The Sauk Centre herald. (Sauk Centre, Stearns County, Minn.) 1886-current, 1890-02-06
AUX CENTRE HERALD
THURSDAY FEBRUARY 6, 1890.

The Sank Centre HERALD, discussing
the subject of taxation Of mortgages,
points out the ease with which the tax
is evaded by the mortgage taking the
mortgage in the name of a nonresident
friend, who cannot be reached under the
state taxing laws. In Stearns county
alone, the HERALD says, the latter meth
cd is almost universally resorted to, and
there are tens OF thousands of dollars
OF mortgages that are evading the tax.
The law puts premium upon misrepre-
sentation and discriminates against the
loaner who is too conscientious to re-
sort to such methods"
There is no doubt that such evasion is
widely practiced and the State fails to
derive the full benefit of the tax as in the
case of other taxes on personal property;
but in the majority of cases, the money
lender charges the mortgagor sufficient
" large interest to cover the tax and
this answers the same purpose. The
HERALD proposes that the realty only
be taxed in full and that an official GER
tifcate be issued, covering the proper
tionate amount of tax which the mortg-
agee ought to pay, the certificate to be
made receivable for either principal or
interest. That is, the mortgagor ad-
vances the tax on the mortgage and re-
ceives it as a rebate of interest, thus
paving a tax upon his equity in the
property only.
Still, this would not remove the diff
Guilty. The holder Of the mortgage
ought to pay the whole mortgage tax
according to the theory of the taxation
of mortgages. AS it is he receives the
tax from the party to whom he lends
the money by charging him larger rate
OF interest. and would continue TO do so
under the HERALD's plan. The HERALD's
plan does not seem to better the situa-
toni Evening Journal.
The HERALD does not think it possible
under any law that can be enacted to
prevent the exactions of grasping mort
gage creditors, so long as the demand for,
money is as urgent as at present. and
while agricultural real estate is aslow or
cheap as it still is, in central and north
ern Minnesota. Usury laws, however
stringent in terms or severe in penalties,
are practically SGT at defiance by arttul
evasion. So, too, under any law taxing
mortgages either directly or indirectly,
the mortgage will devise some effective
means of recouping himself at the expense
of the debtor to the amount OF such tax
either by higher rate of intesest or an
increased bonus. But the HERALD does
believe that the present relations between
borrower and lender will soon be
changed-are changing gradually and IRE
vocably-and to the advantage Of the
debtor class. AS cash capital increases
in amount and in confidence i'll the Sc
curity offered, not only will the rate OF
interest decrease but the demand for in
yestments on real estate security will in
crease, and that, too. irrespective of all
usury laws. Then it is that the value OF
the proposed method OF taxing mort
cages will become app aren't in securing
both to the state and municipal govern
ments full and equitable taxes-full to
the extent of taxing all existing values,
and equitable as compelling both par rites
in interest to bear their just proportion
of taxes, and no more.
Under the system proposed limiting the
value of the mortgage-tax certificate to
one YEAR rendering it void beyond that
date, would stimulate the debtor to
paw his interest promptiy-an advantage
to the creditor-and making such invc. t.
ments more desirable.
AS another feature, the HERALD would
suggest that, at present at least, mort
gage might lie drawn with waiver
clause, in which the debtor valves his
statutory right to use the tax certificate
in payment of principal or interest-the
mortgage agreeing affirmatively to pay
the''taxes on his creditors security, as a
bonus. Such 4 statute fortified by a ju'
dicious and effective usury law-one
which shall recognize no distinctions be-
tween the acts of a principal and those
of his agent or attorney in loaning money
would lift a heavy burden from the Dor
rowing class; capital will be amply pro-
tected and the state will cease to even
seem to tax fictitious or new-existent val
ues by a law which is only recognized by
it's evasion and, in fact, invites such eva
sion bv it's discrimination against honest
citizens.