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Neutrality of Forestry Income Taxation and Inheritable Tax Exemptions for Timber Capital

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This article examines the neutrality of income taxation in the so-called Austrian sector of the economy. By focusing on the forestry sector, it is shown that certain exemption practices of yield taxation can be modified to restore the efficiency of the taxation. Earlier research on the production efficiency relating to different capital income tax systems in the Austrian sector shows that yield taxes based on realized income lead to inefficient allocation of resources between the Austrian and the ordinary sector of the economy when pretax distortions are present. The models used in the earlier tax literature do not, however, differentiate between taxing capital income and taxing the initial capital under an individual occupancy of an asset. In this article, by explicitly separating timber capital taxation from timber capital income taxation, a modified yield taxation scheme is presented, which gradually corrects an initially distorted allocation of resources between forests and other assets in the economy. For. Sci. 46(2):219-228.

Keywords: Bequest; capital income taxes; inheritable tax liabilities; production efficiency

Document Type: Journal Article

Publication date: 2000-05-01

More about this publication?
  • Forest Science is a peer-reviewed journal publishing fundamental and applied research that explores all aspects of natural and social sciences as they apply to the function and management of the forested ecosystems of the world. Topics include silviculture, forest management, biometrics, economics, entomology & pathology, fire & fuels management, forest ecology, genetics & tree improvement, geospatial technologies, harvesting & utilization, landscape ecology, operations research, forest policy, physiology, recreation, social sciences, soils & hydrology, and wildlife management.
    Forest Science is published bimonthly in February, April, June, August, October, and December.

    2015 Impact Factor: 1.702
    Ranking: 16 of 66 in forestry

    Also published by SAF:
    Journal of Forestry
    Other SAF Publications
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