Iron County register. [volume] (Ironton, Iron County, Mo.) 1867-1965, 1893-11-02
TAXATION OF MORTGAGES

Common Sense Comments on . Practical
Question.
The New York Tax Reform associa-
ton is circulating through the state a
circular which exposes the foolishness
of the too common idea that the taxa
ton of mortgages is good for the farm
er. How that fallacy ever took root is
q mystery. One would suppose that a
moments reflection would enable any
one to see through it, yet every winter
men who claim to represent powerful
agricultural societies go to Albany and
work hard to secure the enactment of
just such boomerang legislation. The
theory of the mortgage tax is, of
course. that it compels money lenders
to pay taxes on their money, thus re-
ieving the owners of real estate OF
part of their burden. But every
theory must be tested by practice, and
there this one fails The circular men
toned thus describes its working:
Farmer B owns a farm assessed at
$1,000. It is mortgaged for ZOO.
Farmer pays a tax, say on the as
sessed value of his farm, of $685.. He
pays six per cent. interest on the mort
gage, or $50, q total of ss5. Screw, who
lends him the money, charges him six
per cent. because theoretically he has
to pay tax of $25, which leaves him
only s35 as the net return on his 81, 600,
or three and one-half per cent. Practi-
cally, he says, if have half q dozen
mortgages l can keep some of them out
of the way. say one-half of them, and
will only count on half tax, SO that
need allow only s1a. so for my tax out
of my interest of $50, or S47, SO net.
Farmer B may think that by making
Screw pay the s25 tax on the mortgage
he can get the legislature to authorize
a reduction of his assessment and con-
sequently his taxes; but does Farmer B
suppose that Screw will continue his
loan of $1,000 at six per cent. and pay
the tax of S25 out of it, and take three
and one-half per cent for his money?
Not at all. Screw would at once call
his money, and SO would every other
lender on mortgage. Farmer B would
find himself perhaps ruined if he could
not pay his $1,000. Real relief will
come to Farmer B. by the opposite
course. Ii Screw were relieved alto
gether of any obligation to pay tax on
his mortgage, he would much rather
lend his money at five per cent or $50
per annum, than at six per cent and
take his chances on taxation"
There is no question about the sound
ness of this reasoning. Moreover, it
has been proven by experience. Fiji
teen years ago the city of New York
had to pay six and seven per cent. in
terest on it's bonds, because they were
subject to taxation, although very few
of them were actually assessed. Final
ly the legislature exempted such bonds
from taxation, and the interest drop
ped to three per cent. or less. A
similar result would follow the repeal
of the law taxing mortgages The
farmer would find it possible to secure
all the money he desires at four to five
per cent, there would be boom in
building and improvement on the part
of the people of small means, and the
general prosperity of the masses would
be promoted Is it not advisable for
farmers to consider this matter in
scientific spirit, instead of continuing
to permit themselves to be made the
dupes of rattle-brained cranks?-Troy
proSc