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OCCASIONAL PAPER NO. 92

JUNE 20 , 1940

SOUTHERN FOREST EXPERIMENT STATION
E. L. Demmon, Director
New Orleans , La .

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THE FOREST TAX DELINQUENCY PROBLEM

IN THE SOUTH

By

Ronald B. Craig,

Associate Forest Economist,
Southern Forest Experiment Station.

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The Occasional Papers of the Southern Forest Experiment
Station present information on current southern forestry prob-
lems under investigation at the Station. In some cases, these
contributions were first presented as addresses to a limited
group of people, and as "occasional papers" they can reach a
much wider audience. In other cases, they are summaries of
investigations prepared especially to give a report of the
progress made in a particular field of research. In any case,
the statements herein contained should be considered subject
to correction or modification as further data are obtained.

THE FOREST TAX DELINQUENCY PROBLEM

IN THE SOUTH!/

By

Ronald B. Craig,

Associate Forest Economist,
Southern Forest Experiment Station.

Recent literature (7, 20, p. 870)-2/ on the nonpayment of the property
tax lists the South with the Lake States and the Pacific Northwest as the
three regions of the nation suffering most severely from forest tax delin-
quency. The statement is valid, if by it the authors mean that a considerable
percentage of the taxes currently levied on forest land become delinquent an-
nually, and in some cases are never paid at all . While accurate data do not
exist, there is evidence that possibly 22,000,000 acres of rural land (forest
and non-forest) in the eight states from Georgia and Florida to eastern
Oklahoma and Texas are now in default of tax payments for two or more years.
This is 10 percent of the gross land area under consideration (228,033*000
acres) .

Such a condition poses a problem in governmental finance, in land
utilization, and, most important, in the economic stability and welfare of
the citizens of the South. Unfortunately, however, there has been much loose
thinking and writing concerning tax delinquency, the problems created by it,
and their solution. No small part of this lack of clarity has been created
by the confusion in terminology used in describing the varying conditions of
ntax delinquency.0 Too often the general term has been used to describe any
nonpayment of taxes from temporary delinquency of those currently due to
complete forfeiture of title to the public. Hence any clear discussion of
the subject must first define the terms used, and indicate the general tax
collection procedure in use in several Southern States. <3/

I

The laws of each of these states require that the taxes levied by it
or its political subdivisions be paid before a definite date. Taxes unpaid
on that date are "delinquent . " Tax delinquency begins, therefore, on some
legally established date generally known as the "delinquency date" or "penalty
date." In all of these states except Florida and Louisiana, provision is
made for paying state and county taxes in two to four installments, and in
general the delinquency date is the final due date of each installment. If
taxes due are unpaid on this date, a penalty (a flat percentage of the taxes,

1/ Reprinted from The Southern Economic Journal. Vol. VI, No. 2, October,
1939.

2/ Figures in parentheses refer to list of literature cited at end of this
paper .

3/ Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, eastern
Oklahoma, eastern Texas.

of interest, or both) is charged the taxpayer (in Georgia and Florida no
penalty or interest is applied) . It is at once evident that there are two
distinct types of delinquency, Mshort-termM and "long-term.'* The former has
been defined as "that type of delinquency which exists when a tax has not
been paid at the end of the legal collecting period, and becomes subject to
a penalty." "Long-term" delinquency has been defined as "that type of de-
linquency which exists when taxes are due for two or more years and the tax-
payer is in danger of losing his property" (12, p. 185) through foreclosure of
the tax lien. Obviously, short-term delinquency may grow into long-term, but
in many cases it is merely a temporary condition of not very serious import.

In the states here considered a "tax sale" is held from one to eight
and one-half months after the due date of the last installment. At the tax

sale, the tax lien is offered for sale to the highest bidder who must bid at

least the amount of the taxes due, plus penalty and costs. If no such bid is
received, the lien is held by the state (or county in Georgia and Oklahoma),
subject to redemption by the original owner, his heirs, or assignees. If the •
tax lien is purchased by a private buyer, he also holds it subject to the
original owner's right of redemption. This "redemption period" exists from
one to three years from date of tax sale (Alabama, three years; Georgia and
Louisiana, one year; other states, two years). In Alabama and Louisiana, how-
ever, the owner can redeem his property from the state (though not from pri-
vate buyers) at any time prior to passing of title from the state by tax deed
to a third party.

