An Economic Evaluation of the Massachusetts Forestry Yield Tax Program

Owners of 10 or more contiguous acres of forest land in Massachusetts are eligible to classify their property under a modified assessment-yield tax property tax law. This program is designed to increase the flow of timber products by decreasing the costs of engaging in a program of forest management. In return for lower annual property taxes the owner must practise forest management and pay a yield tax.Benefit-cost ratios, using two marginal analysis decision frameworks, were calculated to evaluate the economic efficiency of this program. The two decision frameworks yielded different results and, therefore, different conclusions about the efficiency of this tax incentive program. Key words: Special forest tax law, yield tax, benefit-cost analysis.