MINERALS 247 



Thus, nothing is saved by taking out only the products of 

 high value. 



The second type of Minnesota tax is the occupation tax. So 

 far as the mining companies are concerned, this is a tax based 

 on the cost of producing the ore. If the cost of production is 

 high, the tax rate is low: if the cost is low, the tax rate is high. 

 This tax attempts to balance the high cost of mining lean ore 

 with the low cost of mining rich ore and thus promote the use 

 of the lean ore. 



A simple illustration will show how this tax works. The 

 figures used here are purely imaginary and are not actual costs 

 of mining and taxes. 



Rich Ore 

 $100 cost of mining 1 ton 



1 5 tax on 1 ton of rich ore 



$115 total cost of tax and mining 



Lean Ore 



$110 cost of mining 1 ton 

 5 tax on 1 ton of lean ore 



$115 total cost of tax and mining 



The third type of tax is the royalty tax. This tax is paid by 

 those who rent the mines to the iron mining companies. Since 

 this tax is based on the value of the mined ore, it too has the 

 effect of making it relatively more expensive to mine the rich 

 ores, and thus force the companies to use the low grade ores. 



The fourth type of tax is the personal property tax. This is 

 a tax on the ore mined and stored. It is taxed according to its 

 selling price in Lake Erie ports. Thus if the ore is valuable, the 

 tax is high; if it is not valuable, the tax is low. Here again the 

 tax system encourages the use of the low grade ores. There is 

 also a reduction in this personal property tax if the low grade 