The ultimate step contemplated in the enforcement of tax collection is
the final sale of the property to satisfy the debt. This takes place at the

end of the redemption period, the process varying among the states and between

private and public holders of the tax liens. At this time, the private holder
of a tax lien can apply for a "tax deed" vesting him with perfect title (under
certain conditions) to the property. Where the lien is held by the state or
county, the law contemplates that certain steps will be taken to vest similar
title in the governmental unit. Only in Florida and Texas, however, do these
steps include a legal suit to foreclose the lien (and even in these states
the suit is seldom entered). All that is required in Arkansas, Louisiana,
and Mississippi, is that the proper county official certify to the state that
the property has been delinquent for the length of the redemption period,
that due notice has been given of its pending forfeiture, that it has not been
redeemed, and is thereby forfeited to the state in "fee simple forever." In
Oklahoma, if the property has not been redeemed by April of the third year
following tax sale, it is offered to the highest bidder at a resale and if
not then sold, it is deeded in fee to the county. In Alabama, forfeiture to
the state is ipso facto, i.e., no special procedure is required. In Georgia,
the county may assume title after due notice to the owner.

Property so vested is said to be "forfeited to public ownership,"
"reverted," "certified," or "adjudicated." Tax-forfeited land held by the
state or county is subject to sale by it to any applicant except the original
owner, his heirs, or assignees; in Mississippi, however, the original, owner
can purchase his own property. Alabama, Arkansas, Mississippi, and Texas
have provisions in their statutes for the setting aside and administ aring of
suitable tax-forfeited land held by the state as State Forests. It is obvi-
ously the land vested finally in public ownership — "reverted" land — that

- 2 -

constitutes the greatest problem. It is this land that is sometimes referred
to as "new public domain" and which, when covering large areas, creates a
burden on government and non-delinquent taxpayers alike.

This discussion of the provisions for tax collection enforcement has
necessarily omitted many local details, and as will be pointed out later,
practice is usually widely divorced from the lav/s here summarized. Indeed,
such failure to follow the law is one of the chief causes of the growth of
long-term tax delinquency in these states, a growth which has reached alarm-
ing proportions.

II

The safest statement which can be made relative to the area of any
state or region which is "tax-delinquent," or "in public ownership for non-
payment of taxes" is: "No one knows." The difficulty of obtaining any ac-
curate data is compounded of the nature of the phenomenon itself, the lack
of adequately kept public records, the confusion in terminology, and the
rapidity of change in the status of such areas. In many estimates from al3
sources, however, short-term and long-term delinquency have been confused
and added together to give highly alarming pictures of tens of millions of
acres of rural land "forfeited to public ownership," when actually the area
so forfeited in a legally indefeasible title was very much less.

Tax delinquency, which is one of the least static of fiscal conditions,
varies not only from day to day with the flow of land into and out of a de-
linquent status, but much more with the seasonal relation of the time of
taking data to the delinquency date, the foreclosure date, and other adminis-
trative periods. None of these eight states keeps an accurate and up-to-date
record of the area held by it through tax-forfeiture, and even local county
records are rarely accurate and current. Reasonably accurate data, as of
given dates, are available for a few states, notably Mississippi (January 1,
1936) (15) and Arkansas (January 1, 1934) (3) and, slightly less accurate,
for Louisiana (November 1, 1934) (unpublished data) . Data are available for
Florida only as to the area covered by all outstanding tax certificates,
i.e., for lands involved in both short-term and long-term delinquency, as of
January 1, 1934 (21). In other states, approximations of all land involved
in any delinquency are available but not authenticated, and in certain scat-
tered counties accurate data are available on land actually forfeited to
public title or legally eligible for such forfeiture. Based on all these
admittedly incomplete and not always comparable data, it is estimated that
in the eight states here considered the area as of date delinquent beyond the
legally established redemption period and therefore subject to final for-
feiture to public title (whether or not this final step has been taken) may
be in the vicinity of 22,000,000 acres. No accurate figures can be given for
the individual states, but, on the basis noted above, the rank of the states,
in decreasing order of area delinquent, appears to be as follows: Florida,
Georgia, Louisiana, Arkansas, eastern Oklahoma, eastern Texas, Mississippi,
and Alabama.

It must be realized, however, that if there are 22,000,000 acres in
the tax status just described, it does not follow that this area is fully
vested in public ownership v/ith a clear and sound title. Indeed, it may be

- 3 -

questioned whether any but a small fraction of this vast area is so vested.
The titles to most of the properties included in this tax-delinquent "no-
man1 s-landM are "suspended somewhere between the original owners and the
Government, neither the former nor the latter having valid title" (l).

It is as true in the South as elsewhere in the nation that forest
land comprises more than half of this tax-forfeited area. The greater sus-
ceptibility of forest land to delinquency has been noted in all parts of
the country by Zon (22), Sparhawk (18), and others, and in the South the
writer has found it true in several states (9, 10, 11). No accurate data
exist except for scattered counties, but it is safe to assume that, of the
22,000,000 acres noted above, between 13,000,000 and 15,000,000 acres are
forest land. The reasons for the larger percentage of forest land than of
agricultural land involved in long-term delinquency will be discussed in the
next section.

