The Nonpartisan Leader Newspaper, October 26, 1916, Page 10

Efforts to Get Fair Taxation of Iron Ore De Always Blocked in Minnesota E fight of the farmers of Min- nesota and the progressive politi- cal element in the state generally to obtain a tonnage tax on iron ore, so.that the mines of the state could be made to pay a just share of the tax- ation and the state at large would get some real benefit and revenue from the great mineral deposits of the iron rang- es, began in 1906. It has been a bitter fight against the steel trust ever since, and the steel trust to date has been vic- torious. 4 Every session of the Minnesota legis- lature since 1906 has fought the matter out, except the 1915 session. At various times the tonnage tax plan has won a majority in one or the other of the branches of the legislature, and once it won in both branches,. only to be vetoed by the governor. In brief, the history of this proposed reform is as follows: 1906—Amendment to the state consti- tution adopted, known as the “wide open” tax amendment, permitting among other things the taxation of mines through a tax on the ore production— the tonnage tax. Amendment fought through the courts by the steel trust. Favorable decision to the mines obtained in the lower court, but the supreme court upheld the amendment. 1907 — First tonnage tax bill intro- duced in the Minnesota legislature, pro- viding® for a tax on production in lieu of all other state taxes but allowing local districts to tax ore as formerly on valua- tion plan. Bill had united support of agricultural districts, but farmers not adequately represented in the legislature and measure failed. 1909 — Same bill again introduced in the legislature, this time with a recom- mendation of the state commission for a tonnage tax. Bill passed both houses through union of the progressive forces from the cities and agricultural inter- ests. Vetoed by governor. TONNAGE TAX FAILS AFTER ABLE FIGHT IN HOUSE 1911—Bill again introduced in the leg- islature but referred to a committee packed in favor of the steel trust. Friends of measure finally get one mem- ber of committee to bring in minority report favorable to bill. Majority on committee recommends against it. House adopts the minority report, but the mea- sure finally fails. 1913—Bill introduced again, but after a hard fight to get a vote on it it lost by a few votes. ; 1915—No attempt by the legislature to take up the proposition and no bill in- troduced. General belief that steel trust influence too strong to overcome, though agricultural interests in the state still in favor of measure. New tax commission appointed by the governor favorable to present plan of taxation and to steel trust interests. i The bill that failed in the 1913 legis- lature represented the ripe thought of the progressive element in the state, aided by expert advice and opinion both within and without Minnesota. It pro- vided for a tax ranging from two to five cents per ton on every ton of ore mined in the state, according to the grade of the ore. It was designed to be in lieu of all other state taxes on the mining indus- try, but if left the cities, towns, school districts and counties in the mining" dis- tricis to raise taxe for focal purposes as they had been raised, on the ad valorem or valuation basis. 2 “BILL PROPOSED WOULD DOUBLE STATE’'S REVENUE ' The state tax cominission reported to the legislature that the measure, on ‘the R RO . influence to prevent a change. ‘a way to make their demands effective. Orga The Steel Trust Gets Its Wa ¢ 1912 basis of ore production, would give the state a revenue of $2,106,909.26. For that year the taxes on the mines, under the plan of putting a taxation value' on all ore in the ground and levying the state tax rate against it, was $918,660.40, so that the 1913 tonnage tax bill;"if - it had been in effect in 1912, would have in- creased the state government’s revenue from the mines nearly $1,200,000. . The bill, had it become law, would have pro-. duced each year over twice the taxes for the state purposes that have been paid by the mines. . - ; production, through a ‘tonnage tax, has ation the problem of the state is that of getting a share of the mineral wealth. The method has been generally followed of making an appraisal, which might be -very far from or very near the truth. - The tonnage tax, depending upon the -amount of the'ore mined, is the best and fairest.” . Professor McVey was here discussing the tonnage tax from the standpoint of conservation of, mnatural resources. Under the present plan of taxation, owners of ore bodies are taxed for the .. amount of unmined ore which surveys : T_he proposition of taxing the .mining industry in Minnesgta on the basis - of show they have in the ground. They are taxed on this amount whether they mine 1000 or 10,000 tons a year. The been fought and defeated in Minnesota in spite of the fact that the tonnage tax is recomniended by experts everywhere as the only scientific and fair basis of taxation on mining. Taxing officials, students and economists scarcely have any difference of opinion on the matter, if one excepts the opinion of the present Minnesota tax commission, which has taken the :steel trust point of view. Many large mining districts in the United States outside of Minnesota are taxed on the production or tonnage basis, and the same holds true in Canada. Yet in Minnesota, which produces two-thirds of the iron ore” mined in the United States, reformers, backed with a united demand from the agricultural interests and the progressive glement from the cities, have been unable to secure the abandonment of the obsolete, unfair and unscientific taxation plan now in effect. A CONSERVATION MEASURE SAID PRESIDENT McVEY Frank