El Paso daily herald. (El Paso, Tex.) 1881-1901, 1900-01-25
THE PROPOSED TAX ON MORT
CAGES

Although ''credits" In general are
taxable under the present law, the
specific taxation of mortgages is an
innovation, and q far from welcome
one. The question of the taxation OF
mortgages is very deep. Many states
have tried the experiment in one form
or another, with small success. The
new Texas bill provides, first. that
Article 52l2. Every mortgage, deed
of trust, lien, contract or other obliga-
ton, whereby land or real property
situated in any county in this state is
made security for the payment OF debt,
shall be subject to taxation in this
state as other property is taxed, and
together with such debt, shall be as
sessed and taxed to the owner OF such
security and debt in the county in
which the land or real property is
situated.
. The county clerk is to keep record
of all mortgages and assignments of
same, from which the assessor is to
make q transcript. From this trans
cript the assessor is to assess all I'M
rendered mortgages. Interest falling
due on mortgages is made subject to
garnishment by the collector for taxes,
and no foreclosure may be had until all
tax claims are satisfied. Finally,
Article 5216. 1t shall be unlawful
for any person or persons, corporation,
company, or association of person
whatever, loaning money at interest," to
any person or persons, whether such
loans be secured by bonds and mort
cages or otherwise, to require the
h.
to pay the tax imposed thereon by
article 5212 of this chnpror; and in all
cases where such tax shall have been
paid by the borrower, the same shall
be deemed aud treated as usury, and
be subject to the laws Cover ming the
same.
The idea of the trainers of the bill
is to tax the debt itself, that is the
money that has actually been loaned,
on the principle that such money is as
truly subject to taxation as is money il
bank or stored away in safe, or as
is money invested in other forms of
personally. The report on this point, |
as on many others, is stupidity unsatis-
factory. 1t admits the inability of |
other states to meet the question, but |
it does not begin to explain why the |
method chosen has any advantages |
over the others. In some states mort |
cages are taxed as real estate, that is, /
the borrower pays taxes on such of his
real estate as is unencumbered, while
the lender pays on the mortgage. This
has some things in its favor. but ma
turally the tendency is still for the
borrower to pay the tax. By contract
between the lender and borrower, in
Massachusetts,, 1t can be arranged as
to who shall pay the tax, but in either
case 1t appears that the tax is paid but
once, and quite equitably. If it is true
that the borrower usually pays the
tax, it is also true that he pays no more
than the regular taxes would amount
to on the land 80 pledged. If the lend
er pays the tax, he makes it up in the
rate of interest charged, but the Dor
rover pays no taxes on the property
pledged, so he Is no worse off. Oregon
had q similar law, by which mortgages
were declared to be real estate for tax
purposes. In other words, mortgaged
property was assumed to change own-i
ership temporarily, and WAS assessed,
In effect, to the holder of the mort
gage.
II must be said that the Texas COM
mission takes the more rational view
that mortgages and real estate are d is
sinctly different subjects OF taxation.
The real estate remains real estate, I
and the tax on the mortgages is in fact
only a tax on the money that is loaned.
The owner of the land and the owner {
Of the money are both liable to tax, {
and the temporary relation of the bor- ]
rover to the lender, and the posting of
a security, in no way alters the true I
,wn ership and consequent liza bility to i
taxation of the two distinct forms of t
property.
Theoretically, the proposition to tax
in the county in which the
and is situated has its good points. It t
makes it possible to locate such prop l
,rty and to assess it with some &C
.uracy. But it would be highly diff
fcult to collect taxes on mortgages
held by non-residents. Certain it is,
hat mortgages held in this state upon 8
property pledged for debt in another j
tate would be entirely exempt, t