Discussion - Principles of Mining Taxation Discussion of the paper of T. W. Gibson, continued from page 648

R. B. BrinSmade, Ixmiquilpan, Hgo., Mexico (written discussion*).—While agreeing with Mr. Gibson that his net-profit tax is the fairest and best for mines, I believe that the tax he describes can be more accurately defined by another name. In accounting, net profits are usually considered to be the residual of the gross income after operating expenses and the annual charge for upkeep of plant have been deducted. Even the necessary interest on bonds or mortgages should not be subtracted in this calculation, for this interest represents merely that fixed portion of the net profits going as a return to that fraction of the total property value owned by the bondholders. Applying this method of calculation to the gross income of a mining property, we should onIy deduct operation expenses and upkeep of plant to get the net profits on its whole property value. So Mr. Gibson in deducting a further sum, to cover the interest and amortization of the capital expended in mine development and equipment, really arrives at something quite differen't from net profits; which can properly only be defined as the annual value of the mineral in the ground, or the royalty value in miners' parlance. From one viewpoint, Mr. Gibson's first principle, which assesses taxes, "proportionate to the benefits received by the person or property taxed," is identical with his third principle wbich assesses "with reference to the extent and value of the natural resources enjoyed." With one exception, everything of use around a mine represents a cash expenditure, or its equivalent in human labor, and state action has not added an iota to its value. The one exception is what makes the enterprise possible and it includes the mineral deposits and their associated surface; water and other landed rights. These natural resources are origin2!1y the gift of tile people acting through their agent, the state, and it is evident that a tax laid on whatever profits may arise from their enjoyment will be exactly "proportionate to the benefits received by the person or property taxed." Mr. Gibson is mistaken in his belief that the general property tax of the United States has the same incidence as his system of taxing profits, because the general property tax falls not only on land1 value—as does