West Virginia Law Review

Document Type



Few industries have presented more troublesome problems for legislators and tax administrators alike, over the years, than has bituminous coal. There are two principal reasons for this. One stems from the physical character of this resource. Lying hidden beneath the earth's surface, coal deposits not only represent an asset of uncertain worth, but also one the value of which will gradually decline as mining activity proceeds. Consequently, the task of making equitable assessments for property tax purposes would be a difficult one even for an experienced mining engineer, and sometimes may verge on the impossible for an untrained local assessor. The other reason is that although the coal industry is still the primary source of income, employment, and tax revenue in many predominantly coal-mining areas, it has been the "sick man" of American industry for more than a quarter century. The purpose of this paper is to describe and analyze, from an economic standpoint, present methods of taxing this product and industry at the state and local levels. Although the analysis will encompass all major forms of taxation currently applied to the industry in the principal coal-producing states, special attention will be given to one particular state, West Virginia, and one revenue source, the property tax. In order to provide the necessary background for this analysis, the discussion will begin with a brief review of the chief economic and other considerations affecting the taxation of this industry. Among these are the criteria of a good tax, the physical characteristics of coal deposits and coal production, the economic condition of the industry, and the policy objectives of taxing bodies. Next, the practices currently followed by state and local governments in the taxation of this industry will be discussed. In this part of the paper, the structure and administration of coal-industry taxation in the principal coal-mining states will be described, and the level of taxation of the industry in West Virginia will be compared with that found in each of the five adjoining states. Following this, the strengths and weaknesses of the three principal types of taxes presently applied to the industry (property taxes, production or severance taxes, and corporate net income taxes) will be discussed. Finally, some concluding comments will be made with regard to the taxation of this important but long-ailing industry in West Virginia.



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