The Hull Rust Mine pit in Hibbing, Minnesota, in June 2013. Northern Minnesota iron mines like this pay a production tax on the ore they mine instead of property taxes paid to local governments, schools and counties. PHOTO: ndwick, Flickr Creative Commons
Marshall Helmberger’s Timberjay has a remarkable story analyzing Minnesota taconite revenue from production taxes over the past several decades. Here are the nuts and bolts:
At a time when Minnesota mining companies continue to reap major windfalls from the historically high price of taconite produced on the Iron Range, state and local taxpayers are definitely not sharing in the bounty.
Indeed, on a percentage basis, the financial benefits from taconite mining, be it to local cities, counties, school districts, or for local economic development, are at an all-time low.
Mining companies in northern Minnesota pay a production tax on what they mine instead of local property taxes. Since these companies own vast acreage and generate more revenue than any other industry in the region, getting a break on property taxes is a huge deal. The production tax was designed to be a more even-keel way to tax these companies without breaking them when production was down or during industry slumps.
But as Helmberger points out, Minnesota taconite revenue is less now as a percentage of company profit than ever before. Meanwhile, property taxes, cost of living and government financial strain have all increased.
This article is must-read for any Iron Range leader. Let’s hope it gets a discussion going about fair taxation for Iron Range citizens and communities.
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