The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1922-04-28
TONNAGE TAX
HEARING ON.
HEARING THIS WEEK-VANCE
| CHAPMAN SPEAKS OF TAX
SENTIMENT.

! This week Judge Tillman Davis
Johnson of the United States Dis
trict Court heard arguments in the
matter of the petition of number
of Northern Minnesota Mining COM
panies for a permanent injunction
restraining the State from making
collections under the new occupa-
ton or iron ore tonnage tax law
passed by the last legislature. The
hearing was to have taken place
April 10, but was postponed to
April "a. A temporary injunction
has already been granted. About
all who seem interested outside of
the Iron country where the tonnage
tax question is a vital one are the
states legal representatives and a
few tonnage tax bugs. Although
involving millions of dollars and
effecting a leading industry, not to
mention one of the most prosper
Gus sections of the state, no one
apparently is on the tip toe of ex-
pectancy regarding the outcome.
The states legal department is ap-
preaching the ordeal calmly and
without any outward appearances
of fear, though some hazard the
opinion that the department is not
overly in love with the task assign
ed it. Not since the Great North
Northern Pacific-Burlington
merger suit of a decade ago in
which the state was the aggressor
has Minnesota figured in more i'm
portant piece of litigation than that
involved in the Federal court hear
ing set for the oath. Politics main
ly and the activities of competit-
ing railroad indirectly were the
basis of the merger suit, but in the
case of the validity of the tonnage
tax act real taxing problem is on
trial with the industries peculiar
to the North country very much up
in the air pending it's settlement.
1t is taxing proposition in its en-
tirety and the findings should set at
rest a controversy of nearly thirty
years standing, but they likely will
not. The Supreme Court will he
the tribunal of last resort. How
ever, the state will not lose any
thing in the meantime. The min
ing companies are still meeting
their tax obligations as of old.
To many members of the legis-
lature and others concerned in a
political way the transfer of the
tonnage tax controversy or as it is
now known, a tax on the occupa-
ton of mining iron ore, 90 the
Federal courts is of considerable
relief. AS stated for better than
a decade the tonnage tax question
has been bi-annual legislative in
Fiction and for the past six sessions
has so cluttered the legislative files
and debates that other needed leg
islation has suffered in consequence.
The unfortunate feature of the
whole thing is that Minnesota's i'm
mense iron deposits are located in
one end of the state and the sup
posed affluence of those engaged in
the development of mining, not to
mention the glazing extravaganza
of some of the Northern Minnesota
towns has not been lost on those
politically ambitious and living else
where and they have not been slow
to make the most of it. There has
been too much politics and too
little sane consideration of the sub
ject. Answering that propaganda
had worked up into a supposed
popular demand the Republican
party in convention assembled two
years ago went on record for
tonnge tax and it was made a part
of the party platform. An occupa-
ton tax of doubtful value followed
and Governor Preus hoping that it
would end the controversy for all
time affixed his signature and the
bill became a law. In order to
cinch its infection and make the
way clear for the next legislature
should the act fail in the courts a
constitutional amendment permit
ting tax on the occupation of
iron ore was enacted and this
amendment the voters will pass
upon next Fall. Showing the per-
sistency of the few eager to con-
tinue the controversy the last Re-
publican state convention was all
but invaded by several anxious to
have the convention endorse the
constitutional amendment mentioned.
but they failed to get by. The pro-
position is now before the courts
and it is hoped that it will end
there. The mining companies rely
mainly on the interference of the
law with interstate commerce and
expect to make their point stick.
On the other hand the state legal
department contends that the law
is proper exciseof the states tax
ing powers and likewise expects to
win.
Just thirteen years ago this
month or to be exact, April 80,
1909, Governor John A. Johnson
of revered memory gave his official
veto to the first real tonnage tax
bill ever passed by a Minnesota
legislature. True the industry in
its infancy operated under a law
by which the state exacted one cent
for every ton of ore mined, but it
was in lieu of all other taxes and
assessments and did not long sur
vive. 1t was held to be unconsti-
tutional and was repealed and the
present ad volorem basis of taxa
ton substituted. Iron ore paws on
basis of fifty per cent of its true
and full Talue while other classes
OF property are as low as twenty
i've per cent. The new infection
now before the courts is additional.
Reading Governor Johnson's veto
message one is considerably i'm
pressed by its prophetic features.
"A more or less uncertain and iIly
dlgested experiment" mot fully
understood even by its advocates: :"
engenders sectionalism;" Intensely
feared by the section Of the state