chapter  6
35 Pages

Taxes on Virgin Materials

THE THIRD and final source of market inefficiency to be discussed here is that relating to taxation of virgin materials. Special provisions have lightened the tax load on mineral industries since the enactment of the income tax in 1913. At first the federal tax rate was low and the special provisions for mineral industries were minor. But over the past sixty years the provisions favoring mineral and other extractive industries have greatly expanded. Since the federal tax rates have substantially increased as well, the provisions favoring virgin materials have also increased relatively. To some extent it has been the intention of Congress to favor the extractive industries, and to some extent the extractive industries' lightened tax load has been fortuitous (from the point of view of the extractive industries) ; some tax provisions, available to all industries, have been most advantageous to the extractive industries.