The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1930-09-19
CANNOT DEDUCT
ROYALTIES PAID
LITIGATION OF OVER A YEAR ON
ROYALTY PAYMENTS DECIDED
BY THE MINNESOTA SUPREME
COURT MINING COMPANIES
HANDED ANOTHER WALLOP BY
STATE LAW

The royalty tax paid by mining COM
panieS cannot be deducted from the
value of ore mined in determining the
occupation tax imposed by the state,
the Minnesota supreme court held this
week in upholding the state tax COM
mission
The decision was returned against
the Oliver Iron Mining Company which
carried the case to the supreme court
on writ of certiorari to review the
findings of the tax commission.
The company paid the state 81 $685.,
20l last year as its occupation tax Of
six per cent on ore mined in 1928
valued at $26,053, 1862, The Oliver COM
pany, however, withheld $18,117 be-
cause the tax commission refused to
allow a deduction of the 1923 royalty
tax of S301 ,961, which it paid to its
lessons, from the value of the ore be-
fore the occupation tax was computed.
In paying its tax for 1929 the COM
pany this year raised the same OBJ
lection and also certified another APP
peal to the supreme court which now
is decided by the decision of the origi-
nal action.
The six per cent occupation tax is
based on the value of the ore at the
mouth of the mine. Because there is
no market value of ore at the mouth
of the mine the tax commission takes
the value of the ore at the lower Lake
Erie ports and then works back by de-
Quoting intervening costs.
The Oliver company, however, at
tempted to deduct the amount paid in
royalty tax in determining the value
of no fOr no
part of the expense between the Lake
Erie ports and the mouth of the mine
Approximately 80 per cent of the
mines in this state pay the royalty
tax OF six per cent, originally intended
to be tax on royalties or rent which
the owner of the land receives from the
mining companies.
Because of the provision of the lease
the mining company pays all taxes
including the royalty tax following
decision of the supreme court few
years ago which held that under the
lease the mining companies must pay
the royalty tax instead of the land
owners besides paying royalties
The mining tax imposed by the
laws OF 1921 is an occupational tax"
the supreme court held in it's decision.
1.-The mining royalty tax imposed by
the laws of 1923 is a property tax.
The two are complimentary and sup
Elementary.
The company's claim of the deduc-
ton OF 1901 ,961 is not sustained. I'm
der the 1921 act the royalty deducted
in establishing the valuation upon
which to impose the six per cent oc-
cupational tax was statutory de-
duction. Why it was made is not i'm
portant here. The 1923 royalty tax is
a tax upon property, in the form of
royalty, and is not deducted in estab-
fishing the valuation upon which to
compute the occupational tax.
1T is strained construction that
calls the tax royalty, which is a tax
on mining property, part of the roy
atty for the purposes of deduction.
The suggestion is made that the royalty
tax mergered into the royalty so as to
become a part of it. We do not think
so.
''The tax statute it is true should
be literally construed in favor of the
taxpayer"
While the Oliver company is the
only mining company to contend that
the state should deduct the royalty
tax from the value of the ore mined
the state would have lost approximately
$4,000 year in taxes had the decision
OF the tax commission been over ruled
by the supreme court. approximately
one-third of the ore mined in Mime
sofa is mined by the Oliver company