The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1913-05-15
THE SYSTEM OF TAXATION BEST APPLIED TO
MINES COMPARED WITH THAT BEST FOR LAND
DEPLETION OF MINES VALUE As IT IS WORKED JUsTiFEs
PUT TAx-FARm VALUE NOT LEssENED IF WORKED
MODERN METHODS

(Written for the Northwest Mimi
News, by r. A. Mccartney. Professc
Of Mining and Metallurgy, Idaho Uni
versity.)
The taxation Of mines Is subjet
which has been discussed great dea
the past few months In Idaho and tn
purpose Of this paper is to present Ger
tain facts and views concerning It.
Right from the beginning 1t must b
borne in mind that II Is the method o
taxing mines that will be considere,
and that the amount of taxation to b
placed on the mining industry or tn
relative amount compared with SOM
other industry will not be discussed
Two Methods Of Taxation.
Generally speaking. there are two
methods employed of taxing mines
one. to determine the value of thu
mine. that is. the value Of Its ore re-
serves plant and holdings and to as
sess these as part Of a general prop
erty tax. The second Is to tax the out
put or production of the mine, that Is
to assess certain amount ON each
unit of gross or total production. on
the tons or pounds or ounces produced
of coal. iron. copper. lead, silver or
gold, or else, to tax the net produc-
ton after operating costs have been
deducted. These two subdivisions of
output taxation will not be separately
considered, but the argument will be
confined to output taxation generally
and It will be compared with the tax
on land valuation.
What Constitutes a Mine.
Before going further we must con-
slider what a mine is and on what fac
tors it's value depends. In certain To-
calities, geological conditions are such
that there is great probability of the
occurrence Of deposit Of some sub
stance, say coal or iron ore or copper
ore or gold, which has a market value
when extracted from the earth. The
coal bed or gold vein may outcrop on
the surface of the ground or the pres
ence OF the mineral may be determin-
ed by boring. but something more than
the mere presence Of mineral must be
known. Mining operations are begun
and work Of development carried or
to demonstrate the quantity and the
character Of the coal or gold which
may be present in the deposit. 4
mine has not vet been made, but this
development work must be continued
for two or three years, till II proves
the existence Of quantity of the min
eral of sufficiently large tonnage an'
Of high enough grade for commercial
exploitation. This development work
will also show whether or not WORKING
conditions are such that the minera'
can be economically extracted anf
marketed. Not till all these points
are proven beyond the shadow of p |
doubt, can we say we have mine
Even at this stage 1t is not always |
possible to begin producing, for 1t may |
be, and nearly always Is, necessary |
to build railways, power plants, con-
,entrators or smelters or all these tc
handle the ores and put them into
form, and 1t may take twr
n three years more to complete these
which could not be be-
gun TIL the deposit had been proven
When a Mine 10 Proved.
A mine can be defined as n deposit
II a mineral that has a marketable
-alue when extracted. that exists "
uch quantity and quality and unde'
uch conditions that 1t can be WORKER
o return a profit to its miners. The
alie Of such property depends or
he quantity quality etc. of the min
raj which can be mined, and an"
aiming company which takes ~ F.,
into It's confidence. re-
orts to them the quantity Of ore de-
eloped IN its mines and It's AVERAGE
alie. These ore reserves are IT'S
,ost important asset and on the pos.
hilitv of earning dividends from the
'orking Of these ores. depends the
'arket value of its shares and de
entures. I,
Hirdrance in tho Beginning. d
An undeveloped mine has a certain "
alue which might be taxed. Such d
roperty requires the expenditure ~ o
rye sums of money to demonstrate s,
is a mine and II would not appear {;
iblic policy to put hndrances in the d
av of the development Of prospects VI
hich would be done If they were a.
xed at any considerable figure: for
ese reasons. only the method Of tax (,
g the larger producing mines will be In,
rther considered. liza
ming as II Differs From All Other a
Business. Iol
The business of mining in at least In,
e respect, is different from all others lie
that the result of the wears work es
an actual depletion of the assets Of u,
6 mine When production Is started 4,
g value of the mine depends on the tn
g which has been proven and oper- IA
up and the profits which will re- va
II from the extraction of this ore do
the end of the year the mine has | r.,
tracted and marketed some or all Of 70
Is developed ore and it has possibly wi
lde profit as n result of the years mi
'rk. but at the end of the year its l;t
sets have been reduced by lust the
lount of the years production and on