The Houston daily post. [volume] (Houston, Tex.) 1886-1903, 1900-01-15

sion IL is non-productive. ana u Is i'm
po,sibIa for him 10 shift the tax on to
some one else When he lends II he VIII
reouirc the borrower 10 pay as interest
ina amount he IL willing to take for it,
nae MUS the tax he will have TO pay on
the security Does any one familiar with
business methods imagine that the clumsy
provision In the proposed Dill, making an
aereement that the borrower shall pay the
IAN ON the note usury, is going TO prevent
mis- having ~ in. the end2 The rate OF in
,arsst "a regulated hy the inexorable law
NJ supply and demand. and taxes on mort
CAGES IAN ut last upon the borrower Just
"a surely az the import tax on goods ~
paid in the end by the consumer Inc
lender OF money pays the tax on the hote
in the same way that the foreigner pays
the import tax on goods
a tax upon mortgages Ia wrong In prln
ciple and inuluitous in its application, put
wren We come to consider the provisions
OF the proposed tax bill in relation 10
building and loan associations, the error
Of tho principle becomes more apparent.
and the iniauty more fagrant. The method
mon which these associations are operated
Il familiar to most OF your readers, Du.
to make il entirely clear. VIII give an
illustration. a member OF one oil THESE
associations, desiring to purchase or I'M
proye a home. borrows $1,000 from the as
ISOLATION, and gives a note payable ID zen
years, with mortgage upon the properly
as security At the same time, ne SUD
scribes for $1,000 OF the stock OF the asso-
citation. which he pledges as collateral Sc
curity for the lean. The stock is TO DE
paid for in monthly installments running
over period approximately as long as
the life OF the loan. He is required 70
pay every month the interest upon his note
and an installment upon the stock. He Is
credited from time to time upon his SUP
scription for the stock with its pro-rata
share OF the earnings of the association.
and IL Is contemplated that when these
credits added to the monthly installments
paid in shall amount to $1,000. 50 that the
stock becomes paid up, Cor as 1t Is tech
nicaly expressed "matures,) he Will sur
render the stock to the association to be
cancelled. and receive in return release
Of his note and mortgage. 1t is thus ap-
parent that the number of monthly IN
stallments he will be required to pay In TO
mature his stock, and thus practically pay
off his debt depends upon the earnings oil
the association over and above expenses.
The more it earns. the less he Will nave
to pay in and vice versa. Now let us
see how the proposed tax bill will operate.
A building association has on hand
$1,000 In cash Upon the application of X.
one of its members, the money is invested
in house and lot which is decided to
X and he executes his note to the assoc
citation for $1,000 with a mortgage on the
property to secure it, pledge OF stock,
etc. X and the association together nov
have the same amount of property they
had before. The $1,000 in money has passed
into other hands, and they have nothing
more to do with it. The value OF their
actual property is the same as 1t was be-
fore, viz: $1,000, now represented by the
house and lot, but their taxable values
have doubled X is assessed upon the
house and lot and the association upon
the note. As the tax paid by the assoc
citation upon the note must come out OF
its earnings, the amount left TO be divided
between the stockholders is correspond
ingly reduced and the number of install
ments which X must pay to mature his
stock increased, Thus the double taxa
tion falls upon X and his fellow stock
holders similarly situated This illustra-
ton only shows more clearly what have
stated above, that the borrower pays the
tax on the mortgage in the end.
But this 1t not all In the course OF
eight or nine years, KS stock has nearly
reached maturity. that is it is nearly paid
off and he feels that his debt to the as
ISOLATION is almost discharged. Neverthe-
less. the association still holds his note
for $1,000 and pays taxes on il. The money
which he has paid in and which gives his
stock Its present value has been loaned
out to other borrowers and is represented
by other notes on which the association is
also taxed SO that \ is till paying taxes
not only on The actual property, the house
and lot but also on the intangible prop
erty" the debt, which has been practically
wiped out.
The principle Of counting the indebted
ness Of people az part OF their taxable
wealth is an insult TO common sense, and
/ its application as proposed by the tax
commission will not only be detrimental
90 the progress and development OF the
state but will fall with crushing force
upon class which can iii afford addi-
/ tional burdens, people of small means
who are struggling to acquire homes
through the benefcient aid of mutual
/ building and loan associations.
G. II. Pendaryis