The Cincinnati daily star. [volume] ([Cincinnati, Ohio]) 1875-1880, 1876-02-12
Taxing Mortgages.

,
The New Jersey Legislature are just
now engaged in violent controversy on
the subject of taxing mortgages. Their
State Constitution provides that "Prop-
erty shall be assessed for taxes under
general laws and by uniform rules, ac-
cording to its true value" A bill is
pending to exempt mortgages, made be-
fore this constitutional amendment was
adopted, from taxation. 1t is claimed
that under the exemption that existed
before this amendment went into force,
in September last, large amounts Of
money were invested by New York cap
italists in mortgage securities on New
Jersey property; and, if now subjected
to taxation, that the investments will be
suddenly Withdrawn, to the great dam
nge Of the business interests, and at
tended by disastrous consequences to
individuals.
The subject of taxing mortgages Is one
of considerable public interest every
where. Experience has fully demon
strated that the taxation OF mortgages
has resulted In driving away money in
yestments from any State or locality
where such taxation exists. The man
who lends money on mortgage security
at six per cent, and has to pay tax Of
two and a hall per cent, receiving thus
an income of only three and half per
cent, will not be likely to let his invest
medts remain long in that predicament,
when he can get six per cent. net by
placing it elsewhere, on security equally
good.
We know that it is commonly said that
the taxation of mortgages is taxing the
property of the rich man who lends
money, to the relief OF the poor man who
borrows it. This sounds we'll; and yet
It NAV be found fallacious. Many peo-
pie besides rich persons loan money.
The finds of the widow and orphan,
comparative mites In themselves, though
possibly sufficient to yield moderate
support If the net income of six or eight
per ceat. could be realized, often consti-
tute the principal loan investments OF a
community. These are not rich people,
and yet their funds, though not large,
should be put to interest for their good
Again, 1t isnot the common occurr ence
that. they are poor people who are the
borrowers Of money. And yet it is fol-
such that the compassionate regards Of
this taxation of mortgages are invoked
Moreover, even If the borrowers be in
pniy moderate circumstances, this law
pf taxation does not, practically, oper
Ate to their advantage; because the
lender will say: I can not loanmy means
at six per cent. and then pay two PEI
cent. tax upon the mortgage; but 1 viii
letyouhave the money at eight per cent.
SO that I can realize six per cent. AND
thus the borrower, whom the law Away
falsely assumes to be poor, and gener
ousIy aims to protect, is himself com
pelledto pay the tax by being required
to pay two per cent. more for the loar
than he would otherwise pay. Conse
quently this mode OF taxation utterly
fails of its purpose in this regard.
1t certainly is correct In principle
that the taxation OF property should bt
Uniform. But it would be difficult FOL
amy Legislative genius to show how i
Is that the making Of mortgage car
create any property. A man may sci
his farm for $4,000 and take mortgage
to secure the whole Of the purchase
money. The seller is Immediately taxet
pn his $lO, 900 mortgage, and the buyer il
also Immediately taxed on his $40, 90
farm; and yet not single additiona
dollar of property has been created b
the transaction.
In communities like ours in this coul
try, where business enterprises are n,
merous and boundless, where there al
brains and business capacity anon
tens OF thousands of honest and enc
getic men who have not capital in none
to large extent, the sound policy OF I'll
law would be to lay no burdens upo
loans, In the form Of taxation; I; to the en-
THAT men who have means may be willir
to place those means at cheapent
rates within the reach OF business cha
nels, on mortgage security. In this ma
ner.he increased prosperity Of a eol