Over at the Center for Investigative Reporting they have found a new thing to worry about. The way in which, in the US, a mining company digging on public lands does not pay a royalty to the Federal Government. Unlike many of the little scares we get presented with from time to time this could indeed be a problem. Private actors shouldn't get rich off the mere existence of something, those revenues should be taxed away. As it turns out it's not in fact a problem because those revenues are indeed taxed. They still might not be taxed enough but that's different from the horror with which we might view their being entirely untaxed.
The article certainly starts off in a worried tone:
Foreign-owned mines operate royalty-free under outdated US law
Quite why it makes any difference that the mine is or is not foreign owned is uncertain. Mines are, by definition, one of those things where you are undoubtedly subject to the tax laws of wherever the hole in the ground is. So however US owned mines are taxed a foreign owned one will be taxed in exactly the same manner.
However:
Let’s say you own 245 million acres. And underneath that land are billions of dollars’ worth of minerals – gold, silver, copper, uranium and more. Would you let foreign companies in to tear up your land, put your water at risk and take those minerals without paying royalties?
You already are. That’s the amount of public surface land controlled by the U.S. Bureau of Land Management, the federal government’s biggest landholder. And companies that mine these lands are exempt from federal royalty payments.
And it’s happening right now. Take, for example, the Dewey Burdock uranium project in South Dakota. It encompasses 240 acres of public surface land, plus more than 4,000 subsurface acres of uranium-rich earth.
Well, yes, that might be something to worry about.
The basic point about taxation is that we do have to get Joe Biden's salary from somewhere. And we'd rather not tax incomes, or capital, or consumption, if we didn't have to. We do have to because we all want so much from the government pinata but in theory we'd prefer to find the money somewhere else. And economists point to rents as being where we should, one of these being a "resource rent". This being the value of something that simply exists. Take, for example, the value of a deposit of uranium in South Dakota. No mining company or mining engineer contributed to the fact of that deposit's existence. Sure, they might have found it, might dig it up, process it and all that, and we're delighted for them to make a profit as they do so. But they didn't actually "make" the minerals. So, we should tax off them the value that accrues purely and only because that deposit exists. For, yes, we really do have to pay Joe's salary from somewhere. Such taxation should also be at eyewatering levels: we want to tax all of that resource rent off them.
So, in theory, the absence of royalty payments, which is one way of taxing that resource rent, is not a good idea. Quite possibly even one we might want to do something about.
However, we also get told this in the same piece:
A spokesman for the mine, Mark Hollenbeck, points out that the mine will be paying South Dakota a severance tax, which is a tax on extracting nonrenewable resources.
A severance tax is not only a tax on extracting nonrenewable resources, it is also a form of royalty. Or, a royalty is a tax on extracting nonrenewable resources. They're, economically speaking, the same thing. The only difference here is that royalty seems to be the word applied to payment to the Feds and severance tax is paid to the State. Further, it doesn't actually make any difference at all to the total amount of tax paid. For (and yes, I checked this) on the South Dakota severance tax form you deduct any Federal royalty from the severance tax payment you make to the State.
It is possible that miners not paying royalties is a problem. Because, I mean obviously, we'd rather be paying Joe Biden's salary from a gift of nature rather than cash taken off you and me. As it turns out it's not a problem as a severance tax is really just another name for a royalty. Phew, Joe's pension is safe then.
