This Bureau of Mines report is a background study of severance taxes on mineral production. The ratu.Gubases, and other features of state severance tax legislation as of March 1978 are presented, as are the amounts of state severance tax collections for fiscal year 1977. Some statistical comparisons between severance tax collections, total state tax collections, and total value of mineral production in the states involved are presented to portray the relative importance of severance taxes both in state tax revenue systems and in mineral industry revenues. A general discussion of the purposes and principles of taxation, the unique nature of a mining enterprise, the various types of taxes imposed on mineral production, and the character and rationale of the severance tax and its impacts on mining firms sets the severance tax in perspective. A bibliography of materials on the severance tax is included.