Gilpin observer., 1916-10-05
TAXING MINING INCOME


It will be gratifying news to the
mining men ct Jle country that the
Senate finance commietee has recog-
n.zed the injustice Of the provision
CT the present income tax act with
reference to deductions authorized
frcm gross income IN estimating the
net income upon which the federal
income tax is levied.
1t will be recalled that the act,
over the protest CT mining men, fix
ed limit Of SO of the gross value
cs the output of mineral as the max
i.Eum amount which could be deduct
ed from gross income for depletion
and exhaustion. AT the time Of the
enactment Of tie original income tax
bill the gross unfairness of singing
cr.t the miptng industry for special
restrictions was pointed cut and fur
tEsr THAT the mineral taken from
mine tcck just that much from the
total value Of the property and was
a sale ct part of the property ra:h-
er than an income from its opera
ton. In the cese of the United
States VS.. the Ntpp sstrg Mines Co.,
the conclusion reached by Judge La
ccpbe in the Uni ed States District
Court for the southern district of
New York upheld this conclusion. A
part of this opinion is as follows:
IF the known vailue of am ore bed
were exactly $2,0OO,OOO and exactly
100000 were taken cut of it each
year, in four years there would be
nothing left. 1t is difficult to say
why it may not reasonably be said
that tie ere bed suffers each year
a depreciation Of $500 600, just as
$4,000 piece of machinery, with a
life of ten years, suffers deprecia
tfon of 81 900 each year"
Notwithstandir this Illustration
tie law provided limitation of SO
and the Comm'ss icuer of Internal
Revenue canstrued this to mean so
of the selling price. The average
selling price of coal in the P,ttsburg
district last year was approximately
$1.20 per ton. A SO deduction am
cunts, under the present law, to
&c en- each ton of coal mined In
the Pittsburg district coal lands have
cost the operators approximately 10c
per ton of ccal in the ground. This
value Is constantly enhanced by tax
es and interest upon the invest
ment. 1t would he a fair assumption
that tie royalty value Of coal in the
Pittsburgh district IS at least 15c per
! ton. The deduction CT &c allowed
under the present law leaves the re-
manning value of SC on each ton of
coal mined, subject to a tax which
is in reality tax upon the capStal
invested rather than upon the income
AN injustice which is SO apparent that
no argument is Necessary for it's de-
mcnstration. Pitts bureh is cited be-
cause it is the center from which a
larger amount OF coal is mined than
in amy ether one district.
In the metal mines the injustice
Is even greater than in tire coal
mines because the roya'fy value of
these properties is greatly in excess
of the proporticnste royalty of coal.
Ten per cent is atout the lowest
royalty ever considered fer low-grade
ores and In many instances a royal
ty as high as 1870 has been paid to
the mine owner by a lessee operat-
ing under the royalty basis. This, has
worked a very great injustice to
many of the large mtndng companies,
and would have been still mere bur-
densome under the increasing per-
centages to be levied by the present
revenue bill
| TIE members of the Senate COM
m.ttee on finance ere to be congrat-
'Iated for having gwen the mining
industry fair deal and it Is hoped
that these provds'ors cfthe bill will
meet the approval OF both the Sen
ate and House. - Mining Congress
Journal.