El Paso daily herald. (El Paso, Tex.) 1881-1901, 1900-01-25

UQuS LeuUlug u OroW uOuCy (WHICH
in Texas out of the state for losning
purposes, reducing by so much the
loanable capital within the state.
The bill aims to make nonresident
as well as resident money lenders pay
taxes on mortgages held by them, when
the mortgages so held are secured by
land in this state. The United States
supreme court has held such tax,
even against non residents, to be law
full. But not all lawful acts are prac-
tical, and in this case the tax would
work three very definite and severe
money on mortgages. In the first
place, it will be nearly impossible to
get st mortgages held without the
state. Money lenders within the state
will make up to themselves the amount
of the tax imposed; and the borrower
lenders without the state will naturally
raise the rate of interest to the highest
point the transaction will bear, and
again the borrower will suffer, while
the profit Is to the nonresident. In
the second place, it is to be observed
that the borrower must pay the usual
tax on the land SO pledged. whether
the tax is paid on the mortgage or not.
Third, since the greater proportion of
mortgages will, in practice, not be SO
taxed, the whole basis of property for
taxstion will be decreased and the tax
rate will be greater, falling again on
the owner of the real estate.
To recapitulate, the borrower will have
to pay on his real estate, he will pay in
advance Ito the money lender, let it be
rem EN- bered, not to the stste) the tax
on the mortgage, and then, since the
tax will be practically uncollectible
amount of taxable values will be re-
duced below the estimate and the bor
rover will have to pay higher tax
rate because of his creditors delin-
quency.
1t is manifestly absurd to claim that
any law to be put on the statute books,
such as that quoted above to protect
the borrower, can change the facts and
the established experience of the COM
mercial world. It is'one of the funda-
mental principles of taxation'that "The
last man pays the tax" and this pro-
position Is no less true in so called ''di
rect' than in indirect taxa
ton. In the Texas report,
the commission endesvors to prove its
by stating that "the argu-
ment that the borrower pays the tax
will not avail in this state, as he now
pays all the interest. in great
majority of instances, that can be COL
lected under the usury provision of
the con stitution. F." The merest sophis-
try! Everybody knows that usury
laws are practically imperative and
seldom invoked, especially in times of
prosperity. Absolutely no attention
is paid to them in The ordinary course
of business, and even IL it is necessary,
take account Of them, 1t is easy to
get around them. The usury laws
would be no bar to the borrower pay
ing the tax on mortgages. If man
wants money he must and will pay the
market price, law or no law. More
over, the tendency in this state is
coward lower interest rate, and shall
our Legislators arrange things SO that
,he highest rate shall be Indefinitely
retained? That is what the commits
lion argument amounts to.
Let it be remembered In this dis
'ussion that the proposed tax is to be
he same as that on sail other, prop |
'rty." There is nothing to prevent
ity and county and state all taxing the |
mortgage. This means, in this city,
or instance, total tax of two and |
hree quarters per cent. Does any
ane man for an instant believe that
money lenders would take the risk of |
aving to pay, or pay
o escape, such tax
Iithout fully protecting themselves?
his measure affects every man who
orrOws money to build q home or
usiness block. 1t means that his
1rdens would be increased without q
corresponding gain to the community.
t a loud protest does not arise from
he average people of the state. the
armers and workingmen, against this
angerous measure, it is because they
o not yet understand it's purport.
Loanable capital has what is known
8 high degree OF mobility-shst is,
will inevitably and invariably flow
q the direction OF the least resistance,
7here the demand is good and the re-
urn on investments the highest. To
tate the whole case in q sentence: