Serving Northern St. Louis County, Minnesota

Corporations rule

More than ever, the nation’s political class kowtows to those with money


There was a time when some politicians in this country stood up to corporate America. They were progressive and truly populist, and believed that the government had a role to play in ensuring that the economic gains of a burgeoning U.S. economy were shared by all. They understood that too much economic power in the hands of a relative few threatened the very foundation of democracy.

Those progressive leaders, including a number who helped shape the politics of Minnesota, must be turning over in their graves.

We now see the political power of those with great wealth every day in Washington, where the Republican majority takes its marching orders from the billionaires who keep them in power. We see this manifested in a tax bill heading toward final passage that ladles out huge tax cuts to the wealthiest citizens and corporations at a time when income and wealth inequality in the U.S. is already obscene. That these tax cuts will be paid for by higher taxes on many average American families and higher health care premiums for working people, makes the injustice all the more astonishing. The tax bill that pretend-populist President Trump hopes to sign before the end of the year is the virtual manifestation of the power of an immoral oligarchy that year after year demands a bigger share of the wealth that America creates.

Yet we don’t have to look as far as Washington to see the effects of growing corporate power and influence, and the ways in which it erodes the public good. Three years ago, we reported on the ever-shrinking share of northeastern Minnesota’s mineral wealth that ends up being returned to communities in the region. This week, we can report that nothing has changed during the ensuing three years. In fact, it’s gotten worse. The value of the production tax, and other levies on the taconite industry, continues to lose ground to inflation, which means less actual spending power for area schools, cities, or for economic diversification.

Today, the region’s taconite mines are yielding as much ore as ever, and the value of that ore, while lower than a few years ago, remains historically high. Even though mine production dropped last year due to foreign dumping of steel, the value of the ore produced in 2016 was still about $1.8 billion. The roughly $80 million in total taxes that the mining companies paid on that production amounts to just 4.4 percent of the wealth that ore generated. That’s pathetic.

While wages contributed approximately $250 million to the economy last year, that’s still just 13.8 percent of the total value of that production.

Twenty-five years ago, a ton of iron ore sold for about $14 a ton, and the region’s mines generated about $98 million a year in taxes. Today, that same ton of ore fetches about $61 per ton as of this week, and the mining industry would still generate only about $100 million a year in taxes on equivalent production.

Adjust for inflation, and that $98 million that the industry generated in taxes in 1991 would equal $175 million today. In 1992, the industry paid about 18 percent of the value of its ore in production taxes and other levies. Today, that percentage has fallen by three-quarters.

And that’s still not enough to please the mining executives. In 2015, they successfully lobbied to exempt equipment used in mining production from the state use tax, which saved mining companies $13 million last year. To make matters worse, the Legislature recently authorized Minnesota Power to reduce power rates on the mines and large paper plants, and have local residents, many on fixed incomes, pick up the tab.

No wonder the rich keep getting richer. From Washington, D.C., to St. Paul, corporate America is running the board, and we’re all paying the price. For years we’ve been promised that if we just cut corporate taxes and reduce regulation, corporate America will create new jobs, boost wages, and reinvest in our communities. Instead, the corporate windfalls have all gone straight to the top, while workers’ wages stagnate and manufacturing production continues to move beyond our borders.

How long before the American people say enough is enough? For too long we’ve allowed politicians to get by with lip service about the needs of the middle class while they’ve consistently passed laws demanding less and less from corporate America and the wealthy. It’s time we wise up and quit falling for politicians’ populist rhetoric while they pass legislation bought and paid for by billionaires, or mining company executives. There was a time when Americans voted for candidates who were true to their word, and truly believed in helping average Americans. Let’s start electing that kind of leader once again.


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Rick Sathre

The taxes paid on production of taconite is the mining industry equivalent of real estate taxes. You rail against 4.4% of gross sales being paid into the public coffers. You can, if you wish, compare that "real estate" tax rate to commercial and residential rates. You will note that 4.4% is much higher than you pay for your taxes.

2 days ago