7. Simplicity in adoption and operation.
A SUGGESTED SOLUTION
These requirements can be met by legislation, following constitutional amendment where necessary, providing that where the owner of cut or burned-over land will contract with the State to insure reforestation and protection for a specified term of years, the State shall notify the county assessor that the land is separated for taxation purposes from any forest growth thereon. The land may continue to pay a fair dependable tax, but the crop shall not be taxed until harvested. To the end that cutting of standing timber shall be conducted so as to place the land in the best condition for reforesting, uncut forest land should be subject to examination and similar contract, and the separate classification for taxation should take effect within a year after the timber is removed in compliance with the contract.
This would mean that when the owner of deforested land chiefly valuable to the community for forest production agrees to make it produce, he shall be taxed not on his effort but upon the results of his effort, and then exactly as other producers are taxed upon their results. He may pay tax upon his land, as other land owners do, upon its actual value, but without this value being enhanced for taxation purposes by reason of any crop thereon.
COMPARISON WITH PRESENT SYSTEM IN RESULTS
The community would get no less tax revenue, but presumably more, than it does under the present system. In either case the owner will really pay annually only upon the land value, not upon the growth; the only difference being that under the proposed system he would not be asked to, while under the present system either there will be no growth to tax, or, if there is, he cannot afford to pay and the land will revert. It must be borne in mind that while cut-over land is actually being held under the present system, it has seldom grown anything yet. No expense has been incurred to establish a crop, accidental growth is almost always destroyed by fire because it does not pay to protect it, and if it is not so destroyed it has not yet been accorded the expectation value which the assessor will be obliged to recognize in the early future if he really observes the present law. The inevitable tendency of the present system is continuance to pay on the land with speculative value for purposes other than forestry but abandonment of land valuable only for forestry, with destruction of the forest growth in either case, by purpose or negligence, because it means added cost of holding with no possibility of profit. Since the owner cannot be compelled to grow timber to be taxed at his net loss, no timber tax at all will be received by the community and its annual land tax will be confined to land worth holding without timber for purposes other than timber growing. Under the proposed system, the latter class would pay the same annual tax, the annual tax revenue from strictly forest land would be greater, and in addition to both would be the future yield tax upon the crop.
AN OBJECTION MET
A possible superficial criticism may be that, leaving the land out of consideration, the proposed yield tax at a personal property valuation of the crop means that but one year's tax is to be paid upon the timber. The fallacy of this, however, will be seen when it is remembered that it is a crop, having been produced from nothing by the owner, since his acquisition of the land and while he was paying taxes upon his land upon its value for productive purposes throughout the entire period just as any other crop grower loes. It is not unearned speculative increment. To tax it annually is exactly equivalent to taxing an agricultural crop 50 times during its growing period. The proposed plan does tax the annual production fully, although not until the crop is produced, for taxing its full value when grown is the same as taxing each year the increment added since the preceding year. If it is worth $150 an acre, after 50 years from seed, a 3 per cent yield tax would be $4.50. Each year since the first must have produced a fiftieth of the ultimate value, or $3, and had this been taxed at 3 per cent, or 9 cents, the same aggregate revenue of $4.50 would have resulted. To also tax annually the value of proceeding years' production, like taxing a wheat crop twice a week, is exactly the confiscatory prohibition of forest growing which we should seek to avoid.
When the essential difference of the two systems Is grasped—that the crop is distinct from the land and the latter is still fully taxed—it will be seen that but one tax upon the crop, at the rate other property pays, is all that is just and all that can possibly be paid in a competitive commercial business. The case is not analogous with our present system of taxing mature timber, in which land and timber together are assumed to constitute inseparable realty, stationary in production and increasing only speculatively in value, therefore the comparison with one year's taxation under our present system has no weight.