The times. [volume] (Richmond, Va.) 1890-1903, 1901-10-09
Ajax DECISION IN KENTUCKY.

Tax question, which is most interesting
Ia The Times. as il establishes a prin-
chile of taxation which we have been
declaring DAY in and day out in these
columns for scme time past Inc de-
cision in brief is that bonds given by
che Frankfort Water Company and
held by nonresident owners could not
!. be taxed by the city of Frankfort as
The State had never exercised its DOM
ers to assess such mortgages
The Louisville Courier-Journal IN
commenting on the decision says tlat
it was not only in accordance Wlta tue
law, but also with common honesty
and good business policy. That the
city OF Frankfort and the State OF
Kentucky were not deprived OF any
revenue by it for the reason that the
property on which the bonds were is
sued is already taxed and that taxa
ton of both the property and the eyi-
dence of debt upon that property Would
be double taxation in its most harm
fm form It would be ineGuitable,"
continues the Courier-Iournal, be
cause the general theory Of taxation is
to lay but one tax on any given prop
erty."
That is only another way of saying
what we have been saying, that all
property should be taxed once but only
once. 1t is not right, it is not eqnit-
able. it is little short Of a public out
rage for the State to tax upon fair
valuation any given property and then
tax also a mortgage in any form upon
the property. 1T is like taxing both
the substance and the shadow No
property is created when debt is
created. for everybody knows that debt
is not property.
Proceeding. the Courier-Journal says
that such a course would also be
harmful because it would drive capital
from the State: that /; would be pos
sible for The State or city to compel
payment upon such mortgages by col
7ecting the tax from TIC GiTer of :fle
obligation, but the result woald ulti-
mateiy he to impose 4 double tax upon
the borrower. And so our contempor-
ary concludes that capital which is
taxed at home will not submit TO be
ing taxed again where it is a loan. and
by no possible legislation can it be
made to do SO. 1t would simply be
withdrawn from investment and
placed elsewhere. In illustration of
this the Coui.ier-Journal says that Mis-
souri, recently had a Legislature which
Of ion
capital in the State ought to be taxed
and passed bill in accordance for the
taxation Of mortgages. The result
was a prompt advance in the interest
rate on real estate loans from five per
cent. to seven per cent. and the ill-
mediate withdrawal Of many insur-
ance companies and other large lend
ers from The State. y test case was
finally made and taken to the Supreme
Court of Missouri. and The court de-
cided that the law was unconstitution-
al. AS Il result Of this decision the
Courier-Journal says that these large
lenders are again making five per cent
loans in Missouri.
AS another illustration. our Louis
vile contemporary points out that re-
Gently an attempt was made 10 tax
real estate mortgages in Clark county,
Kentucky. The result WAS that a
Western insurance company, which
had loaned several million dollars in
Kentucky at four and Ave per cent. IL
once directed its loan agent TO lend no
more and to quit the State if the at |
tempt should be successful. But in
this case the lower court held that the
law did not authorize the assessment
OF mortgages in the hands of non-resi-
dents, and SO, the Courier-Journal adds
this cheap money is once moro nj the
command Of Kentucky borrowers.
The borrower always pays the tax
on the mortgage. The only relief TO
him is in exempting the mortgage and
SO giving him the opportunity to Dor
row money at Il, lower rate of interest.
We believe that one of the very best
things that the Constitutional Conven-
ton could do for the State of Virginia
would be to proclaim aid establish
the principle of taxing all actual prop
5C3AS, VI NNatetSI SiiiiiNicI ~. u LII
valuation and then eSempting mort
cages and other evidences Of debt and
paper evidence of ownership. This
would have the effect. in our opinion,
Of bringing much capital into Virginia
for investment. would reduce the rate
Of interest and would do away with !
the evil and Generalization OF lax
lodging. After all. the moral principle
involved is of paramount Importance.
The State should set the example. The |
State should be just in making her
tax laws. If not she cannot expect
otherwise than that some men will Try
to erade it
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