Ill

It will be obvious that the immediate causes of individual failure to
pay taxes when due are many and varied. There are, however, certain broad
groups of causal factors common to the situation in all of the states here
considered and in many other parts of the country. It should be realized,
also, that the causes of short-term and of long-term delinquency may not be
the same. It is true that short-term delinquency may become long-term be-
cause (a) once the process is started, the taxpayer finds it harder to get
back on his feet and often fails to do so, and (b) public officials find it
harder to collect back taxes than current ones. It is evident, however, that
long-term delinquency has its roots in more fundamental and deep-seated
causes, many of which operate regardless of the use of the land and cause de-
linquency of crop and forest land alike. First, however, let us consider the
causes of short-term default.

There is a remarkable unanimity of opinion among investigators of tax
delinquency in respect to the principal cause of short-term delinquency.
Fairchild and his associates of the Forest Taxation Inquiry of the United
States Forest Service state: "The evidence is fairly conclusive that much
short-term delinquency is due to a faulty collection practice" (12, p. 189).
The National Tax Association's Committee on Tax Delinquency makes an identi-
cal statement (17). Coming to the South, Willis found in Florida that "the
numerous and continuing attempts to favor delinquent taxpayers . . . have
encouraged nonpayment of taxes" (21, p. 117). Fullilove in Georgia (13),
Gabbard in Texas (14), Henderson in Mississippi (15), Brannen in Arkansas
(3), and the writer in several states (7, 8), all came to the same conclu-
sion. The "faulty collection practice" referred to may be in the law itself:
a penalty for delinquency too light or too severe or none at all, lack of re-
lation between the collection date and the period of income of taxpayers,
local authority for waiving or rebating of penalties and interest — all tend-
ing to encourage delay in payment or outright evasion. More often, however,
it is in failure on the part of county officials properly to enforce the lav;.
"The laxity of enforcement is largely a product of a system of popularly
elected collectors" (17) . Such failures in the law or its administration or
both are obviously "grossly unfair to those who pay their taxes promptly and
without coercion, and are of doubtful benefit to those they pretend to help"
(12, p. 189).

- 4 -

Certainly since 1930, another major cause of short-term default has
been the depression. Failure of markets for the products of crop, pasture,
and forest land, declining prices, tightening of credit facilities, all con-
tributed to the inability of landowners to get sufficient income to meet
their obligations. The tax collector frequently was the first to be put off
when the pinch of hard times came. This fact is amply proved by data on
trends in current tax delinquency from 1928 to 1933 (19), which show the rapid
increase in short-term default following 1930. Later scattered data indicate
that following the business upturn in 1930, rural delinquency decreased rather
sharply from the depression peak.

While faulty collection practices also contribute, sometimes material-
ly, to long-term delinquency, there are generally deeper and more fundamental
causes of this more serious phase of tax default. Here again a large degree
of uniformity of opinion as to the causes is found among investigators. The
Forest Taxation Inquiry states: "The chief cause of long-term tax delinquency
is overassessment. A property owner will rarely find it necessary to sur-
render title to his property unless the taxes threaten to absorb all or a ma-
jor part of the expected future income therefrom. . . .The tax on a particular
piece of property is not likely to be confiscatory unless the property is as-
sessed at more than its true value" (12, p. 189) . The National Tax Associa-
tion finds that, among the four factors involved in "the full solution of the
problem of tax delinquency," the first is "such revision of the whole tax sys-
tem as is necessary to harmonize benefit and ability as bases of taxation,
with each measure of ability given its proper weight" (17). In Florida, Wil-
lis lists "incorrect assessment" as one of the three principal causes of ex-
tensive tax delinquency (21). Gabbard found in Texas: "Faulty assessment,
resulting specifically in disparity of assessment, overassessment, and failure
to assess, is one of the primary causes of delinquency" (14)*

There can be no doubt of the fact of overassessment of forest land in
the South. Whether or not the original owners sinned against society in fol-
lowing clear-cutting practices in the exploitation of their forest properties,
the fact remains that the cut-over land is generally grossly overassessed in
relation to crop land or mineral land in the same counties, as is evidenced
by the relative assessment ratios and tax ratios. This is one, if not the
chief, reason why forest land forms such a high percentage of the total tax-
forfeited area of the South.

