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convenient as may be. In particular every effort should be made to insure a fair assessment of forest property. This means not only an accurate valuation; it requires also that the assessed value of forest property shall not bear a higher ratio to its true value than the prevailing ratio of assessed valuations to true value of all taxable property. Assessment at the hands of a state officer or board would doubtless assure uniformity and certainty in the assessments. There is always the danger, however, that such efficient assessment, by arriving at the true value of forest property, will unjustly bur den such property, as compared with other property not so efficiently assessed. Equality in taxation must be real equality, not merely formal.

It is admitted that this solution is more favorable to the forest of marketable timber than to that which is for the present not marketable. But the committee has thus far been unable to discover a practicable means of reconciling this discrepancy. As a matter of fact, the inequality would probably exist more in theory than in practice. It is hardly to be supposed that the assessors would take pains to raise the assessment of unmarketable timber each year, to take account of the approach to the date of cutting, the possibility of this being what makes the property tax unjust to such forests. If the assessors seek honestly to value all mature forests on the same basis as other taxable wealth it is probable that little injustice will be done. If such treatment could be guaranteed, the owners of mature timber would probably have little reason to complain.


Yale University


Western Forestry and Conservation Association PHILIP W. AYRES,

Society for Protection of New Hampshire Forests


The American Forestry Association


Yale Forestry School

W. T. Cox,

State Forester of Minnesota


State Forester of North Carolina


Potlatch Lumber Company


Board of State Tax Commissioners of Michigan


American Paper and Pulp Association


State Tax Commissioner of Washington


CHAIRMAN HALE: Following Professor Fairchild's appropriate suggestion and believing that you will all be much interested to hear from him, I take the liberty, without notice, of calling on Mr. L. S. Murphy of the United States forest service.

MR. L. S. MURPHY, of the United States forest service: Ladies and gentlemen of the conference: I should like to ask Professor Fairchild whether or not this report is a progress report and whether the committee is going to continue to wrestle with the problem of devising a suitable law to carry out their ideas, or whether this is a final report. I hope it is not, because the worst is yet to come, I fear. How about that? PROFESSOR FAIRCHILD: Mr. Chairman, I think all I can say to Mr. Murphy is that the answer to that question rests with this conference and this association. I presume if it is sufficiently urged, this committee would be willing to undertake the burden of carrying this matter further, and I am quite frank to admit that there is plenty still to be done, but whether we will do so or not is a matter outside of our control.

MR. MURPHY: It seems to me it has been carried to a point where it would be unfortunate to allow it to stop where it is. There is need to formulate these ideas which have been incorporated in the report, and which I think we all agree are very excellent, and to get down to some such status as the model tax committee has, and add to the program practical bill-drafting. I notice whenever I am called on, on occasions of this sort, I am always asked to get down to bill stages, if possible, and those are hard stages to get down to.

It seems to me that one of the most encouraging things of Professor Fairchild's report is the fact that after having been-well, you might not say out of touch, but at least he has been interested in other things very much more than the yield tax, for several years he now comes back and finds that we have made progress. Although his note of legislative progress is not very encouraging, it is encouraging to know that the principle of separating the value of land and timber, and taxing the timber on some sort of basis at the time it is cut, has gained wide recognition. The report covers the field so fully that without going over much of the ground again, there is not much to be discussed.

It might, however, be well to point out one or two things. We all know that the general property tax is still in many states the only real tax that is available. It has in several of these states not been breached in any way. Some of the other states have gone a step further and provided for the classification of property, with a uniform rate of tax for a definite class. One state, Michigan, has changed in a different way. While adhering very closely

to the general property tax, it has allowed its legislature to cut out its field of specific taxes, and thus escape in a certain measure the rigors, we might say, of the general property tax; and lastly, some of the states have gone to the extent of allowing income taxes.

Now, Professor Fairchild's paper, the report of this committee, stresses the possibilities of developing the yield tax under this more favorable aspect of the income tax. He assumes that we can hit it at three points, the personal income tax, the property tax, and a business tax. It still leaves to be considered how we are going to get at relief of the timber land owner in those states that do not authorize the income tax. I hope that we may hear later from Mr. Barnes, a former member of the tax commission in Michigan, who has a very interesting plan dealing with the special Michigan aspect of taking the forest tax problem out from under the general property tax and treating it entirely from the standpoint of specific taxation. That still leaves the situation where we have forests under general property taxes and there is no authorization to classify property. There does not seem to be any possible way of relieving the timber land owner from the difficulties that Professor Fairchild has pointed out with reference to the general property tax. Where, however, we have the authority to classify property, as we have in Minnesota and in several other states, there is an opportunity to work out a plan of a substitute property tax. It is possibly in many ways the most difficult field to which to attempt to apply the yield tax principle. One of the chief difficulties of a practical nature that we encounter is that of the assessment of property, because under the general property tax all property must be assessed. The one principal way of meeting that difficulty seems to be to place the assessment of forest property directly on the state. Now, that means, of course, a good deal of opposition from the local community. It runs considerably counter to the home rule aspect of taxation on general property. But, nevertheless there seems to be no other way out of the difficulty so far as the general property tax is concerned. And in connection with the assessment, it seems as though it were necessary to adopt a state land policy.

