The Black Hills union. [volume] (Rapid City, Pennington County, Dakota [S.D.]) 1889-1904, 1895-04-05
TAXATION DE MORTGAGES.

4uOuSUIldl OOlleSldu.
TAXATION DE MORTGAGES.
EDITOR UNION:
The articles appearing in your COL
umns in regard to the taxation of mort
cages have been interesting to me from
several points OF view, but principally
because [ live in a state IN which mort
cages are taxed.
In the year 1879 the state OF Callfor-
MIA adopted a NEW constitution" IN
which occurs the sections following. viz:
SECTION 4. A mortgage, deed of trust
contract or other obligation by which q
debt is secured, shall. for the
OF assessment and taxation, be deemed
and treated as az interest in the pro.
perty affected thereby. Except as to
railroad and other quaslc-public cor
poratlons, in case OF debt SO secured,
the value of the property affected by
such mortgage, deed of trust, contract,
or obligation, less the value of such Sc
curity, shall be assessed and taxed to
the owner OF the property, and the value
OF such security, shall be assessed and
taxed to the wner of the property, and
the value OF such security shall be ass
essed and taxed to the owner thereof, IN
the county, city, Or district in which the
property affected thereby is situate.
The taxes SO levied shall be a lien upon
the property and security, and may be
paid by either upon the property az
fected thereby shall become a part of
the debt so secured; if the owner of the
property shall paw the tax so levied on
such security, 1t shall constitute a pay
ment thereon. and to the extent of such
payment a full discharge thereof; PRov1-
DED that if any such security or indebt-
ness shall be paid by any such debt or
debtors. after assessment and before the
tax levy, the amount of such lew may
likewise be retained by such debtor or
debtors, and shall he computed accord
ing to the tax levy for the preceding
year.
SECTION 5. Every contract hereafter
made. by which Il debtor is obligated to
paw any tax or assessment on money
loaned, or on any mortgage. deed Of
trust. or other lien, shall, as to any in
terest specified therein. and as to such
tax or assessment. be null and void.
The current rates of interest at that
time-1S79-were from ten to fifteen
per cent ner year. usually one per cent
per month The usurer said that if the
new constitution was adopted the tax
rate would he added to the rate of in
terest and thus the tax on mortgages
would be shifted to the borrower. The
fact was not so. There was no increase
IN the rate of interest eitherlmmediately
or afterwards, IN fact the rate of in
terest has had a downward tendency
ever since, until the recent hard times
beginning in the summer of '93.
In December 1885 I borrowed $l,1OO
on mortgage security at eight per cent
the loaner paid the taxes about two
per cent. l am Observation-Disclosures that
where the ability of the borrower to re.
pay the loan as per the terms of con
tract is undoubted, the same or a less
rate prevailed three years ago, while
money on note of hand with personal
security was loaning at one per cent per
mouth in small amounts, varying more
or less according to the reliability of the
security.
Now it is difficult to borrow money on
real estate security. the depreciation Of
land compared with the appreciation of
money having DESTROYED it's value as Sc
cnrltv. Right here IS a point for Nc
Gees consideration. Would not the
money loaner rather extend the time
ut his loan at the present rate and pay
taxes thereon than to burden himself
with land which under present condl-
tions is almost sure to be a loss to him
Another important feature is the fact
that under California's system OF tax
ing mortgages g. large amount of money
loans, loanable Confidence and store,
machinery and other accounts which
eventually often take the form of mort
cages are unable to escape the assessor
as they otherwise would do.
The plan of taxing land mortgages and
exempting like values in the security
from taxation has worked with great
satisfaction to the people of this state.
Excepting OF course the traficing, shy
lock class h are continually seeking
to overthrow the system but as a
change can only be effected by a change
IN the constitution the people have the
matter IN their own hands and are
likely to continue the present plan INDIE
fnltely. Yours, ETC.,
Redding, California, March "a, 1895.