Another cause of long-term delinquency — a possible corollary of over-
assessment, since it frequently results in such disparity—is the decline in
property values. In the South there is abundant confirmatory evidence to be
found in Florida, in Oklahoma, and in other states. The collapse of the 1924-
26 real estate "boom" in Florida left thousands of acres with rapidly shrink-
ing values and diminishing prospects of future income, but saddled with debt-
service taxes, which, on the inflated values, were possibly within reason but
which, on the declining values in the aftermath of the boom, were plainly con-
fiscatory. Hence arose, in large measure, Florida's vast area of long-term
delinquent land, now indeed a "no-man ' s -land" with the titles suspended amid
a conflict of the thinnest of claims. The writer, in a recent investigation
in certain Oklahoma counties, particularly those suffering from the after-ef-
fects of a recent oil boom, found a similar relation between declining values
and increasing delinquency (10) .

- 5 -

A third cause of long-term default is the increasing portion of prop-
erty income required for taxes. The need for increased revenue to finance the
constantly expanding services demanded of government has resulted in increased
assessments or, more frequently, higher tax rates, and hence in higher tax
ratios — the relation of the taxes levied on property to the net income from
it, before tax payment. This has been an important cause of delinquency in
parts of the South, especially of cut-over forest land. In parts of west
Louisiana, throughout Florida (although in this state special assessments as
well as assessments for ordinary governmental operation are involved) , and in
certain counties of other states, tax rates have risen to such heights that
when applied to the existing assessments the resulting taxes have plainly
threatened the possibility of any future returns from the ownership of prop-
erty (6) .

Still another cause of delinquency leading to loss of title is the
levying of an intolerable burden of special improvement-district taxes. The
levee and drainage districts of the great Mississippi River Delta in Arkansas,
Mississippi, and Louisiana, and the special drainage and other districts in
Florida, are eloquent witnesses to the futility of saddling excessive bonded
debt on rural or urban land. A recent study in the lazoo Delta in Mississippi
showed clearly that these special improvement-district taxes were the primary
cause of tax default in this area (9).

These are the fundamental and deep-seated causes of long-term delin-
quency. There are, of course, other causes that stem in part from those just
discussed. These include improper or unwise land utilization, overexploita-
tion of natural resources, especially of the timber resource (not infrequent-
ly caused, however, by overassessment or excessive taxation of the original
stand or of the land on which it stood), and, of course, personal and indi-
vidual causes such as death of the owner, unexpected heavy expenditures for
personal or family requirements, and unwise investments. Underlying these
economic and personal causes, and closely related to the governmental ones,
is the low level of the purchasing power of the predominantly agrarian South,
which is reflected in the present inability of the region to consume directly,
or to export to advantage, all the products the land can produce. This in-
ability, in turn, results in a pressure, not of population on land, but of
land on population, and may contribute materially to tax delinquency. All of
these causes — statutory, administrative, economic, and personal — have been
made more effective, of course, by the recent depression, which has ’narrowed
the gap between income from property and the taxes required for the increased
needs of government.

IV

The problems created by excessive delinquency, especially by long-term
delinquency, may also be divided into three categories — governmental, econo-
mic, and sociological. All the effects, in whatever category, are so closely
interrelated that overcoming them in only one of these groups without solving
the problems in the other two will be of little permanent value.

It has been pointed out by many investigators that "tax default nur-
tures further default" (IB). This is one of the most serious effects of the
nonpayment of taxes, since it not only perpetuates the process but also in-
creases the rapidity with which it grows.

- 6 -

The decline in the local tax base caused by removal from the tax roll
of the assessed values of delinquent property— -and hence decreased tax reve-
nue— confronts government officials with four unpopular alternatives: (1) to
increase the assessment or the tax rate or both; (2) to curtail public ser-
vices to the citizens; (3) to depend on state subsidy; or (4) to consolidate
into larger units. Resort to the first alternative may actually result in
further decrease in revenue by engendering further delinquency. Resort to the
second may mean political reprisals at the next election, since political
history is replete with evidence of the unpopularity of taking away from citi-
zens the public largess to which they have become accustomed. It can be done,
however, and often is the only way out. Adoption of the third alternative is
impractical, since it is generally admitted that the state should not subsi-
dize indefinitely a county with an inadequate or unsound economic basis. The
fourth alternative, while highly desirable, is the most difficult of all to
adopt successfully. Local pressure against county consolidation, thereby
threatening not only the "jobs" at the county courthouse but quite possibly
the chief source of income for local merchants and hostelries at the abandoned
county-seat, is a potent obstacle to this solution.

This dilemma of declining tax base and tax revenues is particularly
difficult for the smaller units of local government, especially for school and
road districts, many of which have outstanding bond obligations that must be
paid if credit is to be maintained.

