New-York tribune., 1876-04-08
TAXATION OF MORTGAGES.

SIR: Notwithstanding the clear exposition
recently given by the supreme Court OF California OF he
principles involved In the taxation OF mortgages thefe
are good many people-qute large huinDer ID 'le
present Legislature Of NewJersey-Who are unaoe 10 see
why mortgages should De taxed the same rs properly
in general or why legislation exempng mortgages ron
taxation ia not legislation I'm favor Of the boattd
capitalist. and 10 the detrmcnt Of the attenna-
ted borrower For the purpose, then, OF having
IA little further plain talk on this important
question with the public, ask the privilege OF
replying to n recent correspondent Of THE TRIBUNE III
sIo March 9. who chaTacterizes the Cali ornia d.
csion IA having made "in sublime Ignorance of the
te nature OF mort cages" and who predicts the most
radical resul from the exemption OF propert- IN case
New-Y,rk shall follow the precedent thus created
"The decision which yOu CTHR 1EIBUNE) quote with so
much approval goes immensely further than It's authors
intended 1t will exempt bank bills and greenhacks
But il Mr. so viii examine the law Of Congress OF June
30 1864 he will find that national currency matona
bank no.eg and Unted States notes a.. lega-tendcr
notes. are Expressly made free from state and municipal
taxation The National Banking act provides that tHe
Government shall pay all National bank notes wnlch are
not promptly redeemed by the banks Issuing them Ihey
are obligations Of the General Government, and could
not be taxed If there no prohibition by Congress.
Congressional action however all donbt on the
subject Again, the U s Supreme Court, In Brooks agt
Supervisors & Wallace, p. 2Gl. has decided that egi-
tender notes arc national obligations payable IN CON- ana
exempt from State ard municipal taxation
Your correspondent is also mistaken in supposing that
MORTGAGES are taxable according to the laws OF the state
OF Nev-Yorl The law of New-York docs, however, i'm
pose taxes N resident ggee, but ther Is no tax on
the mortgages or reduction in the taxable vaae OF the
town. II The owner of mortgage on realt' in New
York resides in Maryland, California, Canada, or the
countries OF Euro e, there is tax imposed on him fO
the ownership OF the mortgage either where he resides or
in New-Yor1. The slate OF NcwYork in no form as
flttr. an nlFitf AK
resident mortsagees and thereby gives cor
responding bounty - nonresident mortgages. dis
cra,natng tax co0red or Hebrew mortgages couId
not ba cons dered tax MORTGAGES, and would mn
doujely bo decided by tho highest cours 70 be tax on
color and religious belief aud not tax on nOrt-agea
Is u also ey lent that discriminating tax solely on
resident mortgages IS nothing but an odOus, dlscrhi
nating and arbitrary cxac,On res dcncci
But II now taxes were imposed uniformly on mortgages
when made. il would seem TO require no argument l."
salts y that the bOrrOwer-the owner OF the l&nd-anl
lender would pay tao AK, OF not set tuc money
ou the mort gage. Boys asc sometimes made to b"hc'c
that birds can bo gt Dy throwing salt on their tS
but NO ons sapposes that cautions old snyocls b.
raped by these They 30 not lend money for
amusement or b-neyoence, bu. because aiey bolieV"
tnat they Will reazo profit equal to ihc average profit
OF other investments Of like security. TIC borrower,
Therefore must pay rate of interest In addition 10 tue
taX or estimated tax, -qua 10 the pots of 0tner invest
merts or ne cannot blrrow At all This IS law of human
nature which always executes Jsof and whcI theorists
aud egsators repeal, suspend, or render in
any way null and void. It Is not only an unlltes-
abe natural law but has been iudiciay recognized
enforced by the Supreme Court Of tine United states
in the case Of Weston ast the city of Charleston &
Peters, 4J in which the Court held Lat the owners AID
holders of United states bonds exempt from s,a.e
taxation because such tax would in lygal eif ct be
tax On the bOyrOwer-the General GOyernment-its
property ana resources, by mpdiTing Its borrowing
power The Court said "Tbe right tax the contract co
any extent when made must operate on TIE power o.
borrow before 1t is exercised, and nave sensible nhu-
ence on the contract" The Court added: Tie tax on
Government stock is thought by the Court to be tax on
lr power money on the credit OF the United
sa.cs." Here, thon is the highest judicial authority as
sartiug that taxes collected through tue meuum ana
agency Of lenders law burGous Oh borrowers and
ghuS On property.
The present Constitution Of California which has been
I'm force more tlan quarter Of century, anj which
has now been for the first no authortatiyey inter
preted on the subject Of taxing credits provides that al
.uxaiion shall be "unif,Im" Now, II two adjoining
farms of tie cash value are taxed each at The same
~ and % l. tWO farms is motsaSed iOI hui IT,
value, the mort aasor must pay on his farm more thJh
uis ua -hbor PAYS Ike and adjoining farm, for he
must pay the taX the tsage collected through the
lender this il the legal eject unicss the dee SION o
gle Uutted satcs supreme Court reversed wIcI de-
c,,ion gives full to The doctrine That taxes co..
ec.ed through the agency Of lenders primary
burden ON bolroWe,s. This sugcharse upon
tho debtor OF morigacOr must be the inevitable
eject unless il can b. sablshed that Government
bonds and mortgages, bearing gwen rate OF interest
ygill tho open market at as high "a price when
annually taxed two or tire per cent as When untaAeu
Il is an obvious proposition that freeing debts iron J
aon will enhance the borrowing power of future debt
ors AMI relieve their property rom taxation @ tbs cH-
cent OF tho exemption II these obligations from taXtOn
,,Ft nd mon
slD has therefore, entered into contest beyond his
uowcrs when he makes a warfare upon wellAu0wu
economic and natural Law, and upon decision Of the
highest court of the land, and when is by force and
effect Il part OF the National ous,itution.
Culde ideas exist about debts being property: but
the subject examined it viii be seen that credits are
Only choItc titles AMI the property Of debtors. Credits
facilitate Inc production aud transfer Of property ana
rights 10 property, but they not, in any economic
Jr purpose OF taxation, the property ITSELF
Property or wealth cannot he increased by making
credits debts; they are only the evidences Of TIE
transfer property which has been produced by labor
,e basis Of all property. The right to transfer is ue
dent TO ownership. and tax transfer Is another
form OF taxing the property transferred. Credits are
only property in the OF rights or titles To physical
actuacs- tho product of labor-aud II tie physical
actuay il taxed whole, the titlo TO all OF one Of tn
parts In tie form Of mortgage simple dcDt lease, fee
simple clear disputed tc, viii be taxed also. 10 is
Iuis is n simple question OF mathematics, and not oi
law or poIt ca economy. Itwould invoke end trouble
e. require tlo tax tie exact amount OF each per
sons interest legal equitable IN any given subject of
taxation. How could the General Government collect
dues under such rule Property is taxed where It Is
found and the state cannot examine even into the title
n real estate before it IT. but il the lana
Itself its simple value, without reference 70 the
rious forms Of equitable. legal life interests house
hold mortgages inchoatc debt interests wB!cn may
exist on the property: Uniformity and equality Ot tlSl-
ton and freedom from mutt plicaton OF taxes by dcr-
eut Stes require that the state which imposes the tax