Federal Taxation of Mines - Discussion

W. 0. HOTCHKISS, * Madison, Wis.-It was fortunate, in a way, that this subject of income taxation came up during the war when the government could appeal, on the basis of patriotism, to men of large, business experience to undertake the work of formulating this matter and practically donate their services. At any other time the government would have been unable to secure the necessary number of men of like ability. There is one thing that must not be forgotten. In all cases, except the very largest and most important, the application of this income tax law to a mine is going to be made by clerks whose salaries are fixed by a Congress that appropriated a half billion of dollars for a war purpose and provided that $4000 should be the highest salary paid in the adminis-tration of that great sum. The Congress of the United States unfor-tunately seems almost entirely unaware of the fact that men of ability and experience are worth money and must be paid adequately if proper public service is to be secured. While the formulation of the broad plans for administering the law have been in the hands of. men of unusual ability, we have the future to guard, and, if possible, the mining industry should see to it that the Internal Revenue Department is permitted by Congress to pay salaries that will enable it to secure men of the ability and experience necessary to insure proper consideration of the industry. Another fact to which I would call attention is the difference between the business and the economic, or economists', points of view as to what a mine is. The economists have properly, from their point of view, classed a mine as a wasting asset, but the average metal mine is not a wasting asset if it is a real mine. The economists are correct in a broad sense in that every ton of ore taken out diminishes the orebody by that amount. When it comes to the consideration of an individual mine from the business standpoint, the future of that mine rests on unfore-seeable events-the discovery of new orebodies or the development of old bodies beyond the point of probable expectations. Every going mine must develop new ore each year to replace that extracted, and, .during all but the last one or two years of its activity, actually does so. Instead of being a "wasting asset" such a mine, from the practical stand-point which must control valuation, is an "increasing asset." From