Still another effect in the governmental field is the engendering in
public officials of continued or increased laxity in enforcing collection.

They quite obviously tend toward leniency or outright negligence in the col-
lection of delinquent taxes when they find it difficult to collect those cur-
rently due. This in turn leads what may have been short-term delinquency in-
to a status of forfeiture and loss of title, thereby intensifying the diffi-
culties of solution for both the government and the remaining nondelinquent
taxpayers. If this process is carried forward without relief from the diffi-
culties it breeds, the inevitable ultimate result is local government bank-
ruptcy.

Even though bankruptcy is long delayed or even averted, there are
economic effects of excessive delinquency no less disturbing than the effects
on government. One of the first of these— even of short-term default— is in-
creasing neglect of a property by its owner. Fearing that he may shortly
lose title to it, he is unwilling— or financially unable if he is to save
enough cash to pay his taxes— to spend the money required to keep up the
fences, paint his house, protect his woodland from fire, or improve his crop
land. During such times also, he lends a willing ear to the operator of the
nearest portable sawmill, who offers him a Mrock-bottomn and "lump-sum” price
for his timber on the stump and then cuts it clean, often paying the owner
only a fraction of the actual worth of his timber. Such neglect and forced
liquidation of property leads very frequently to loss of all in come -producing
capacity in the property, to ultimate loss of title, and to a condition vi-
vidly described by Zon as applicable to reverted land in the Lake States:

"This land now comes back into public ownership stripped of its valuable tim-
ber, ravished by repeated forest fires, depleted of its fertility, and often
disfigured by gullies due to erosion. . . .It is not welcomed either by the
State or county and is poorly protected against fire and trespass. . . .Like
an abandoned child, it is left on the steps of the county courthouses or state

- 7 -

capitols to be disposed of in the best way possible” (22). While such a de-
scription may paint too black a picture to be true of all reverted forest
land, there is abundant evidence that the difference between such land in the
Lake States and its counterpart in the South is one of degree rather than of
kind. Indeed, there are areas in the South where even the difference in de-
gree is negligible. Much the same statement could be made in respect to re-
verted crop and pasture land, particularly as to erosion damage.

Declining private income from property, increasing tax costs on the
nondelinquent land or, in lieu thereof, decreased public services to re-
maining taxpayers, increasing land abandonment — all stemming from chronic tax
delinquency — lead inevitably to lowered standards of living, to more and more
shifts from owner-operation to tenancy, to greater and greater public "relief
loads." The ultimate picture is well painted by Sparhawk: "Carried far
enough, this process discourages or even renders impossible the occupation and
profitable use of the remaining privately-owned land in the locality. In ex-
treme cases, whole sections of counties or states may then be virtually de-
populated. If any people remain, they constitute pauper communities which
look to the State or federal government for funds with which to carry on the
ordinary functions of government" (18) .

The areas in the South which are seriously involved in social deterio-
ration arising through long-term tax delinquency are fortunately few, but
they can be found in greater or less degree in nearly every state of this
region in which such tax delinquency involves any considerable area. What,
then, are the steps toward a solution of this whole problem?

V

There can be no doubt that too much effort has been spent in the past
in evolving methods of handling and using lands which have already reverted
to public ownership in comparison with the effort made to prevent, or de-
crease the volume of, future delinquency and reversion. It will serve pub-
lic and private interests little to evolve complicated machinery for deter-
mining the best use, ownership, and administration of reverted lands when
the volume of the annual flow of private property into public title under
existing conditions exceeds by far the area which the public can afford to
handle and use. Nevertheless, much of the literature on this problem is
concerned more with what to do about it after it has arisen than with means
of alleviating its causes. Since the chief causes of both short-term and
long-term delinquency lie in the field of governmental organization and
administration, it is obvious that the first attack on the problem, whether
relating to crop land or forest land, must be on that front.

The previous discussion of the causes of delinquency has necessarily
hinted at some of the steps toward preventing or decreasing this process,
and a full discussion of the steps required to solve all the problems in-
volved in these lapses in governmental perfection is far beyond the scope of
this paper, but they may be summarized as follows: (l) improvement in the
whole assessment system and practice to relate benefits received by, and tax-
paying ability of, property to its assessment; (2) improvement in supervising
by the state of local finances, and in relating the extent of local govern-
mental services to the local tax base, present and potential; (3) prompt,
impartial, and equitable enforcement of properly drawn and reasonable tax
laws; and (4) such changes in the organization of political units and in the

- 8 -

distribution of functions as are calculated to insure the greatest efficiency
(2). When these steps have been taken, much of the problem of delinquency
will have been solved, because the causes mentioned above will have been
largely eradicated.

