The sun. [volume] (New York [N.Y.]) 1833-1916, 1876-02-21
Taxing Mortgages in New Jersey.


Taxing Mortgages in New Jersey.
One OF the most important subjects that
has engaged the attention Of the present
Legislature OF New Jersey is that relating
TO the taxation of mortgages.
Under the old Constitution, by the pro-
visions OF what is known "a the Five Coun-
ty act mortgages in Ave of the counties
near New York were exempted from tax
alton. The new Constitution provides that
property in all parts of the state shall be
assessed for taxation under uniform rules,
and this is considered MS virtually repeal
ing the Five County act, though no such
effect was con tomplatcd when the instr,i-
ment was framed. Statistics derived from
authentic sources show that the operation
of the Five County act has been extreme
ly beneficial to the State. Since 1866 the
increase in the taxable property in the FIVE
counties affected by the act has amounted
to s120, 72s 1924, against an increase OF ST.
52s 09e in the remaining sixteen counties,
being an average increase in the former OF
CO per cent. against only IL per cent. in the
latter. The last report of the Comptroller
shows that there are borrowers from
savings banks In the Ave counties, secured
by mortgage, TO an amount exceeding Sl4,-
600, 600; while all the other savings banks
in the state have invested in such securi-
ties only about $500, 900, about one-half Of
the loans thus secured in all the banks
consisting of sums not exceeding $1,000.
1t would naturally be supposed that the
representatives OF the sixteen counties out
side of the operation Of the Five County
act would gladly avail themselves Of the
opportunity Afforded to extend its benefits
throughout the State, and that they would
have sense enough to see that the opera
ton Of the act in so greatly increasing the
amount OF property liable TO taxation for
State purposes, is decreasing the rate OF
taxation throughout the whole OF New
jersey, thereby benehting the whole pop
ulation. But New Jersey has n set OF
country legislators who seem to bo in
capable of taking n reasonable view of the
subject, and insist that all mortgages
should he taxed, as well as the property
mortgagcd, thus making the owner Of the
mortgaged property pay a tax on the fun
value of the property which stands in his
name, and a further tax, ut the same rate
upon what he owes FOR the same property;
for in the end II is the owner Of the mort
gagged property who has to foot the whole
bill.
These short-sighted individuals have per-
sistently resisted all sensible measures in
tended TO solve the difficulty but the COM
mittee having the matter in charge have
at last agreed to report n bill by which
real estate generally is TO be liable for the
whole amount OF the tax assessed upon 1t.
aud the owner will be entitled TO require n
separate receipt for the tax paid on the
value Of any mortgage upon the property,
and the holder of the mortgage must ac-
ccpt this receipt rs equivalent to money in
the payment of interest, thereby requiring
the mortgage holder indirectly to pay the
tax on the property to the amount of the
mortgage which he holds. But the bill
provides that in the district covered by
the Five County act the owner of the
property may agree with tho owner Of the
mortgage to pay the tax on the latter. IN
which case the tax paid shall not be a legal
payment for interest, which would leave
In the five counties matters just about as
they are wherever there is an agreement
in writing 10 that effect.
This is all very well, so far as the 1--WE
counties are concerned, provided the ex-
cepuon TO the general operation of the law
would not bring 1t within the limit of the
constitutional objection which lies against
the Five County act itself, a question which
should not be left IN a shape TO provoke
! litigation. 1t appears 10 us that the plain
est and most sensible way TO settle the
matter would be to tax real estate, at
just valuation, aud leave IL throughout
the state a matter for private agreement
between the mortgagor and the mortgage
ms to who shall pay the tax on the part of the
property represented by the mortgage.
To summarly deprive the people who
have enjoved the advantages OF the Five
County act Of the benefit Of Its provisions
without providing any means for their re-
lief, would cause savings banks TO call in
their loans secured by real estate, and
would result in irretriovable disaster 10 II
large portion of them, us well rs in utter
ruin to thousands of families in moderate
circumstances who have invested all their
means in homes which are yet only par
TALLY paid for. At the same time il would
inevitably lave the effect Of driving cap
ital and enterprise from the State.
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