The Vermont watchman. [volume] (Montpelier, Vt.) 1883-1911, 1884-10-15
Double Taxation.

papers have been discussing the ques-
ton with considerable zeal, and it will
doubtless be the fruitful source of pro-
posed legislation. The Burlington Free
Press, among the state journals, has
been somewhat conspicuous in demand
ing reform" in this department of
taxation. In leading editorials it vo-
ciferates, "Double taxation must 60"
and if noise will exercise the evil spirit
it has conjured up, its time has come.
The general position seems to be that
to tax real estate at its full value and
then to tax mortgage upon that real
estate constitutes double taxation, and
this is declared to be unjust. The ar
gument is that property should pay bat
one tax, that mortgages are not prop
erty, that the tax on mortgages compels
the borrower pay ahigher rate off inter
est, and that if the land only were taxed,
if the mortgage were exempted from
taxation, the money-lender would re-
duce the rate of interest accordingly, and
so tighten the burden of the mortgageor.
1t is beautiful theory, and it places
high estimate upon the benevolence of
mankind in general and the money
lender in particular. To illustrate the
enormity of the existing law, the Free
Press cites the case of young man in
Burlington just setting up in life for
himself" He bought a 1" little place ="
of his father, for which he agreed to
pay $780, He paid $40 in cash and
gave mortgage for $3.50. When list
ing time came round, the assessors
taxed the young man for the market
value of the house, and the father for
the mortgage Now let the ties of con-
sanguinity between these individuals be
destroyed, and let the purchase of the
little place" be considered as bona
.fde transaction and strictly business
affair. Add to the elements of the
Free Press problem the case of another
person who had saved $500 and invested
it in a stock of goods. The three-the
young man, A, without means, the real
estate owner, b, and the tradesman, G.,
owning his merchandise without incum-
brance-make up miniature commu-
nifty. The Free Press illustration
presents an extreme case, but to give it
its EXTREMIST aspect, suppose the young
resident gave his mortgage for the full
amount of his purchase, $500. Sup
pose this miniature community raised
sixty cents on its grand list, the average
rate by Ex-Governor Barstow's estimate
Each members property tax before b
sold the little place to A would be as
follows:
A. without means. 80 %
b. on $500 real estate. 80
c, on $500 merchandise, unincumbered......... 80
Now A buys the little place of b and in
payment the latter takes the formers
note secured by mortgage. This COM
munity again raises $3.50, but the rate
is reduced under the existing law to
forty cents on the grand list and each
member pays taxes rs follows:
A, on $500 real estate. IS 20
b. on $500 mortgage note ...,.............,.....
c, on $500 merchandise, unincumbered. u
The grand list has been increased fifty
per cent and the rate of taxation re-
duced one-third. If the "reform "
which the Free Press is advocating
should be enacted, one very obvious
general result would be that the mort
gage would exact of the mortgageor a
written agreement 10 pay all the taxes
on the mortgaged property. This min
iature community, then, to raise $3.50
under the new system would be taxed
as follows;
A, on $500 real estate.
II, $500 note exempted ACKNOWLEDGEMENTS. u
G. on $500 merchandise. unincumbered.. ~
That is to say, the Free Press " re-
form" has reduced the grand list one
third by entirely exempting B, who ID
now practically money-lender, and il
has relieved" A, who is now practi
cally borrower, by adding fifty pei
cent to his former tax. One halt
the exempted money-lender's tax has
been transferred to A, and c who hat
no interest in A and BIS transaction
and derived no advantage from it, il
saddled with the other half. The ere
form" has given the money-lender {
bounty, and the borrower and the unin
terested party, the debtor and the unin
numbered public, have been taxed t,
pay that bounty. A and G pay under
the new system one tax and half O.