It is obvious that this, the most important step toward a solution, is
chiefly the responsibility of the state and local governments, with such aid
and advice as may be required from federal agencies or private sources. More
directly and ultimately, perhaps, it is the responsibility of the taxpayers
themselves in the exercise of their citizenship in the state.

There are also, as has been shown, economic and personal causes of
long-term delinquency— unwise land utilization, overexploitation of natural
resources, private inefficiency in management and administration of property.
To solve these problems the government and its citizens must also work to-
gether. The areas of land utilized unwisely should be found by studies of
soil potentialities, economic demand for products, and margins of costs and
returns, and the results should be made available to all citizens. Owners of
timberland or other renewable natural resources should be protected against
confiscatory taxation of their property in order to make it possible for them
to exploit the resource permanently and profitably; they should be aided by
such extension services as will show them how to administer their properties
to this end; and they should themselves recognize the obligations imposed by
the private ownership of resources in which all the people have a "vested”
interest .

An important aid in the solution of the problems involved in the
economic causes of delinquency is the development of a sound but flexible,
state-wide but detailed, plan of land-use. To this end the State Planning
Boards of several of the Gulf States are now working. It is no easy task, and
if it is to be effective the plan must have great flexibility. It must be ad-
ministered with the stress on popular education to its provisions, but never-
theless it must have teeth for use in case of necessity. Rural zoning is
advisable only on the basis of some such state or local plan of land-use, but
such a plan is not a cure-all for delinquency; rather is it a guide to sound
utilization of the soil and its resources.

Finally, there are personal responsibilities, other than those enumer-
ated above, involved in any alleviation or prevention of further delinquency.
Not the least of these is the recognition that private ownership of property
imposes duties as well as grants privileges. Allen states: "In view of the
relationship between private property and government, it is obvious that the
property owner is liable for the payment of lawful taxes. Property, unless
specifically exempted, is owned subject to the payment of taxes. Government
could not survive and perform its functions if this were not true" (1). It
has also been well said that "Good government is costly government" (16),
by which the author meant that government cannot be operated efficiently
along modern lines with only "shoestring" revenues such as are available to
many local governments today, particularly to those in the rural South.

Thus far we have discussed the first, and most important, part of the
solution of tax delinquency — its prevention. There still remains the problem
of disposing to the best advantage the area already in, or about to revert to,
public ownership through tax default. There are two schools of thought in
respect to its solution. It is recognized by all, however, that the first

- 9 -

problem is one involving a judicial clarification of tax titles now " suspended
somewhere between the original owners and the government.” Obviously, neither
government nor a private person can afford to incur expenses for administering

and developing property to which, at best, it or he has but a shadow of title.

Even a supposedly bona fide tax deed frequently conveys little better than a
clouded title. Hence means must be found to vest a clear title either in the
original owner of such property or in the purchaser of the tax lien (whether
government or private person) . This is an extremely difficult task. In cases

where such delinquency resulted from gross overassessment, it may be necessary

to revise the tax debt by lowering the original assessment to an equitable
figure and recomputing the taxes. Installment payment of delinquent taxes may
be provided (already possible in Louisiana, by paying 10 annual installments
with interest at 6 percent). Possibly, penalties on such delinquency (in the
"suspended title" status) could be waived if all back taxes and interest were
paid up promptly, or if a binding agreement for installment payment were made.
On all properties on which the original owners refused or neglected to adopt
any such compromise and which were not clearly vested in private purchasers of
the tax liens, the state or county should promptly and permanently foreclose
its lien and vest perfect title in itself, by a suit entered in a court of
competent jurisdiction.

Having now established the land which cannot be restored to the origi-
nal owners, and to which government has a perfect title, the next step should
be use classification. State and local experts in land classification and
land values in each county should appraise this land, and classify it as to
its potentialities for profitable private or public use. Land classified as
best adapted to private ownership and use should then be offered for sale at
the appraised value set by the local-state agency. Possibly the state should
demand, as a guarantee against further unwise use or overexploitation, some
modicum of control over the immediate operation of the property; it should
always do so if the purchaser buys it on an installment basis. Land adjudged
best suited for public use should be held by the government, and its adminis-
tration and development assigned to that division or agency having statutory
jurisdiction over the particular use to which the property is to be put.

Such a plan is believed best suited to our democratic American pattern,
although there are advocates of much more stringent action on the part of
government. Thus Sparhawk, possibly basing his opinion on the type of de-
nuded and reverted forest land referred to by Zon in the Lake States, says:
"Certain conclusions are inescapably drawn from the public-domain studies so
far made .... Forest land now in public ownership [through tax-forfeiture]
should be retained in such ownership and administered in the public interest"
(18). Zon himself, seven years earlier, had declared: "The State will have
to come to a comprehensive program of reforestation and recreational devel-
opment of this newly acquired Public Domain . . . .No other solution seems
in sight at present" (22) .

