McGee: World’s highest tax proposal on U.S. mining has negative economic consequences - East Valley Tribune: Opinion

McGee: World’s highest tax proposal on U.S. mining has negative economic consequences

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Posted: Monday, December 12, 2011 5:01 pm | Updated: 2:05 pm, Wed Dec 21, 2011.

With Arizona’s unemployment rate topping the national rate at 9 percent, any plan to boost the economy and get Americans back to work must be on the table — especially if it involves a sector proven to generate economic growth and provide high-paying jobs. United States mineral mining is a vital contribution to our economy and recovery from the recession.

In 2010, mineral mining contributed $2 trillion to the national gross domestic product and supported 1.1 million direct and indirect American jobs. Many of those jobs are right here in Arizona, which leads the country in copper production. Minerals also provide raw materials that builders, manufacturers and innovators transform into products and infrastructure on which we depend; examples include molybdenum that strengthens steel structures, lithium for batteries in hybrid autos and copper in solar energy technologies.

Our pathway out of the recession is being threatened by House Resolution 3446, a measure that would impose the world’s highest gross royalty tax on mining on federal lands — 12.5 percent. This new tax would result in higher mineral production costs, leading to Arizona and American job losses and an even greater dependence on foreign suppliers for minerals essential to virtually every sector of the economy.

U.S. mining is already obligated to navigate a duplicative permitting process that can delay projects up to 10 years. This new tax would be an added burden that will further impede U.S. mining’s ability to compete on a global scale, driving investment and mining jobs overseas. American manufacturing and construction would be forced to rely on higher levels of imported foreign raw materials. Keep in mind we are already at a disadvantage, as we import $5.1 billion worth of minerals — including those we are capable of producing, but do not.

Similar to our reliance on oil from unfriendly countries, measures such as this new tax leave us little choice but to depend on foreign countries, such as China and Venezuela, for mineral commodities.

Congress can choose a different approach that would lead to increased production of critical minerals, job creation and growth across the economy. Proposed legislation in Congress would require an in-depth evaluation of national mineral resources and raw-material needs. This legislation, leading to increased domestic minerals production, has already garnered bipartisan support in the House—including that of Reps. Ben Quayle and Paul Gosar, and support is building in the Senate.

The proposed legislation would also benefit our armed forces. Our military is one of our nation’s largest end-users of mineral-reliant products — equipment such as advanced aircraft, vehicle bodies, precision missile targeting systems and night vision goggles are some examples. A U.S. source would ensure our strategic autonomy in this arena.

Too much is at stake in our economic and national security to be derailed by a punitive tax. Call your members of Congress today. Tell them to oppose this new tax and support the legislation that will help domestic mining generate the jobs key to our economic recovery.

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