The Powder River County examiner and the Broadus independent. [volume] (Broadus, Mont.) 1919-1935, 1922-03-03

snare. giving a total valuation 20 t61
/ stock OF this company, representing IT.
property in Montana, Utah. Arizona,
Mexico. Illinois, New York. New Jer-
sey, South America and elsewhere, Of
According to the official report OF
the Anaconda Copper Mining company
on file with the state treasurer Of this
state there is located In Montana 81 g
per cent OF its property and holdings,
and outside Of Montana 1874 per cent {;
0l6 per cent Of the market value Of
the total outstanding capital stock Of
the Anaconda Copper Mining company
on the first Monday in March. 1921,
was $54.57O,OOO, SO on that date the
physical property Of the company in
Montana was assessed in excess Of 100
per cent of its proportion Of the total
market value Of the capital stock, and
It must be remembered that this as.
sessment is made solely upon the prop
erty above mentioned, and does not
include the net proceeds tax, the cor
poratiOn license tax, or the metal mines
tax, which is in addition to the fore
going.
THE principles underlying the net
proceeds tax as applied to mines is
SOUND. NO man lives, or ever lived
who can value the Butte mines. No
BODY can see beyond the actual work
the ground. Again If the ad valorem
tax was applied to mines as advocated,
what would be the result? Taxation
now averages close to 5 per cent on
the taxable value. Some of the mines
IN Butte have been in operation over
4O years. If the ore reserves in the
ground had been taxed on this basis
IN the past it would mean that their
full value would have been taken in
taxation before large portion Of these
ore bodies were ever touched. The
mining industry of this state could
not survive under any such system.
Net Proceeds Not Net Profits
"A common misunderstanding Of net
proceeds Of mines under our taxation
system Is that 1t means net profits to
the operator. That such is not true is
apparent. A mine has been aptly
Hkened to piece of cheese, from
which you take a slice in every days
operations, and when the ore body in
the mine Is exhausted nothing Is left
but IN empty cavern on the hillside.
It therefore follows that the net re-
turn from a mining operation is neces-
sarily a return Of capital. Putting it
another way. II you buy mine for
$1,OOO,OOO, which mine contains Il body
OF ore that will net $1,OOO,OOO, and in
five years operations you make Il net
return OF 100000 year. at the end
OF five years you will have returned
$l'OOO,OOO in net proceeds Your ore
body is then exhausted, you have not
one cent of net profit. but the entire
net proceeds represents return Of
capital invested in the mine. A min
ing operation is necessarily an opera
tlon OF wasting assets, and all returns
from mine necessarily includes Il re-
turn OF capital, and is not In any sense
wholly net proceeds or net profit.
"Again. in the determination Of net
proceeds for purposes Of taxation, the
operator Is not permitted to deduct all
OF the expenses of his operations from
the gross, but Is limited to fixed de-
auctions determined by the statute.
This statute makes no allowance for
any prospecting or development work
or other expenditures prior to the year
for which the net proceeds are being
determined. II likewise permits no de-
auctions for prospecting or develop
ment work on any other mine or group
OF mines owned by the same operator
other than the mine or group Of mines
being assessed
Mine Taxation Method Misstated
Il read with interest il stenographic
report of an address delivered in this
city some few weeks ago by proni-
nent educator in this state. which I
think illustrates the injustice and mis-
representation Of this tax situation as
1t is usually presented to the public in
this state. In discussing the question
of net proceeds. quote the following
from his address:
I'm other words, after mining
companies have paid their EN-.
plOyes and allowed their manag-
ers. including lawyers, large sal.
aries; after they have bought their
supplies and paid for their de-
velopment work in this and other
states and countries: after they
have paid for improvements for re.
pairs and other hetterments neces-
sary; after they have made all re-
placements Of the milling and re-
ductiOn works used in connection
with the mine. allowed the sum Of
per cent Of the assessed valra-
tlon for depreciation Of milling
and reduction works and have paid
all money expended for otherwise
placing the ore upon the market,
then on what Is left a tax will he
paid.
This statement was deliberately
made after the quotation Of the statute.
which provides among other things:
"Such expenditures shall not in.
cl,de the salaries. or any portion
thereof. Of any person or officer
not actually engaged in the work
Ing Of the mine or experimenting
the management thereof.
"And the same statute likewise pro-
vides that the deduction for develop.
ment work is confined to the mine or
group of mines upon which the net
proceeds Is determined, and not upon
any other mines in this state or other