ut of the ground and sold, income tax
is paid only on the difference between the assigned capital value per
unit and the selling profit. If, for instance, the capital value as of
March 1, 1913, is placed at 50c. per ton of mineral in the ground, and
ten years later a ton is sold for a profit of $1, income tax is paid on
50c. The figure of 50c. per ton as value in the ground is actually
obtained by estimating a profit, when the ore is ultimately mined and
sold, of $1 per ton, and discounting this dollar to present worth as of
March 1, 1913. Therefore the total amounts on which taxes are paid
during the life of the mine should represent approximately the total
accruals of interest from March 1, 1913. In this manner the proportion
of annual income to be taxed becomes larger with the length of the life
period. With a deposit having a life of thirty years the net result is
that about half of the aggregate income is taxed, though this figure of
course varies somewhat with the interest rate used.

In the collection of income taxes from coal mines in England, and in the
collection of certain state income taxes in the United States, a
considerably smaller allowance is made for the retirement of capital
value (or for _depletion_, as this is commonly called). In these cases
the deduction allowed is a small fixed percentage of the capital value,
regardless of the actual life of the property.

The treatment of mineral resources as wasting assets in the United
States income tax law meets one considerable practical difficulty--namely,
that the law really requires physical or _ad valorem_ valuation of
every mineral property by the government, as a check on the claims for
depletion allowance. This immense and expensive task is too much for the
tax collection agencies as now organized, and it may be questionable
whether it will ever be desirable to expand these agencies to the extent
required for such a purpose. This is the principal argument for the use
of arbitrary depletion factors such as those sometimes used abroad.

There are many advocates of the straight tonnage tax on mineral
deposits, on the ground that it is simple, definite, and easily applied.
The present tendency is to extend the application of this form of tax.
It is clear, however, that to assume the same value per ton for taxing
purposes on a property making a large profit, and on another property
which, because of physical conditions, is barely able to operate at a
pr