e. The
adjustments of flat values on the several classes through a series of
years, however, as well as the assigning of specific ores to the
different classes, have been based on the same factors as are used in
_ad valorem_ valuations.

The state of Wisconsin uses a so-called "equated income" method of
valuation and taxation for the lead and zinc deposits of the
southwestern part of the state. Under this method the state puts such a
tax on the mine incomes for the preceding year as will yield
approximately the same total return as under the _ad valorem_
method,--the whole being based on the assumption that each deposit has
about the average life figured for the mines of the entire district. So
far as individual ore deposits vary from this average life, the value
fixed departs from the true or _ad valorem_ value.

Several states impose specific taxes based on the operations of the
mines for the preceding year or for some combination of preceding years,
as expressed in tonnage output or net profits or net proceeds,
regardless of life or reserves. So far as output or net proceeds for a
year are proportional to the real value of the property, a rough
approximation to equitable taxation as between mines is accomplished.
Often, however, the valuation thus obtained has little relation to the
true value, because it does not take into account the great differences
between properties in reserves, in life, and in capacity for future
profit.

Income taxes, national and state, are of course based on the profits of
the preceding year; but in the collection of these taxes from mineral
operations, it is recognized that mineral deposits are wasting assets,
and therefore a considerable part of the income may under the law be
regarded as a distribution of capital assets, and be deducted from
taxable income. The amount to be deducted obviously depends on the size
of the reserves and the life,--with the result that progressive
adjustment of income tax valuations tends to take into consideration
exactly the same factors as are used in the _ad valorem_ method. It is
obviously unjust, for instance, to collect the same proportion of tax
from the annual income of a mine which has a life of only two years as
from a mine which has a life of fifty years. Under the federal income
tax a capital value is placed on the mineral deposit as of March 1,
1913, which total capital value may be increased with subsequent
discoveries. As the ore is taken o