New-York tribune., 1901-03-13
EXEMPTION OF CORPORATE MORTGAGES

Senator Stranahan yesterday. speakinc of his
Mortgage Tax bill. said: 1t does exampt rail
way mortgages. In fact. il does not reach cor
''porate mortgages in any way" This fact has
already been noted and commented uDon by
The Tribune. but Mr.. Stranahan's authoritative
statement is commended 10 the attention Of
rural legislators and taxpayers who are inclined
10 favor this bill as a measure OF relief for the
plain people
Why should railroad mortgage be exempt
when the mortgage on a laborer's cottage or a
farmers field is 10 be taxed? One reason that
VIII be given is that the railroad bonds bear n
lower rate Of interest than bonds issued against
ordinary real estate security. That is true To
take one-half Of per cent from 80 or 4 per
cent bond would he severe. II would depress
outstanding securities and interfere with the
hoating Of future issues 10 the best ADVANTAGE
III, however. il is conceded that the tax would
thus burden the holders of bonds and the rail
roads issuing them, il must be equally true that
IL would burden the holders of farm mortgages
and the farmers issuing them III II is to the in
terest of a railroad which pays taxes on It's real
estate 10 stand with it's creditors i'm onnosi,ion
10 tax on their transaction of borrowing and
lending il must likewise be TO the interest of the
farmer who pays taxes on his fields TO stand
with his creditor in opposition TO n tax on their
transaction of borrowing and lending. The rail-
road managers are sharp business men who
know what is good for themselves. and the
srlall property owner may wisely draw a lesson
from the way they strive 10 make lending 10
them popular and 10 avoid any depreciation in
the value of their securities
The motive of the railroads is plain. They
want TO borrow 10 the best advantage and
Know that a tax on their mortgages would com
pei them TO pay higher interest Does net the
householder CT farmer see that he is I'm exactly
the same position? Does the fact that he pays
higher interest than the corporation warrant
discrimination which makes the difference still
greater: The fact that his creditor draws > or
per cent will be urged as a reason why the
mortgage holder could afford 10 pay the tax
while the bond holder could not Rut IL his
mortgage is by the nature of the security or the
conditions OF the loan so little attractive that
he cannot place il at a lower rate even NOW
when the individual and the corporate mortgages
are on the same basis as regards taxation there
is no reason 10 suppose that the individual real
estate owner would be better off when his bor-
rowings were subjected TO a tax from which
those OF the corporation even previously enjoy
ing lower rate were exempt The higher the
present rate which a borrower pays the less
| ready he should be 10 tax mortgages. and
thereby add 10 the difficulty of securing advan-
tageons loans, which are already extreme for
him. or else he would get loans cheaper
Ihere is no reason in logic for this proposed
discrimination between individual and corpo-
rate mortgages. If il is just 10 tax one. il is
just 10 tax the other. II one should be EXEMPT.
both should be. The true reason for the exemp-
ton is not'at all one Of principle but of politics.
: Mr. Stranahan last year included corporations