The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1929-02-01
WHAT OTHERS SAY
TAX RELIEF FOR IRON.


of the state legislature from the north
ern mining counties are sponsoring
series of measures intended to give
the iron ore industry OF Minnesota re-
lief from adverse economic conditions
to onerouS for prosperity. The dill
cultieS of the mining companies seem
to be two. In the r1rst place comes
the high cost of mining; in the second,
high taxation. Combined these two
influences are responsible Tor an UNI
healthy trend in the industry which
not only concerns the mining corr-
panies but is also inimical TO long
time interests of the state.
Operations on MinneSota's iron
ranges are becoming so expensive that
only the highest grade ore can be
mined profitably. The cream OF Miu-
neSota'S once fabulous deposits is be-
ing SKINNED from the surface, the tire
mendous reserves of low grade ores
are being ignored, exploration for new
mines is at a StandStil and the ex-
tinction Of the industry Is being hast
ened.
1t is legitimate and proper that the
delegations from the northern counties
should submit for legislative consider
alton the need of prolonging the life
of this industry. The legislature ma
turally cannot help the companies
tighten their burden of general costs,
but it can re-eXamine present taxation
policies to discover what remedy may
be justified.
Minnesota imposes two Super-taxeS
and one special tax on the iron indus
try. When the legislature passed the
general classification law in 1913, iron
ore was placed in a category by it
self. Although other property not
used for urban purposes was assessed
for taxation on SO 1-3 per cent of its
value, iron ore deposits were made to
pay taxes on so per cent of full value.
The legislature acted on the theory
that since iron is a natural heritage of
the people, and besides a constantly
diminishing and irreplaceable resource,
it is fair to exact somewhat heavier
taxation than from other kinds of
wealth. It was assumed at the time
that this device would permanently
put at rest the question of iron taxa
ton.
This hope of the mining companies,
however, was not realized, and in 1921,
after long agitation, new tax in addi-
ton to all others was imposed. First
introduced as a tonnage tax, for tech
nical legal reasons new levy known
as the occupation tax" was placed on
the production Of iron ore. In addi-
ton to the ad valorem or general
property tax on the deposits them
selves, the state now takes per cent
Of the Semi-net value of all iron ore
mined There is also a royalty tax,
relatively unimportant, which the leg
iSlature of 1928 thought to impose on
fee owners of ore lands but which, by
judicial decision, actually is collected
from the operators of the mines.
The comparative Importance of these
taxes may be understood from these
figures For the five-year period, 1928
to 1927 the total state taxes on the
industry were $112,379,950. Of this
sum, the ad valorem or general prop
erty tax was S91, 572,51 the occupa-
ton tax S16,211, 230; and the royalty
tax $4,596,205. ALLEGATION of these
revenues among the divisions of gov
eminent is also highly pertinent. The
state or its trust funds takes all the
occupation and royalty proceeds. But
of the major revenues, those from the
n,
municipalities of the range get 89.5 per
cent and the state only 10.5 per cent
OF the 80 odd millions proceeds OF
this one tax in five years the state
took less than 10 millions while the
rest was absorbed by county and town
government on the iron range.
1t is necessary to bear in mind that
this industry belongs to the state as a
whole and not to any particular coun-
ties, more immediate though their in
terests may be. In view of the CON-
parative weight of these three taxes
it seems obvious that any relief should
be first sought at the source of the
chief difficulty.
The counties and municipalities
which come asking for remedies are
themselves primarily responsible for
the heavy weight of taxation bearing
down on the companies. 1t Is the ad
valorem tax that constitutes the bur-
den and it does so because local units
of government insist on unconscionable
extravaganza in public expenditure.
Thus where the mining village of Hib-
bling annually spends $126.25 per
capita, derived almost wholly from
tax on mining properties, the non
mining city of st. Cloud, with a popu-
lation almost identical, spends only
$18.18 per capita. The municipality
of Bull spends $122.20 per capita to
S5.43 for Cass Lake off the range to
the west.
The northern counties, therefore, do
not come into court with unSelfish
hands when they ask the state govern
ment to bear the brunt of tax reduc-
ton for mining The insignificant
royalty tax was legislative misfire,
hitting the wrong object and possibly
could be reloaded or repealed. But 1t
Is right that the state should have
specific super-taX of some sort, and at
this time there Is no occasion for tam
pering with the comparatively unim-
portant occupation tax.
Whatever relief is granted should
come out of the advalorem tax. The
local units of government could solve
the problem quite simply by curbing
their extravaganza, but since this APP
parently is forlorn hope, the legisla-
ture might well do for those communi-
ties what, for political or other rea-
sons, they seem unable to do for them
selves. Nothing would be so effective
as to eliminate the super part of the ad
valorem tax by assessing iron deposits
on equal basis with other unplatted
property. Reduce the assessment basis
from so per cent to full value to 80 1-3
per cent.
WHV IN nNTv HAZE UAv0