246 OUR USE OF THE LAND 



the area from which the iron is taken. Thus Ribbing gets a 

 very high revenue from the Mesaba iron range. This high 

 revenue has paid for a fine school system with one of the best 

 swimming pools in the country. And because the high school 

 has such a fine pool and so much money to spend on training, 

 Hibbing has one of the finest school swimming teams in the 

 country. 



These taxes fall into four groups. The first is called the 

 ad valorem tax. This is simply a tax based on the value of prop' 

 erty any property owner may possess. If a farmer has a farm 

 worth $10,000 and his state has a 10 per cent ad valorem tax, 

 the farmer pays 10 per cent of $10,000, or $1,000 tax. In 

 Minnesota, 16.31 per cent of all the money collected by ad 

 valorem taxes is paid by the owners of the iron mines. 23 



This ad valorem tax has a direct effect on the use of iron ore. 

 All the ore is used outside the state. The ore that is mined in the 

 winter is stored until the ice on the Great Lakes melts, and then 

 it is shipped in the spring to Cleveland and other lake ports 

 near steel mills. Since a company must pay the ad valorem 

 tax on the value of its property in Minnesota, it naturally 

 wants to get that property out of Minnesota as quickly as pos- 

 sible. Therefore, the companies mine and ship the most valuable 

 ore as speedily as they can and leave the low grade ores behind. 

 This means that the supply of the high-grade ore is used rapidly, 

 while much of the low grade ore is left to waste. Thus you can 

 see how a high ad valorem tax exhausts a mineral supply. 



In Wisconsin a type of tax called a severance tax was en 

 acted to remove the bad effects of the ad valorem tax on min 

 erals and timber. The severance tax is a tax on the value of the 

 products taken from the land. The important thing is that the 

 tax is collected only when the resource is taken from the land. 

 If that resource has a high value, the amount of the tax is 

 large. If, on the other hand, it is of little value, the tax is small. 



25 Letter from Minnesota Tax Commissioner, August, 1937. 



