The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1920-05-21
THE STORY OF
TONNAGE TAX

This is the story of tonnage tax in Mime
sofa. Though it was the wrong remedy, and
never was accepted, it was aimed at two
very real needs, and as an indirect but certain
result of the agitation for it, both of these needs
have been overfiowingly met to the great bene-
fit of the state.
When the tonnage tax was first introduced
in the 1907 legislature its primary purpose was
to compel the manufacture of iron and steel
in this state, and it's secondary purpose was to
compel the iron mining interests to pay their
fair share of the expenses of the state govern
ment.
These were both valid ends and both were
needed. There was then no steel manufacture
ing industry in Minnesota-all the states iron
ore went to build up industries in other states.
The iron mines were then not paying their just
share of the state taxes.
The first tonnage tax bill was for tax of
20 cents ton, 20 cents to be rebated on all
iron smelted within the state; this shows the
primary purpose of this proposed legislation
This being obviously an attempt to tax exports
from the state, which the Federal Constitution
forblds, this first measure was dropped, and the
straight tonnage tax bill, followed later by
supertax" bill, came in.
While the tonnage tax was pending in the
1907 legislature efforts therefore made by Dull
nth citizens to induce the United States Steel
corporation to begin the manufacture of steel
in this state were brought to head, and when
the bill was defeated, there was promise
from that company that steel plant, to cost
100000 to $7,O00,000 would be built in
Duluth
Today there is in Duluth a great, up-to-
date steel plant of the United States Steel cor
poration, costing $30,00000O instead of the
promised 100000 or $1,000, 900, and plans
are drawn ready for immediate extension cost
ing $10,00O,000 more
Though happily the tonnage tax has failed,
this aim of the original tonnage takers has
been met, to the great benefit of all Minnesota.
How about the taxes? In 1907 the total
assessed valuation of all the iron mines OF Min
nesota was about 100000 on which the
state in that year got total tax of about
$4,000.
the iron mines of Minnesota is about $500, 000,-
OOO-eight times that of 1907--and the states
direct tax from this wealth will be about
O,0O0--nore than twenty-five times that
of 1907.
So the secondary purpose of the original
tonnage takers has also been met.
What brought this about was, first, the
creation OF the state tax commission in 1907,
commissioned by the legislature that had de-
feated the tonnage tax to make a scientific
assessment of the iron mines, and second, the
passage later by the legislature of law assess
ing iron property at fifty per cent of actual
value, while city property is assessed at 40
per cent, farm property at 33 1-3 per cent and
personal property at 25 per cent.
The tonnage tax agitation, therefore, has
given the state a monster steel industry and
has compelled the iron interests to pay taxes
on Just valuation multiplying the states rev.
enue from this source by twenty-five.
1t has served both the purpose for which it
was started. Why should it be continued,
the threat of it jeopardizes the creation of a
great industry that cannot fail to benefit every
part of the state.
MINNESOTA FAIR TAX ASSOCIATION.