Middletown transcript., 1891-03-05
Taxation OF Mortgages.
New York, Feb. %, 1891.

tention to legislation that will better
their condition. l find that your idea
OF bettering the condition Of the farm
er is to tax mortgages and exempt the
farm from taxation to the extent Of
the mortgage. This is a very pretty
theory; but will it work ? Let us
examine the Immediate effect Of such
law upon those who are now in debt.
The taxes Of Delaware, fortunately,
are comparatively light. A farm in
Sussex county, which I am supposed
to manage, is taxed only about $500,
and we believe the farm to be worth
at least $5000.0O. In New Castle
county farm that will sell for $5000.-
90 understand is taxed about $4,000.
But whether the tax be one cent on
the dollar or one-third of cent on
the dollar, perhaps, is immaterial to
the proper consideration of the ques-
tion. Whatever tax is levied against
the mortgage at once creates distrust
nthe mind of the holder of the mort
gage against his security and In the
case of New Castle county farm prop
erty where the tax would be one cent
on the dollar. or Wilmington City
property where the tax might be two
cents on the dollar, the mortgages
would in all human probability i'm
mediately seek for new investments
for the money, and force the payment
on great majority of the mortgages
now overdue; and we know what pro-
portion of the mortgages Of Delaware
are now overdue.
Now in regard 70 new borrowers OF
money In the State. Can there be any
doubt in your mind that the fact that
there is q law which imposes the tax
levied on the loaners of money and not
upon the borrowers would induce,
practically, all money lenders to re-
fuse to loan money on farms or any
property in q State where such laws
prevail ? You say the proposed new
law provides that the amount of the
mortgage shall be deducted from the
assessed value of the farm. Now the
assessed values of the farms are not
supposed to be more than one-half oi
their real or selling values. Mortgages
are made upon that basis, and conse-
quently, were that to be the rule the
deductions because of mortgages would
practically amount to the newly
assessed values of the mortgages, the
income which the State would derive
from taxation would practically be the
same, only the State would look to the
mortgage instead of the mortgager
from whom to gather the taxes un-
less, indeed, they should do, what
have no doubt they would do, make
the mortgager responsible for the taxes
owed by the mortgage. So the mort
gager would in that case pay the
taxes, and il he demanded the amount
Of the taxes as he would have the
right to do under the law, back from
the MORTGAGE, the mortgage would
simply say, "Mr. Johnson, that is your
legal right and will have to pay it.
but as sure as do pay it, will fore
close on that mortgage" You can
pile up all the fines and methods of
evasion that you please but that will
be practically the result, and when
the mortgager of that farm seeks for
money wherswith to pay the mortgage
now existing, and place another one,
an exact duplicate, in its place lie he
should be so fortunate as to suceeed)
he would have to pay additional
lawyer'scharges, conyeyancing charges,
and court charges. But If, as in all
probability he had secured money from
the old mortgage at the best possible
terms which could be secured, now he
would be unable to secure a new loan.
No man is going to lend money on a
specified interest unless he knows wit b
all the certainty that man can possess
in such matters that be viii be able
to get the interest specified. He will
not loan money at a rate of interest
that may be changed without his con.
sent. He will not loan money on a
farm where his mortgage may be tax
cd to enlarge county aims house, or
to make new county roads or bridges,
or to build new schoolhouse, or to
employ more teachers for the schools
now existing. A man, residing in
Pennsylvania can have no other than
philanthropic interest in the paupsrs,
the rogues, and the scholarly develop
ments Of the people Of New Castle or
any other county not his own and it
Is certain that his money will not be
loaned where any of it can be diverted
without his consent to such uses. I
viii quote from you" now a great
many farms are mortgaged, yet the
capitalist who loans the money pays no
tax, while The farmer who il already
borne down with debt, pays it all.
When man buys farm for which he
is unable to pay the cash he generally
borrows about two-thirds Of the value
of his land on mortgage" Should the
assessment of land not be more than
one-half of its probable value, (which
! think is correct assumption,
although not correct as far as New
Castle county is concerned, but which
it is as far as Sussex is concerned) il
man should succeed in borrowing two.
thirds of the value of his farm on a
mortgage, it is certain that the holder
of that mortgage would pay more
taxes than the adjoining farmer who
had farm of equal value would pay,
which would obviously be unjust.
I quote again from you :" The man