Washington, DC – U.S. Senators Maria Cantwell (D-WA) and Russ Feingold (D-WI) introduced legislation today to end an antiquated tax break for companies that mine for hardrock minerals on public land.  The Elimination of Double Subsidies for Hardrock Mining Industry Act of 2007 will end the “percentage depletion allowance,” a concept created nearly a century ago to spur exploration and extraction of natural resources.  As a result of this concept, mining companies are given what is tantamount to a double subsidy on public lands: first, they are allowed to mine on federal lands for free and then, under the percentage depletion allowance, they are allowed to take tax deductions beyond the value of investments they have made.  Based on the most recent estimates of the Joint Committee on Taxation, this bill would save taxpayers an estimated $500 million over five years. U.S. Senator Dianne Feinstein (D-CA) is an original co-sponsor to The Elimination of Double Subsidies for Hardrock Mining Industry Act of 2007.    

 

“Right now, mining companies are using America’s public lands for free and their bottom lines are benefiting from the rich mineral deposits they find on those lands.  Yet, these companies still believe they are entitled to a tax break as well,” said Cantwell, a member of both the Senate Finance and Energy and Natural Resources Committees. “This unnecessary tax subsidy is an open-ended drain on our federal treasury that costs American taxpayers millions.  Our budget is in the red.  We must do more to restore fairness to the tax code.  Getting rid of this century-old tax break that punishes taxpayers is a good place to start.”

“Congress must put an immediate end to the current double subsidy for companies that mine on public lands,” Feingold said.  “Mining companies should not be allowed to take deductions for mineral deposits they received for free.  The tax code needs to be updated to eliminate this giveaway to the mining industry, protect our environment, and save millions in taxpayer dollars.”

 

In addition to repealing the tax break for minerals mined on public lands, the bill would also create a new fund called the Abandoned Mine Reclamation Fund.  One-forth of the revenues raised by the bill, or approximately $125 million dollars, would be deposited into an interest-bearing fund in the Treasury.  The money would then be used to clean up abandoned hardrock mines in states that are subject to the 1872 Mining Law.  Though there is no comprehensive inventory of abandoned mines, estimates put the figure at upwards of 100,000 abandoned mines on public lands.