The herald., 1896-10-28
REPEAL OF THE MORTGAGE TAX

REPEAL OF The MORIGAGE lax.
Editor Herald: In a recent issue of
your paper a letter appeared from a
well known attorney of this city in
which he took the position that the ef-
feet of the constitutional amendment
No. l, by which it is proposed to amend
Sec. !, Art. XIII, and to repeal Secs. 4
and 5, Art. XIII, of the constitution
would be to enable the mortgage to
insert in his mortgage a. clouse requir-
ing the mortgagor to pay all taxes lev
sied on the mortgage or on the moneys
secured, and authorizing the mortgage
in case of default Of the mortgagor as
to such taxes to pay the same and re-
cover such amount from the mortgagor,
so that the man who owned a lot worth
$1,000, upon which he borrowed $500, Sc
cured by mortgage, would be compelled
to pay the taxes on the land and also on
the $500 secured by mortgage. This let
ter has been widely distributed, and in
a recent edition of the San Francisco
Chronicle it was quoted with approval,
and electors were urged to vote against
the amendment for the reasons ad-
vanced in the letter
There is absolutely no basis for such
position, for the simple reason that the
proposed amendment of said Sec. l, by
cages and trust deeds shall be exempt
from taxation" thereby industriously
guarding against the very evil which
your correspondent fears. In fact, the
sole and only purpose of the amendment
of said Sec. l, Art. XIII, is to repeal
the tax on mortgages.
A mortgage has no taxable quality
or existence aside from the money or
credit secured by it, and the word
mortgage" in the proposed amend
ment. as in the existing clauses of the
constitution relating to taxation is
used in the broad sense of credit, or
money secured by mortgage. So that
when it is declared that mortgages shall
be exempt from taxation it means that
no tax shall be levied on the money
which the mortgage is given to secure.
If any Of your readers doubt this they
have only to take the proposed'amend-
ment of said Sec. 1. published in your
pare it with the present existing Sec 1,
and the Secs. 4 and 5, Art. XIII, which
it is proposed to repeal
At present Sec. 1, Art. XII of the con-
stitution is as follows:
ARTICLE XIII--REVENUE AND
TAXATION.
Section 1.-All property in the state,
not exempt under the laws of the Unit
ed States, shall be taxed in proportion
10 ltS Value, TO De aScertalneQ as pro-
vided by law. The word property as
used in this article and section is here
by declared to include moneys, credits.
bonds, stocks, dues, franchises, and all
other matters and things, real, person.
al and mixed, capable Of private own
ership; provided, that growing crops,
property used exclusively for public
schools and such as may belong to the
United States, this state, or to the coun-
ty or municipal corporation within this
state, shall be exempt from taxation.
The legislature may provide, except in
the case of credits secured by mortgage
or trust deed, for reduction from cred
its Of debts due to bona fide residents Of
this state"
1t will be observed that nowhere in the
existing section are mortgages or trust
deeds in express terms mentioned in the
enumeration of property which can be
taxed-but of course the word credit"
includes mortgages, as the term ''cred-
it" means any evidence of debt, such as
notes, bills. etc. This, too, is clearly
shown by the clause in the latter part
of the present section l, where 1t Is said
1.-The legislature may provide, except In
the case of credits secured by mortgage
or trust deed for . reduction from cred