Sometimes in discussing this question of the taxation of natural resources a great deal of emphasis is placed on the statement that it is the cause of the depletion of timber and mineral lands especially. I think it may be said at the outset that the taxation of natural resources is only one of many factors in the destruction of them. The extent to which this takes place is impossible to say, but the fact remains that the taxation of natural resources may or may not hasten the destruction of forest lands, the exploitation of minerals, and the cultivation of the soil. Where lands bearing timber are owned, interest charges with each year of ownership are piled up, and the same is true of the taxes. Where, on the other hand, lands are held through a royalty contract, the lessee is in a position to carry the lands without special cost to himself except that of the taxes. The consequence is that it is impossible to apply the same principle of taxation to agricultural lands, timber lands, minerals, and water-powers. There must be a differentiation between them, and a differentiation that will clearly meet the various uses to which they are put.
Without question, the general property tax, as it now stands upon the statute books of the different States, does not meet in any true sense of the term the general economic conditions, and the special needs of mining and lumbering in particular. The principle of taxing the product when it is placed upon the market applies particularly to mineral and timber lands, but the same principle in the case of agricultural lands would probably deter their use and fail to meet the needs of revenue as well as working to the discouragement of the agricultural industry. The single-taxers have insisted that the taxation of lands hastens its use, that it forces the owner to develop it; and this is just the thing that is needed in the special instances of agricultural lands and of town lots, but the same principle could not be applied to the other resources of the Nation.
It is possible for the owners of timber lands by following the principles of forestry to modify the product and to keep the land in producing condition indefinitely. Taxation of such land, therefore, should have in view the maintenance of this condition. It must be clearly understood, however, that the fear of fire, interest charges on investment, and the cost of management will act quite as surely toward the rapid destruction of forests as will taxation. These conditions must also be recognized by the State in the establishment of a fire warden system, and the encouragement of forestation through some plan of bonuses. Where forestation is not practiced, the taxation of timber products under present conditions, whether on stumpage or in transit to the saw-mills, is a serious problem--serious to the local governments because under existing laws logs in transit are taxable where they are owned, and serious to the owners of the timber lands because the fixed charges on their property increase each day without any income from them. As near as can be ascertained, the annual taxes on timber vary from one cent per thousand feet to fifty cents per thousand feet, with an average tax of somewhere in the neighborhood of fifteen cents per thousand feet. Interest charges are probably about twenty-three cents, making a total annual cost of something like thirty-eight cents per thousand feet. In ten years time the tax on each thousand feet of standing timber will amount to $1.50, which compounded with interest makes a total of $2.37. When added to the other charges it is probably true that the owner of timber under modern conditions must have at least $13.02 per thousand feet on his logs delivered at the mill if he is to come out even at the end of ten years with a profit of six percent.