You may recall that last year Professor Ely discussed the subject very fully of an economic survey which undoubtedly would underlie a state land policy, and which would tend to insure a proper use of different classes of land, classified under certain economic use classes. I possibly can illustrate what I have in mind by referring to the situation that we are all familiar with of agricultural land in the vicinity of cities being taken out of the agricultural use, in the anticipation of being cut up into house lots and subdivisions. Probably a great many years intervene in many cases during which this land performs no economic function.

We have an exact duplicate of that in the wild land sections, where forest land and cut-over land, in anticipation of being cut up into farm units, is allowed to lie fallow and not perform any economic function. The war brought out the possibility of reviving the economic function of agricultural land in the vicinity of cities, through the war garden, and while that was not a total success, it was much more of a success than it would have been possible to develop in an attempt to relieve a timber famine by utilizing these lands that are being held in anticipation of conversion into agriculture. We cannot grow timber crops in the same length of time as agricultural crops. We have to go at it premeditately, and it seems to me that the fundamental thing to provide for is this economic survey and the studying of conditions which will remove the uncertainty from the mind of the timber land owner as to whether he will continue to use that property productively to raise timber, until the economic demand actually arises for that land to be converted to agriculture. If we can work out some solution along that line, it will go far toward helping out our tax problem and our forestry problem also.

CHAIRMAN HALE: If Mr. Barnes is present, I take pleasure in calling on him at this time for such remarks as he may care to make.

MR. O. F. BARNES of Michigan: Mr. Chairman and gentlemen of the convention: I don't know as I am qualified at all to discuss the paper that has been given us. A man who would attempt to discuss a paper of that character, without days of study, would be on dangerous ground. I will, if you will give me just eleven and one-half minutes, take pleasure in reading to you a synopsis of what I presented to a conference of the Michigan state forestry association and the state conservation department, in which the topic was that of forestry taxation, and the problem in our state, where we have hundreds of thousands of acres of land that is today economically worthless and never will be worth anything except through reforestation, and that reforestation must take place through natural reproduction.

What I have prepared today, after talking with Mr. Murphy and obtaining some ideas from him, I dictated, and I will read it to you in the few minutes I ask of your time. I will promise you that it is so very condensed that you may not be able to get anything out of it.



Forest property is a long-time investment and, as an investment, differs radically in its income-producing features from most other forms of investment and is particularly burdened by prevailing methods of taxation.

The most important consideration with respect to every longtime investment is what will be the future cost of carrying the investment? Any uncertainty as to future carrying charges invariably outweighs promises of large profits. Uncertainty as to the future cost of carrying a forest property investment is very largely a question of taxation.

Ad valorem property taxation inflicts greater hardship upon property not yielding a regular income, or where income must be left to increased capital than it does upon property yielding a regular income. In the case of forest property the non-incomeproducing period may extend over many years.

Ad valorem property taxation applied to forest property necessarily results in over-taxation of such property, as compared with other forms of real property.

Standing timber in all essentials can only be considered as a crop, and like the wheat crop or the corn crop, has no economic value until severed from the soil. Theoretically, therefore, and as a matter of justice, land devoted to a timber crop and land devoted to a farm crop should be affected in the same way by just and equitable taxation. This is impossible when both classes of land are subject to unmodified ad valorem taxation. The wheat crop or the corn crop matures and is separated from the soil annually. The growing and maturing of a timber crop is a matter of years. The annual farm crop provides income with which to pay the annual tax. During the maturing of a timber crop there will be many tax rotations with no crop furnishing income from which to meet them. The unsevered farm crop in practice is never taxed, and its presence in any state of maturity has no influence on the annual taxation of the land producing the crop. A farm may be cropped and taxed under the ad valorem general property tax system for fifty years and during that period no growing crop would be taxed and no assessment increased because of the growing crop. The assessment of the farm for taxation would simply be the income-producing capacity of the soil, capitalized. In determining the assessment for taxation purposes of land devoted to a growing timber crop, the assessing officer annually capitalizes the crop-producing capacity of the soil and also whatever progress the timber crop has made toward maturity. In determining the assessment for taxation of a mature forest, where nature has established

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