L. McVey, now president of the. North Dakota state university, formerly chairman of the Minnesota tax commis- sion, made a hard fight for the tonnage tax in Minnesota. His-idea on the pro- position was expressed in an address be- fore the Conservation congress in Min- neapolis in 1910, when he said: : “The taxation of natural resources is only one of the many factors in the de- struction of them. We have no principle in our scheme of taxation that can be used to meet the néw‘ conditions “that Ahave-arisen in our efforts to conserve our. natural -resources. JIn minéral tax- Figures gathered by the federal government, by the , ‘ itself show the present system of taxation to be unfair, yet the trust always has commanded the The change will never be made till th Trainloads of irom ore in Duluth yards tendency is, therefore, under this plan, to mine the ore as rapidly as possible, for immediately it is mined and shipped out of the state it stops paying a tax. There is no tendency to conserve the ore deposits. The cream of the ore rich in iron is scooped out and shipped away, never to return. This does not tend to methods of mining that conserve the supply but at the same time produce enough ore for the demand. Under a tonnage tax, however, the tendency would be to censerve the supply —to mine by methods that would make the supply last as long as possible and at the same time fill all demand for iron ore. This would be:the tendency because an owner of iron deposits would not be paying on the ore in the ground, but only on what he actually mined. He would therefore mine ‘only what he needed to supply the demand and his desire would .be to mine the deposits on a basis that would conserve them, because there would be no penalty, through taxation, for leaving -the deposits in the ground. MANY TAXING EXPERTS FAVOR TONNAGE PLAN Taxing experts almost without number ‘could be quoted in favor of the tonnage tax as opposed to the present unfair and wasteful plan. Professor , Skelton = of Queen University, Kingston, Ontario, in | discussing the proposition before the International Tax conference some time ago said: ek G IR A “The positive reason for preferring the tax on the output is its greater cer- = the state tax commission and the steel trust vill neve A e people of Minnesota find posits tainty. Any estimate of the value of the minerals in the ground must, it is felt, contain a2 large element of guess- work—diligent and scientific guesswork it may be, but guesswork still.” An important feature of the plan now used in Minnesota, which works to the detriment of the state’s interests, is the fact that its success depends on this very guesswork pointed out by the Canadian authority. H. O. Bjorge of Lake Park, Minn., member of the Minnesota legis- lature since the tonnage tax issue came up and the one who introduced the ton- nage bills in all the sessions except one, has made a 10-year study of the propo- sition. He is a farmer and farms near Lake Park. He says: “In 1910 the tax commission estimated the total iron ore tonnage in Minnesota at 1,350,000,000. Since then the esti- mate has been increased somewhat. These estimates, made each year, are the basis on which the present ore tax is paid. - I am not prepared to say whether the estimates even approach the total tonnage in the ore deposits. I am free to confess I do not know. But I do not believe it is possible for anybody to determine with any degree of certainty the extent of the deposits in this or any other state. If it is easy to determine the extent of the tonnage in the ground for the purposes of taxation under the present plan, then experts ought to agree within reasonable limits. ; FARMER LEGISLATOR SHOWS PRESENT SYSTEM’S EVILS “As I said, the tax commission says the deposits contain about a billion and one- half tons. The federal government, through its geological survey has also made an estimate, issued in 1908. It divides the ore into two classes, avail- able for smelting and not available under present conditions. The ore available is taken to include all ore containing above b5 per cent in iron and 25 per cent of all ‘ore containing between 45 and 55 per cent iron. It finds that the available tonnage .in the ground, that is, tonnage that can be mined and used under present conditions, amounts to 3,175,000,000 tons. Over three billion tons is the federal estimate, while the mines under the tax commission’s estimate are paying taxes on only one and one-half billion tons! The government estimate of all classes of ore, available and not available, is 43,485,000,000 tons. “If either the federal or the tax com- mission is correct, which one is it? If it is such an easy matter to ascertain the. agount of ore in the ground for taxation purposes, as claimed by friends of the present plan of taxation, why this differ- ence between the federal and tax com- mission estimate ? “As a matter of fact, this difference of opinion between the two authorities shows that it is not possible to even- approximate the real extent of the deposits in the iron ranges. It ' shows that the present plan of taxation can not !)e accurateé or fair, because to be fair it must be baSed on an estimate.of the : ore in the ground somewhere near right. But the federal government says there 18- over twice ‘as much high grade ore, valuable under - present - smelting - con- - ditions and hence taxable, as the tax . commission figures. . “On the other hand the tonnige tax would tax the production and would be dealing . with known quantities of ore. It would be a scientific plan of taxation as opposed to a guesswork plan, and under the bill we have fought for'in vain it would' more than ‘double-the state _8overnment’s. tax - revenue from - the - mines.”