On the other hand, there are advocates of a strictly private handling
of reverted forest lands, or an attitude of complete laissez-faire in regard
to them. Bunker states: "In considering the tax burden as the cause of for-
feiture of lands to the State, it is well to observe that the losses to the
Commonwealth through unprofitable attempts to operate these areas as [state]
forests may easily exceed the lack of tax revenue, especially in view of the
fact .... that the apparent deficit in taxes is largely compensated for by
the increased burden placed on other property" (4) .

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The solution first suggested seeks to follow a middle course between
the extremities of complete public control on the one side and private or no
control on the other , "on the basis that, as in all other important problems
of society, there is a normal balance between public and private activities,
between personal profit and common good, and that only by maintaining this
equilibrium can the highest good be secured" (5).

VI

Various agencies of the federal government also have an interest in
the solution of this problem. Space does not permit a discussion of the re-
lation of all these agencies to such solution, but since more forest land is
involved in delinquency than land in other uses, the United States Forest
Service has a keen interest, and hence a particular responsibility, in solving
this problem. This responsibility it seeks to discharge in several ways.

Obviously, the Forest Service can never do more than advise in con-
nection with the overhauling, reorganizing, and increasing of efficiency of
local or state governments. Through its Divisions of Research and of State
and Private Forestry, it aids such governments, at their request, in de-
vising means and methods for the more equitable assessment and taxation of
forest land and timber. This may well be an important part of the requisite
improved administration of taxation, since forest land forms so large a
portion of the delinquent area. In such assistance, the Forest Service fre-
quently points out specific changes in organization and administration of
the government which will lead to an improvement of the whole technique of
tax administration.

Since overexploitation of timber resources is one important "economic"
cause of tax delinquency, the Forest Service contributes materially to a
solution of this particular problem through its research into profitable
methods of permanent operation of timber stands, and through its extension
service to timber owners, bringing them the results of its research and of
its experience as administrator of the National Forests. This contribution
is perhaps the greatest one the Service can make to the solution of tax de-
linquency of forest land.

In the administration of delinquent forest lands and of abandoned
farm lands, the Forest Service also plays a part through the acquisition,
with local consent, of large areas of such lands as National Forests. A
considerable part of the recent national forest acquisition in the South has
been of this type, thereby assuring not only the protection and building up
of these lands but also the paying up of all the delinquent taxes on such
lands not fully reverted in fee to the state, i.e., those temporarily de-
linquent or forfeited. Furthermore, the federal government returns to the
counties 25 percent of the annual gross proceeds from operation of the forest,
and carries some of the costs of roads, fire protection, and similar items
previously borne by the local governments.

Another contribution toward development and use of forest lands in
which the Forest Service can aid the state governments is the acquisition of
such lands under the terms of the Fulmer Act (Public No. 395, 74th Congress),
whenever this act is implemented by the appropriation authorized in it. This
act contemplates that federal funds will be made available for purchase of
suitable forest lands, that the areas so acquired will be turned back to the

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states as State Forests, and that the states will reimburse the federal gov-
ernment for such financial assistance, without interest, out of the proceeds
from these State Forests. The Forest Service is prepared to assist the states
in bringing their statutes into conformity with the requirements of the Fulmer
Act (Alabama, Arkansas, Mississippi, and Texas are the only Gulf States that
have statutes fully complying with this actV) and in making surveys of the
extent and character of tax delinquency. It is also prepared to assist them
in the actual location and establishment of "Fulmer Act Forests" as soon as
Congress makes available the requisite appropriation.

In one other field — and a most important one — the Forest Service also
contributes to better forest protection and management, and hence to a de-
crease in forest-land delinquency. This contribution is through the provi-
sions of the Clarke-McNary Law of 1924, as amended, whereby federal funds are
made available, when matched by state and private funds, for the establish-
ment of fire protection units on private lands; the average private contribu-
tion is 2 to 5 cents per acre per year. Another provision of this law
authorizes the studies now carried on by the Forest Taxation Inquiry, pre-
viously referred to.

Thus in many ways the United States Forest Service is contributing to
a solution of the problems of forest-land tax delinquency, and stands ready
to continue its efforts and assistance in this work within the limits of its
available funds. The Division of Research maintains its headquarters for the
eight states here considered at the Southern Forest Experiment Station in
New Orleans, whereas the administrative branch has its headquarters for the
eleven states of the Southern Region under the Regional Forester, at Atlanta.

