New-York tribune., 1900-01-08
TAXATION OF MORTGAGES.

TAXATION OF MORTGAGES
If the fine flower of the wisdom of the Special
Joint Committee on Taxation is a tax on mort
cages a substitute for the present direct taxa
tion for State purposes, the hope of securing a
reasonably perfect revenue system as the result
of its labors is apparently doomed TO disap-
pointment. The last thing that any rational
student of taxation wants is a multiplication Of
taxes. The reform should be rather in the di-
rection Of simplicity. There are already too
many separate levies for different purposes In
this State, and single property tax, TO be dis
tributed among the different agencies of govern
ment-city, county, school and State-according
to their respective requirements would probably
be more just and more economical than a series
of taxes levied upon different classes of property
by various officers for various purposes. A
mortgage tax at fixed rate such as has been
proposed would be another step toward in
direct taxation and while our corporation and
inheritance taxes have undoubtedly in the last
twenty years been of great service. it is also
clear that they are provocative of extravaganza.
The taxpayers do not feel them consequently
legislators have dared to be profuse in expendi-
lures so long as they kept the direct tax down
TO the rate endured before the indirect taxes
were levied Our State tax rate does have a
restraining influence. The cost has to be count
ed in making appropriations. But if a fixed
percentage on mortgages other securities is
substituted, then the individual taxpayer will
have no barometer by which to judge his rulers.
Moreover the income would depend not On the
needs Of the Government. but on the state of
business. If it fell short Of requirements the
recourse would have to be bonds or new taxes.
If the return was excessive 1t would be an ir-
resistible temptation to extravaganza.
What hope is there. also, that mortgages
would be better taxed. if called upon to furnish
the State revenues, than they now? They
subject to taxation under the present laws
and If country assessors happen upon widow
whose property consists of a few mortgages on
neighboring farms they swoop down and cut
her income in two But the great majority of
mortgages are not taxed, and if they were it
would frequently be in fact, though not in form
double taxation. Real estate owners get no de-
ducton from their land tax for the debt that
may be upon it. If they have personal property
subject TO taxation they can of course. offset to
it the mortgages but personal assessment
amounts to so little in this State and mortgages
so largely given by persons who own moth
ing but the equities in their real estate. that
taxation of land and also Of mortgages on it
would really be double taxation of one value
1t is virtually impossible to tax mortgages To-
cally as personal property without an elaborate
system Of exchanging records between counties,
for mortgage may be made on property in one
county and be recorded there. but its owner
may live and pay personal taxes at the OPP
posite end of the State. If mortgages are to be
assessed by central authority a great tax ma
chine must be estabshed-and there is some
reason to suspect that is what Mr.. Platt would
like There has already been talk of taking the
collection of the rreSPnt indirect tayeS from the
Controller and giving it to the Tax Commits
sioners who now assess the franchise tax, thus
offering an excuse for creating new full
fedged State department rich in patronage.
The theory of the advocates of a mortgage
tax is that it would relieve the burdens on real
estate. But would it? If a mortgage holder had
TO pay one-half of l per cent tax on his loan
would he continue to loan at Az per cent? No.
Real estate loans would advance the amount of
the tax, and the land owner and the rent payer
would carry the load just the same. 1t would
simply be handed along. If the State succeed
ed in assessing substantially all mortgages the
interest rate for that sort of investment would
rise so that the situation would adjust itself
about as it is now. While if only part of the
mortgages were reached their owners would be
subjected TO new and unequal burdens. It is
also necessary to consider the nonresident hold
er of New-YOrk mortgages and the New-York
holder Of foreign mortgages. If the mortgage is
TO be taxed as personal property at the holders
residence, then by getting real estate loans in
other States New Workers can evade the tax.
If the tax is made lien on the mortgage debt
at the place of its security, then New Workers
will be driven to invest their money elsewhere,
and land owners here will find borrowing cor
respondingly difficult and expensive.