The weekly democratic statesman. [volume] (Austin, Tex.) 1871-1883, 1881-12-22
TAXATION on MORTGAGES.


The question of an equalization oI
taxation between property mort.
gagged and mortgages is claiming
considerable attention III some of the
states. In South Carolina there has
been much agitation upon the sub.
ject, and the legislature of that state
may soon take the subject in hand fol-
a solution. AS the law exists in Texas
and most of the states, property
upon which money is loaned, Sc
cured by mortgage bond or by deed
of trust, is subjected to double tax
alton. AS the Ne1cS de Courier says
there is no need of argument to
prove this a fact. When planta-
tion is worth $4,000 and it is mort
gagged for $4,000, property worth
$4,000 pays tax on $4,000. On the
face of it, the holder of the mort
gage pays the tax on $4,000, repre-
sented by the mortgage, but as mat
ter of fact the lender of money makes
the raie of interest high enough to
cover the tax on the mortgage, and
in the end it IS the owner of
the mortgaged property who pays
the whole of the tax. The land
owner pays q tax on what he owes
as well as on what be has. But
when the landowner pays the $4,000
for which his property is mOrtgaged
he is certainly, as regards that
property, $4,000 better off than
while the mortgage was in force.
Yet, without taking into account
the tax included in the interest on
the mortgage, he pays no more
taxes than when he was $4,000
in debt. The first thought will
naturally be that the proper plan
is to exempt property from
taxation to the extent of the mort
cages upon it, so that the owner
and the mortgage will, between
them, pay taxes on the full value of
the property and no more. But
such an arrangement would open
the door TO fraud, in encouraging
the mortgaging of property for the
sake of escaping taxation, and the
general opinion is that the most ef-
fective plan would be to exempt
the mortgage. Not long ago
the Springfield Republican dis
cussed this question, and its con-
clusion was that mortgages should
be exempt, and not the property in
any part. From the arguments
presented we deduct as follows:
l. Because to tax them taxes the
poor mans estate twice, the rich
mans once. The poor man, when
he buys, incurs a debt secured by
mortgage. The debtor is taxed for
his land, the creditor is taxed nomi-
nally for his loan and charges it
over to the debtor, who is thus
double-taXed. The rich man, who
owns his estate free of debt, is
taxed on it but once. Therefore
exempt mortgages from taxation
as an act of justice TO the poor
man, and to the debtor class.
2. Because it is poor policy to
levy taxes which cannot be collected
with a reasonable degree of uni
formity. Credits are personal prop
erty. Loans on mortgages are cred
its, and they largely escape taxa
tion, but they are all placed at a rate
of interest high enough to REIN
burse the creditor for tax which
he does not pay.
3. Because real estate owners can
better afford to assume and pay the
small amount of revenue now de-
rived from mortgages than to have
the rate of interest kept up one per
cent. on the total of mortgage loans.
4. Because the surest way for the
state to encourage industry, is to be
just toward 1t. The plea Of the poor
man to the state should always be
that of Diogenes to Alexander, "Get
out of my light"
5. Because exemption, pure and
simple, is the only remedy which IS
perfectly ineligible to the assessors,
which gives the people no hard
''sums" to submit to the lawyers and
fight out i'll the courts, which raises
no questions between residents and
non-residents, and which requires no
relief to be extended to savings
hanks on6 other financial inetitu-
tions.
The question has had some atten-
tion in Texas, and it deserves more.
There should be an adjustment OF
relations, by which either the mort
gagged property should be credited
with its amount of Indebtedness, or
the mortgage should be released.
permitting the borrower of money
to make better terms with the money
lender.