Belt Valley times. [volume] (Armington, Mont.) 1894-1977, 1922-02-23

ft$ ~t%W Htvbcttt tf thc tOiHphbS III
Montana was assessed In excess of 100
fper cent OF It's proportion Of the total
market value Of the capital stock. and
II must be remembered that this as
sessment Is made solely upon the prop
erty above mentioned-aB does o
include the net proceeds tax, the cor
poraiion license tax. or the metal mines
tax. which is In addition TO the fore
going.
The principles underlying the net
proceeds tax as applied 10 mines Is
sound. No man lives. or ever lived
who can value the Butte mines. No
body can see beyond the actual work
ings and determine the ore reserves IN
tite ground. Again II the ad vaIorem
tax was applied 10 mines as advocated.
what would be the result? Taxation
now averages close to ; per cent on
the taxable value. Some of the mines
TN Butte have been In operation over
40 years. If the ore reserves In the
ground had been taxed ON this basis
In the past 1t would mean that their
full value would have been taken IN
taxation before a 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 tru Is
apparent. A mine has been APPLY
likened TO a piece OF cheese, from
which You take a Slice IN every days
operations, and when the ore body In
the mine Is exhausted nothing ts4eft
but an empty cavern on the hillside.
1t therefore fellows that the net re-
turn from n mining operation is neces-
sarils Il return of capital. Putting It
another way, If you buy q mine for
$1.010.00o. which mine contains a body
of ore that viii net Sf.000,0o0. and In
five years operations you make u net
return of S2O0.0O0 a year, at the end
OF five years you will have returned
xl,oso,oW In net proceeds. Your ore
bsass fs then .~exfiHusfed,- you have not
one cent of net profit, but the entire
net proceeds represents a return of
capital Invested In the mine. A min
ing operation Is necessarily an opera
tion OF wasting assets. and all returns
from u mine necessarily includes a 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 IL not permitted to deduct oil
OF the expenses Of his operations from
the gross. but Is limited 10 fixed de-
ductlons determined by the statute.
This statute makes no allowance for
any prospecting or development work
ar ethe4. eS expenditures prior 10 me year
for which the net proceeds are being
determined. II likewise permits no de-
auctions FOR prospecting or develop
meni 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 s%tenographlc
report of TIN address delivered IN thiS
city some few weeks ago by a promI-
nent educator IN this state, which I
think illustrates the injustice and mis-
representation Of this tax situation as
II Is usually presented 20 the public In
this state. In discussing the question
of net proceeds, | quote the following
from his address:
In other words. after mining
=cnhtpnt1fnsEhHxa paid their eai-
ployes and allowed their manag-
era Including lawyers. fHrge sai-
aries after they hive bought their
supplies and paid for their de-
velopment work In this and other
states and countries after they
have pnid for improvements for re-
pnirs and other hetterments neces-
sary after they have made all re-
placements 0f the milling and re-
AHeffoff works used I'm connection
with fhe mine. allowed the sum OF
q per cent of the assessed valua-
lion 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 n tax viii be
paid.
"rhis statement was deliberately
made after the quotation of the statute.
provides among other things:
"Such expenditures shall not In
clude the snlnrles. 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 am stntute likewise pro-
'Ides that the deduction for develop
nent work Is confined 10 the mine or
IF mines upon which the net
proceeds Is determined. and NOT upon
other mines In this state or other
tateg or other countries. The statute
< 50 plain that submit there Is not n
Ugh school boy In Montana who. after
u. WIN not tell you that the
notation from this speech. ms above
utllned. IS mn absolute misfepreseif-
alton. The public would be fortunate
indeed n those who proposed to dis
uss this question would first learn
he facts and then talk them.
Anaconda Contributes Six Millions
what contributions has the Ann
DDda Copper Mining company made,
nd IL making, toward the maintenance
r this state government? During the
years last past this company paid
taxes IN the state If Montana the
I'M Of s0.323,J76, or an average of
,264, 10 per year. During that same
srI0d the total net return of the com
operations In Montana amount
to S33. 309.37S. In these five years