New-York tribune., 1901-04-17
SHIFTING THE TAX.


fm oughout the United States that 1t was pos
sbe TO legislate against the creditor class with
out in the end burdening the debtor The craze
has now run its course and most men realize
that the real sufferers from depreciation of the
currency would have been the poor rather than
the rich. who are able to protect themselves
against unfavorable legislation by contracts for
gold payment and other safeguards. The popu-
lfstfc delusion seems. however. to have persist
ed in the rural districts Of New-York and filed
men who ought TO know better with the notion
that burdens can be put upon lenders which
will not be an additional hardship 10 borrowers
but rather an advantage to them.
The farmer and small house owner will be
the chief sufferers if the Stranahan mortgage
tax bill becomes a law. That BILL as has been
previously noted. makes it possible for any cor
poration 10 borrow on mortgage free from tax.
1t also gives the individual with gilt edged
loan an opportunity to borrow free from tax.
But the second mortgage the purchase money
mortgage. the mortgage for large proportion
OF the value of property such as poor man in
need wants and must obtain from an individual
lender would all command higher price than
the mortgages of the corporations and well-to.
farmers and home makers think that even
though their mortgages are taxed while others
are exempt. 1t makes no difference TO them
since the tax is levied in form on the lender
If So let them consider how already the lenders
are protecting themselves against any possible
loss. just they did when free silver threat
ened. Some Of the largest loaning concerns in
this city have for long time been putting in
their mortgages a clause which throws upon
the borrower. in addition to his real estate tax
the amount Of any tax which may be levied on
the loan. Here is the form used by one of
these companies:
II is hereby further agreed by the parties
hereto that If, at any time times before said
bond is paid any law or laws be enacted reduc-
ing the taxable value Of land by deducting
therefrom any lien thereon, changing the
laws in relation to taxes on debts secured by
mortgages the manner of collecting such
taxes, the mortga geor agrees to pay to the mort
gagee a sum equal to the tax burden i'm
posed by said law or laws on the holder of the
said bond and this mortgage in addition to the
interest provided to be paid in said bond with
In ten days after said tax is made payable by
added to the amount Of interest provided for in
said bond exceed legal interest, unless the
payment OF said tax by the mortgageor owner
OF the land is prohibited by law. II the amount
OF said tax and the interest aforesaid exceed
legal interest, or il such payment by the mort
gageor or owner Of the land is prohibited by law
then said bond and this mortgage shall become
due and payable at the expiration of thirty days
after the enactment of any such law or laws
Inc d0Olt1Onal amounts which may under the
foregoing provision become due and payable
shall be regarded interest and shall be part
OF the debt secured by said bond and this mort
gage. and all the provisions in reference to de-
fault in payment Of interest contained in said
bond and mortgage shall apply to such addi-
tional amounts.
II a law be enacted under which the mort
gageor shall be liable to pay additional sum
under the foregoing provisions, the mortgageor
may pay off said bond at any time before ma
turity, II said mortgageor gives to the holder
thereof three months prior notice in writing Of
the intention to do II such notice be given
said bond and this mortgage shall then become
due and payable If the time fixed In the no.
tice had been named in the bond as the time
for the payment OF said principal sum.
This is just an illustration Of the methods al
ready being adopted to make the borrower pay
the mortgage tax should one be imposed and
throw the burden back upon the land-not on
all Of the land. but on the land of those who are
poor and in need and must borrow. The rich
can find a hundred ways to avoid the tax in
duential they with corporations whose
mortgage investments will be exempt and ac-
customed as they are TO do their borrowing by
means Of bond issues which will be exempt
The poor borrower who thinks he can strike at
the money lender will find that he is the only
person who will in the long run pay tax on
mortgages.