The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1922-04-07
HALT COLLECTION
OF TONNAGE TAX
IMPORTANT HEARING ON
1921 BILL SET
Permansns Injunction Against
Enforcing Measure Sought BY
Mining Companies; Federal
Judge Tillman D. Johnson,
Salt Lake City VIII Hear Case
In st. Paul. i
[AssocIated Press Dispatch. J


ST. Paul, Mimi, April 3.-Hear-
ing will be held in st. Paul on April
10 before Federal Judge Tillnan d.
Johnson of Salt Lake City on the
application for a permanent IN
junction to restrain collection OF the
Minnesota occupational or tonnage
tax on iron ore.
A temporary restraining order
was issued in federal court Ia Dull
nth late in January, a few Gays
before the expiration OF the Fenr-
uary limit on time for ming Dy
the mine companies of reports on
the tonnage mined in 1921.
z. S. Oakley, deputy attorney gen
'eral of Minnesota, who viii assist
Clifford l.. Hilton, attorney general,
in representation Of the states. case
expects the hearing set for April 10
will last only two or three days.
Facts are not in dispate, according
to Mr.. Oakley, who declares the is
sues are entirely questions of law
and involve, first; whether the oc-
cupational tax is in violation OF in
terstate commerce, and second.
whether the law is constitutional
under the Minnesota constitution.
Enacted BY 1921 Legislature
The occupational or tonnage tax
law was enacted by the 1921 state
Legislature, after more than twenty
years agitation in that body for
similar legislation, including veto
by two governors of bills providing
for the tax.
The tax-which was declared not
strictly tonnage tax provides for
a percent tax on iron ore mined
after all costs are deducted. The
value of the ore is ascertafned by
subtracting the cost of mining from
the selling price at lower Lake Enc
ports.
Involved in the legislative contro
versy. and paralleling it, is the his
tory of the development of the iron
ore industry in Minnesota, dating
back to 1865, when the Soudan mine
on the Vermillion range was located
as the first step in the industry IN
this state.
Virtually no taxes were paid IN
til 1881. and little mining was done.
The legislature that year imposed q
tonnage tax of one cent a ton Tin
lieu of all other taxes" This tax was
repealed in 1897 and the ad valorem
basis of taxation substituted.
From 1897, the tonnage tax issue
grew in Importance almost with such
session of the state legislature, and
additional tonnage tax legislation
was a feature of every legislature
until the 1907 session.
Gov. johnson Vetoed 1909 Bill
In. 1909, it had gained supporters
in such strength that bill WAS uas-s
sed to tax each ton of iron ore from
2 to cents. but Governor John A..
Johnson vetoed on the grounds of
"Equalities and because the produc-
ton costs we're not taken into con
sideration"
In the session from 1911 TO 1919,
similar legislation heA a position
of commanding importance, though
the use of tonnage tax" gradually
was substituted by profits tax"
though the layman continued to re-
fer to them as tonnage tax mea-
sures.
The special session of 1919 passed
tonnage tax or profits tax bill. but
governor j. A. A. Burnquist vetoed
the measure. pointing out that he
considered the serious objection in
the fact that royalty paid by min
ing company to mine owner was
not deductible as an expense.
In the political campaigns of the
1920 elections, the Republican and
Democratic parties and the Nom
partisan league all adopted Slanks
in their platforms favoring a ton
mage tax. and j. A. o. Preus. the
Republican gubernatorial candidate,
pledged himself to sign a fair and
equitable tonnage" tax bill.
When the measure went through
the 1921 legislature, Governor Preus
was ii at home, but the measure was
taken to his HOME, and he signed it
at once, It was recognized even
then that the mining companies,
headed by the Oliver Iron mining
company, subsidiary of the United,
States Steel Corporation. would con.
test the laws constitutionaIity.