tax base for the 10-percent "minimum" tax as an item of tax preference, thus diminishing the effect of section 169 in many cases. We recommend that pollution control facilities be deleted from the base of the 10-percent minimum tax. The 10-percent Minimum Tax The 10-percent minimum tax imposed under present law is in reality an additional tax, not a minimum tax. Moreover, for the mining industry and corporations generally, it is essentially an additional tax on percentage depletion deductions and capital gains. Its effect, thus, is in large part to reduce through an indirect approach the incentive effect of a specific provision in the tax law which is of substantial assistance to the mining industry. The imposition of the minimum tax on corporations is not a sound policy. This is especially true at a time like this when it is clear that sound policy requires greater, not reduced, tax incentives to assist industry in meeting its capital requirements. When this Committee originally considered the issue of a minimum tax in 1969, it wisely confined the application of its proposals for a limit on tax preferences and for the allocation of nonbusiness deductions between tax preference income and other income to individuals. Again, in 1974 when this Committee considered a number of modifications to the present 10-percent minimum tax, it confined the application of those modifications to individuals. The time has come when the inappropriateness of the imposition of the minimum tax on corporations should be fully recognized and the tax made inapplicable to corporations. Respectfully submitted, AMERICAN MINING CONGRESS Dennes P Bedell Dennis P. Bedell Chairman, Tax Committee A COMPARATIVE STUDY of TAX SYSTEMS and THEIR EFFECT on FOREIGN MINING INVESTMENTS as of May 12, 1975 Prepared at the Request of the American Mining Congress May 12, 1975 Mr. J. Allen Overton, Jr., President American Mining Congress 1100 Ring Building Washington, D. C. 20036 Dear Mr. Overton: On January 21, 1975, the Board of Directors of the American Mining Congress (AMC) requested that our initial study entitled "The Comparative Study of Tax Systems and Their Effect on Foreign Mining Investments" be reviewed and updated for the changes which have occurred in the tax laws of the countries included in the study. As you know, our initial study, which was submitted to you on March 16, 1973, compared the tax position of U.S. mining companies to the tax position of mining companies from other capital investing countries in regard to international mining ventures. In addition to updating this study, we have determined, at the request of the AMC, the effect of recent U.S. tax proposals on the competitive position of U. S. mining companies relative to companies in the other capital investing countries. Purpose of the Study The AMC, having obtained an analysis of the U. S. competitive tax position as a result of our initial study, is interested in maintaining such information on a current basis so that the comparisons remain meaningful. This study (as did the initial study) analyzes the tax structure of eight leading capital investing countries (hereinafter described as capital exporting countries) and measures the burden of the U.S. tax structure relative to those countries. The countries selected for comparison are: |