
However, a severance tax differs from a yield tax in 
that, (1) it is levied in addition to, not in place of, the 
normal property tax; (2) it is always mandatory; (3) 
it is usually calculated as a fixed amount per unit of 
product, not as a percentage of stumpage value; 
and (4) it rests upon the timber operator, not the 
timber (Hall and others 1959). 
Long-Term Trends in Usage 
Figure 1 shows how usage of the various “spe- 
cial" forest taxes has changed over time in the re- 
gion. (2) 
Section A indicates that the first exemption law 
was adopted in 1907. This Alabama statute was 
subsequently repealed in 1923. No further exemp- 
tions were authorized until the late 1930's, when 
legislation was implemented in both Mississippi 
(1938) and North Carolina (1939). While Mississip- 
pi's statute was quickly withdrawn, the number of 
exemptions has gradually increased to the point 
that there are now three in existence. 
Section B shows that the first yield tax laws were 
enacted in the early 1920's. Alabama led the way 
(1923) and was quickly followed by Mississippi 
(1924) and Louisiana (1926). Since that time, except 
for a relatively brief period during the 1930's, the 
number of yield tax statutes has remained constant 
at the current level of three. 
Section C reveals that the first modified assess- 
ment law was passed in 1910. This Louisiana 
statute provided that the land devoted to timber 
growing was to be taxed on the basis of a fixed 
value. This legislation was repealed in 1926, and no 
further programs of this type were implemented for 
over 30 years. In the late 1950's, a crop of new 
modified assessment laws began to appear. Florida 
(1959) led the way and was subsequently followed 
by all of the other Southern States. As a conse- 
quence, this type of legislation is now the most 
prevalent form of "special" forest tax. 
Finally, section D indicates that the first sever- 
ance tax laws appeared about the same time as the 
first yield taxes--the early 1920's. Louisiana (1922) 
led the way and was followed the next year by 
Arkansas. Subsequent to this initial spurt of activity, 
usage of such laws remained unchanged until the 
mid and late 1940's, when both Alabama (1945) 
(2) The information used to prepare figure 1 as well as the rest 
of this section was obtained from the following sources: 
USDA Forest Service (1945), Forest Industries Committee 
on Timber Valuation and Taxation (1972-84), Fairchild and 
Associates (1935), and Williams (1957, 1968). 
