The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1892-03-30
MORTGAGE Tax Exemption.

At its session of 1891 the legislature of
Michigan passed law providing that the
owner OF mortgaged land should be taxed
on the value OF his land less the amount
due on the mortgage, and the amount due
on the mortgage should be assessed to the
owner of the mortgage as an interest to
that amount In the land. This is the pro-
vision against double taxation" which
has been very commonly demanded in
the western states. The supreme court of
Michigan has recently held this law con-
stitutional, three of the judges taking
that view, and two dissenting. 1t will
probably go 10 the supreme court of the
United States on the question of vio-
lating the obligation of contracts as to
existing mortgages. The court also
holds that if the borrower agrees in
contract will be valid, even though the
amount of tho tax added to the interest
agreed upon shodld exceed per cent,
which is the maximum rate of interest
under the Michigan law. The necessary
result of this will be to produce the same
by similar law, which, as has been well
said. worked the exemption of the
money lender and left the borrower take d
more than before"
In an address before the farmers insti-
tute at Williamsburg, Mass, on March 90,
1890, Mr.. HENRY WINN of Boston said as
to the working of this law
L. \
the tax on his mortgaged land. This law
has been in force nine wears, and / cnal-
lenge you to cite a single instance where
the lender has borne the tax on the
mOrtgaged land. 1t is patent and known
of all men that the borrower always does
agree in the mortgage to bear the tax and
leave the lender free. Unless, then, the
lender has reduced his interest charge by
reason of the law, the borrower has not
prohted one penny by it-nay, he is worse
off than before, for he is compelled to pay
his share of the tGres The lender got rid Of.
Mr.. VIM then proceeded by an ex-
haustive review of statistics to show that
while there had been general reduction
OF interest rates the reduction on mort
gage loans had been less than on any
other securities, and that this law did
not reduce interest rates in the least, but
only helps the money lender, the man
who, above all others, owes tax" After
giving his arguments on the subject Mr..
VIM continued:
Do you think | am wrong on this
question of mortgage exemption? Then
ask President SEELYE, whom you, in this
section, at least, all know and trust. Ask
PERRY and DORCHESTER, thu able professors
OF political economy at Williams and
Boston university. Ask the tax commits
sloner. ASK his predecessor, GLEASON,
who for seventeen years studied our tax
laws and modified them more than any
man now living. Ask THOMAS HHL,
twenty-five years at the head of the AS
SCISSORS department in Boston, an au-
thOrity wherever a tax law is discussed.
Ask any man who has become distin-
guished for comprehension of Massachu-
sets tax laws. All stand alike in de-
nounoing this statute or petitioning for its
repeal.
This presentation of the facts under the
Massachusetts mortgage exemption law
has never been answered, and there is
nothing to prevent precisely the same re.
suit from occurring in Michigan. The
working OF the experiment there will be
watched with much interest by those who
have been examing the question, but we
venture the prediction that the Michigan
law will mean simply the exemption Of
money-lenders from taxation.