The evidence presented in this paper indicates both the size and the
seriousness of the problem of forest-land tax delinquency in the South. It
is believed, however, that the problem can be solved by the federal, state,
and local governments in cooperation with the forest land owners and the
forest products industries. Such efforts are already under way in several
states, but need to be amplified and extended in order that all lands suit-
able for private development may continue in such use, while other lands may
be devoted to those public uses for which they are best adapted.

In conclusion, it needs again to be emphasized, however, that "Tax
delinquency which advances to the point where titles are surrendered on a
large scale is prima facie evidence of serious economic or political malad-
justments, and there can be no adequate solution of the problem apart from
important — perhaps • drastic — changes in the organization and financing of local
government" (12, p. 197). Only so can long-term delinquency be decreased.

All other steps are merely temporary palliatives, not permanent cures.

4/ Information supplied by Regional Forester, Region 8, U. S. Forest
Service, Atlanta, Georgia, January, 1939.

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LITERATURE CITED

1. Allen, H. K.

1938. Forfeiture of real property rights through tax delinquency.

Jour. Land and Public Utility Econ. 14 (4) : 382-387.

2.

1939. Tax collection procedure: land-use implications and adminis-

trative problems . U . S . Dept . Agr . , Bur . Agr . Econ .
[Mimeographed] Washington .

3. Brannen, C. 0.

1934* Tax delinquent rural lands in Arkansas. Ark. Agr. Expt. Sta.
Bull. 311. Fayetteville.

4. Bunker, P. S.

1930. Some significant aspects of the idle land phase of the forest
problem. Jour. Forestry 28 (2): 178-183.

5. Chapman, H. H.

1930. Some significant aspects of the idle land phase of the forest
problem. Jour. Forestry 28 (2): 184-190.

6. Craig, R. B.

1934* Reversion of forest land for taxes increasing in South.
Occasional Paper No. 32, Southern Forest Expt. Sta.,

New Orleans.

7. .

1935. The South's no-man' s -land. American Forests 41 (12): 684-685,
712.

8.

1935. The extent of tax default in the Gulf States in 1934*
Occasional Paper No. 49, Southern Forest Expt. Sta.,

New Orleans .

9.

1938. Taxation of forest land in the Yazoo Delta of Mississippi .
Occasional Paper No. 74, Southern Forest Expt. Sta.,

New Orleans .

10.

1939. The extent of long-term tax delinquency in certain Oklahoma
counties. Occasional Paper No. 80, Southern Forest Expt.
Sta., New Orleans.

11. , and Orville J. Hall.

1937. Tax delinquency of forest land in Arkansas, 1932-1933. Ark.
Agr. Expt. Sta. Bull. 340. Fayetteville.

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12.

Fairchild, Fred Rogers and Associates.

1935. Forest taxation in the United States. U. S. Dept. Agr. Misc.
Publ. No. 218. Washington.

13. Fullilove, W, T.

1935. Tax delinquency of farm real estate in 52 Georgia counties -
1928 - 1933. Ga. Expt, Sta. Press Bull. 406. Experiment.

14. Gabbard, L. P.

1935. Tax delinquency of farm real estate in Texas. Texas Agr.

Expt. Sta. Bull. 507. College Station.

15. Henderson, C. 0., and John T. Caldwell.

1937. Lands owned by State of Mississippi through tax reversion.

U. S. Dept. Agr. Farm Security Adm. and Bur. Agr. Econ.

Region VI. No. 4. Mimeographed. Little Rock,

16. Lancaster, Lane W.

1937. Government in rural America. D. Van Nostrand & Co., Inc,,

New fork.

17. National Tax Association.

1933. Preliminary report of the committee of the National Tax
Association on tax delinquency. Nat. Tax Assn. Office
of Secretary, Columbia, S. C.

18. Sparhawk, W. H.

1938. The return of forest land to public ownership. Jour. Forestry

36 (9): 897-898.

19. United States Department of Agriculture. Bureau of Agricultural
Economics .

1935-6, Tax delinquency of rural real estate in 1536 counties in 31
states, 1928-33. Mimeographed. Washington.

20. United States Senate.

1933. A national plan for American forestry. Sen. Doc. #12, 73 Cong.
1st Sess. Washington.

21. Willis, Bryan, et al.

1935. Report of the special committee on taxation and the public

debt in Florida; to the Governor and Legislature. Tallahassee.

22. Zon, Raphael.

1931. The new public domain. American Forests 37 (5): 261-264, 280.

Note: Assistance in the preparation of these materials was furnished
by the personnel of Work Projects Administration Official Project 65-2-64-74*

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