The Portland daily press., 1892-11-03
Mortgage Taxation.
To the Editor of the Press:

Mortgage Taxation.
To the Editor of the Press:
The levying of taxes on real estate as
well as upon the mortgage which incum-
bers such estate is a system of double
taxation quite unwarrantable in these
days of advanced thought and perfected
methods. While it is clear that no piece
of property should be liable to double
taxation it is equally clear that the money
advanced by way of mortgage on real es-
tate, should be exempt from taxation
as personal property, because from the
moment of such advancement, it be-
comes an actual investment in real es-
tate bearing the same relation to the
property except for the time-limit, as SO
much purchase money would do. Of
course it is the value in the property, as
represented in dollars and cents, which
constitutes taxable property, and the
real value is often more clearly repre-
sented and declared by mortgage, than
by warrantee deed. For all taxable
purposes the one takes the place of the
other and for this reason a mortgage in
vestment should not be taxed as personal
property, while the estate itself is taxed;
Either the MORTGAGE or owner should
pay the taxes on the real prop
erty, in whole or in part but GER
tainly not both. Should the owner
pay them? The moment the owner
of real estate mortgages his es-
tate, does he not practica1ly-and con-
Acknowledgements to be the owner, in
in whole or in part? If the property is
mortgaged to full value should the mort
gagee pay the taxes, or if only in part,
should the MORTGAGE and owner pay in
proportion to their individual interests?
When narrowed down to this point it
seems clear that only one tax should be
paid by one party or the other on single
piece of property: and while the thing
which makes the owner of a piece of I'M
inoumbered property liable to taxation,
is it's value, the money or it's equivalent,
actually invested, and remaining in the
property, the man who holds mortgage
ON piece of real estate is as much an in
weston in real estate, to the extent of said
mortgage, as the nominal or presumed
owner Of the property and as such, is
liable, and only liable, as an investor in
real estate. 1t only remains for the
state to say which shall pay the tax, the
MORTGAGE or owner. Custom, conven-
er or nominal owner, shall pay. Even if
all mortgages could be known, and were
obliged to pay the real estate tax in pro-
portion to the amount of mortgage, there
would be no personal advantage in the
change as the mortgage would charge
enough higher rate of interest to offset
the taxes imposed, while under the pres
ent method, the mortgage only gets. as
a rule, fixed, legal rate of interest for
his money which interest rate cannot
consistently be reduced by legal taxa
ton.
The law. then, properly and rightfully
looks to the property, to the party who
owns, or claims to own it. to pay the
taxes. The property, then, fixed for
taxable purposes, at a certain standard
of valuation-the property, as represen-
tative of a fixed value and price, should
not be forced to pay double taxes on the
whole, OF any part, of that value.
Unfortunately for those who have to
buy, money is as much thing of pur-
chase and sale as any other commodity,
while it is about the only thing on which
the law presumes to fix however unsuc-
cessfully) limit of profit, in the way of
interest and then. as in the case of mort
cages, burdens it with tax which may
be already paid. OF which IN any case is
amply secured. Whether or not this
view of the case holds good in the case
of bonds may perhaps be protitably con-
sidcred in connection with the immense
amount of llntaxed property in the hands
of our great corporations.
To put the matter in a few words: a
mortgage ON property, SO far as taxation
is concerned, is equivalent to purchase
money. since it takes the place of it. and
stands for the value of the property itself
either in whole or in part. Money, if it
can be found, may be taxed as personal
property before an actual purchase or
transfer is made, but it cannot, OF should
not, be so taxed after it is exchanged Tor
real estate. If A. has got $1,000, for
which he is taxed as personal property,
and excha ges it for farm, his personal
tax is sunk with his personal property in
the farm. B. wishes to sell his house,
but, unable to effect a sale in the usual
way, he sells it to a mortgage or mort
gagees; that is, he finds some party or
parties who advance money enough to
cover it's full value. He has practically,
and Intentionally sold the property, and
the mortgage money is actually purchase
money, and should not be taxed Sepa-
rately from and in. addition to the value
of the property. Does not this rule hold
good in the ca Sc of bonds or any other
claim upon property universally recog-
nized as properly and rightfully taxa
BILE?
While there should be no such thing
as evasion on the part of the citizen,
there should be no such thing as dis
elimination in favor of capital OF politi-
cal influence. The small property owner.
is made to pay in full when the prop
perty is in sight. How is it with the
immense properties, in sight. owned by
our great railroad and other corpora
tons, to say nothing of large individual
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