The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1929-01-25
| WHAT OTHERS SAY
WHY CHOKE A GOLDEN GOOSE
TO DEATH?

The world is using more iron today
than ever before in its history.
The greatest readily accessible de-
posts of iron ore on earth are right
here in Minnesota.
Yet today the Minnesota iron in
duStry is dying on its feet. Mines
that should be open, are closed. Range
towns that should be booming, are
dWindling. Communities that should
be prosperous, are watching gradual
shrinkage of the payrolls that keep
them alive. Not only that, but there
is a growing danger that the industry
will go clear to pot once the operating
companies finish Swimming the re-
manning cream from the richer de-
poSitS
Minnesota has been Strangling, in
moose of taxation, the goose that lays
the golden eggs. Seeking to save for
public uses the public'S due share of
the heritage OF wealth that nature so
laviShly spread through the north
country, Minnesota is in danger of
making that heritage well nigh worth
less. No industry can survive, when
taxes make up half its cost of doing
business. Yet that is what Minnesota
has been eXacting Of the iron ore in
duStry.
There is no question of Minnesota'S
moral right to seize by taxation from
wealth that comes out of the ground
in the form of iron, greater share
than from the wealth that comes out
of the ground in the form of crops.
The principle underlying recapture of
a part of great natural resource, is
sound enough. But it has been over
worked. Tax has been piled upon tax,
until the industry is threatened with
extinction.
In the days when there existed no
means for the state to levy on the
output of ore, there was devised the
alternative method of assessing ore in
the ground at a higher percentage of
its true value than any other property
in Minnesota. And the ad valorem tax
levied on this onerous assessment is
repeated and repeated, year after year.
Thus a man unfortunate enough to
have ore found under his land, is
rather likely to see that land, and
that ore, sold for taxes.
Came later the occupation tax, for
the benefit of the state at large Also
for the benefit of the state at large,
the royalty tax, originally intended to
catch the ore owners, but passed on
to the leasing operator, along with all
the rest of the ore owners taxes
So the operator now pays local taxes
on the ore in the ground out of all
proportion to its value. He pays a
fixed royalty to the ore owner for
every ton taken out. He pays the
state 6 percent tax on these royal
ties. If, after paying these taxes and
royalties, and his operating expenses,
he has anything left, the state takes
6 percent of that as his occupation
tax. On the sadly diminished remain
der, the federal government collects
an income tax.
ANY wonder, then that the operator
is hurriedly stripping out the richest
ore, preparatory to closing up shop,
when this is gone?
Collapse of the ore industry would
be a catastrophe for both the range
country and the state at large. Yet
the ore industry is plainly headed for
collapse, unless its tax burden Is light
ened.
Lie lions share of the ad valorem
tax money goes to the range COM
munitieS, which spend it freely and
often foolishly. So tax relief can best
be applied at that end of the line.
Inc per capita un1C on municipal
spendings, fixed a few years ago at
500 for municipalities and $50 for
schools, was set too high. It should
be reduced still further.
But equally important and necessary
Is the reduction of the assessment
rate on ore in the ground. Before the
royalty and occupation taxes were
laid, there may have been an excuse
for assessing ore bodies at SO percent
of their actual value, in contrast with
the lower percentages enjoyed by all
other kinds Of property. That excuse
no longer exists. Unmined ore, against
which an ad valorem tax is levied year
after year until its value is eaten up
should be assessed at no greater per-
centage Of its real worth than plated
real estate, which gets valuation of
40 percent. Quite possibly, the figure
should be cut further still, to 80 1-3
percent, the rate enjoyed by unplatted
real estate.
Granting this urgently needed relief,
will be no act of benevolence on the
part of Minnesota. The state vitality
needs thriving ore industry. But the
industry cannot thrive, If the state
insists on choking it to death with a
tax noose.-The Minneapolis Journal