Vermont watchman and State journal. [volume] (Montpelier, Vt.) 1836-1883, 1881-04-06
More About Taxing Mortgages.


More About Taxing Mortgages.
This is certainly live question, Judging
by the number of letters we get about it.
One long one now before us, from j. A.
Reyes of Chelsea, states the matter well
from the point of view heretofore taken in
these columns. Speaking of the proposal to
exempt money loaned on mortgage from tax,
on the bare possibility of consequent re-
duction of the interest rate, he says Note
the inconsistency Of the idea. A class hav-
ing every ground of advantage are to be
further favored by relieving them from a
tax on debts secured to them by. mortgage,
on the mere chance that the rate of interest
on such investments may thus be decreased.
Mortgagee and mortgagor are joint owners.
Is this plan to exempt the one more sensible
than like plan to exempt the other party
to the contract2 If one plan encourages to
loan at less interest, would not the other
equally encourage investments in real estate
to the profit of agriculture? 1t is nonsense
either way. Let each pay on the exact part
of the estate he owns, and let there be but
one tax on the whole. Compel the mortgage
to pay on the amount of the mortgage, and
the holder in fee to pay on the amount he
really owns, and no more. The justice of
the thing is plain"
This is the view the people at large will
| always take. 1t is the view we take, be-
cause as a practical fact this promised ex-
emption will be in the vast majority of cases
no real exemption. 1t only gives by law
what is already enjoyed by most lenders on
mortgage by cunning and fraud. During
the reconstruction period after the war our
political agitators were always warning the
northern voter against any plan of recon-
struction that pleased the south. Now this
plan of exemption is too popular with the
lenders, and the plan of an equitable single
taxation is too fiercely opposed by them, not
to show where the advantage or disadvantage
to them may be found. So strong are they
that in Massachusetts they absolutely con.
troll the Legislature in face Of the popular de-
mand, supported by many of the ablest men
in the state. This support is not only given
on equitable, but also on philanthropic
grounds, because under the present law it is
found that hardly any poor man who buys q
home and runs in debt on it is ever able to
pay for it. This discourages and demoral
ICES the working class, to the detriment Of
the entire community. 1t also encourages
that hatred toward the moneyed class which
disposes the mind of the sufferer towards
extreme and so-called communistic views
and gives dangerous power to demagogues
in times of financial distress.
The best argument on the side of the
lender is that while the mortgage is for {
fixed sum the value of the property fiuctu
ates. 1t may decrease so that the mortgage
represents its whole value, or even more
Yet this seems the rather TO be strong ar
gument in favor of the borrower, since al
the time he pays tax on all he really owps
be it much or little. If the property shrink
in value, he loses and pays less tax if it in
creases in value, he gains and pays more tax
while the lender pays tax on just what h
has invested, what he draws interest on, ant
what he will receive when the debt is paid
The interest he receives in times of depres
sion has then more purchasing power, AM
is raised with more difficulty by the boz
rover, which quite offsets the gain of
smaller tax to the latter.
The next best argument for the lender
exemption is based on his own character 70
dishonest evasion Of his duty as citizen
at is poor policy" says the Springfield RI
publican, "to levy taxes which cannot b
collected with a reasonable degree Of uni
formity. Credits are personal property
Loans on mortgages are credits and the,
largely escape taxation, but they are a
placed at rate of interest high enough
reimburse the creditor for tax which
does not pay" This is an exact reprodu'
tion OF the stock argument in favor c
licence instead of prohibition, in the sale @
intoxicating drinks. "You cannot enforc
the law in every case, therefore repeal it.
But it is really begging of the question
. All laws are evaded to some extent. Th
degree to which they are enforced depend
greatly upon public sentiment, the skill wit
which the law is drawn, and the pressure {
penalty and opinion upon the ofhcia
! charged with its enforcement. Doubles
under any law that can be framed concea
able property will sometimes escape tax
tion. But to use this as an argument
put all taxes upon real estate will not d
Z The practical legislator must see that, eve
!. were it the right thing to do theoretical
the theory is too recondite for popular a
ceptance. Put in force, it would almo
raise a rebellion-perhaps quite. At al
= rate let US have trial of the other wa
Let us make more and more stringent law
Ilss let us impose the severest penalties up'
conniving listers, let us have their lists OPP
to public inspection, or even printed in d
e, papers. Where there is a will there is
nnSy way. Rich men may be squeezed into
nd corner so tight that it will be their bt
'' policy to make an honest declaration Al
pay an honest tax. They may "squea
= but no one can say that he is abused.
has just been stopped from abusing othe
This often causes the worst sort of sque
ing, but it is squeal that excites no me
ID sympathy than that of cats on the roof
midnight.
4. Constitutional and legal objections |
te also urged. Says the Republican al
,le year bill was killed in the last stages
I'M the session, because the lawyers in the |
his islature agreed that to impose differ
er taxation on future mortgages from that
~ =, those now existing was to violate the
DIs quirement for just and equal taxation un'
the state constitution. On the other ha
to attempt to apportion taxation betw,
i, debtor aud creditor under existing mt
vs.; cages is to violate the obligation of contra
pm in manner repugnant to the federal con
ny tuition" Lawyers are famous for such XIII
n'' as these, developed as last resort.
ava constitutions and legal precedents that W
est injustice and wrong must be amended
swept away. They are man-made, and
be changed by votes. The argument is s