Ottumwa semi-weekly courier. [volume] (Ottumwa, Iowa) 1899-1903, 1902-03-13
THE TAX ON MORTGAGES.

George 3. Roberts, director of the
mint: l notice that Senator Healy.
Representative Meservey and the Mes
senger, a triumvirate that has usually
been harmonious, are mixed up on the
subject of tax ferrets. If there is any
subject of legislation that is calculated
to defy ANALYSIS and destroy unanim-
lty even in the councils of the elect it
is the subject of taxation. Permit me
to appear in the discussion to the *
tent of urging the adoption of the pol
icy advocated by the Messenger in
the past and which will accomplish
the only final and satisfactory DISPOSE
ton of the troubles that grow out of
any attempt to tax moneys and credits
and that is the abandonment of all
efforts to tax moneys and credits. Let
Senator Healy and Representative
Meservey amend their proposition and
carry it to this, it's legitimate conclu-
sion. The proposal to release money
and credits wholly from taxation will
seem to many people, upon first
thought, to be a sweeping proposal to
establish permanent favoritism to
wealth, but upon investigation it will
be found that the benefits of such a
policy cannot be absorbed by money
lenders, but will inevitably be distrib-
uted to the entire community through
the advantages of lower rates of inter-
est.
In considering any system of taxa
ton 1T is necessary to inquire not mere
ly who pays the tax into the public
treasury, but where the burden of pay
ment finally rests; also the efficiency
of the tax, or, in other words, the &C
curacy with which it can be levied and
collected and the cost of collecting it.
The attempts to tax moneys and cred
its have never been justified by results.
Without the ferrets the law is a farce,
and with them it is an abomfnation.
The fact that it is necessary to resort
to such extraordinary methods of col
lection as the employment of the So
called tax ferrets is evidence that the
system of taxation is an unwise one,
and the true remedy is in abandoning
the levy, not in merely abandoning the
efforts to collect. The necessity of
paying such a percentage of the tax to
secure even a partial collection is
enough to condemn the tax. 1t is
wasteful, and in the long run will be
found inefficient and non-productive. 1t
has yielded considerable sums where
the ferrets have been employed to go
over the records for a term of years,
because it was q new method, unex-
pected, and the proceeds consist of an
accumulation of back dues. But even
these back taxes have not been collect
ed with that certainty and equality
that ought to characterize taxation.
Compromises have been common and
apparently without any general rule.
There is nothing of promise in the sys-
tenn for the future. for there are now
only accruing taxes to collect, and
money lenders, warned by their expert
ence, are already devising new meth
DDS of evasion, or directing their capt.
tai elsewhere. That anybody will lend
money at 5 per cent, subject to the
rate of taxation that prevails. in our
Iowa towns, need not be expected.
The tax on mortgages, eve with
the ferret scheme, will not therefore
be a success as a permanent producer
of revenue, unless interest rates are
forced up to a higher level than now
prevails. That is not probable, be-
cause there are enough lenders not
subject to taxation, to wit, insurance
companies, savings banks and invest.
ors resident outside the state, to keep
the rate down. The enforcement of
the tax on mortgages in the future by
the ferret system will simply catch
the few who are comparatively help
less in the choice of investments, who
dare not place their money outside the
state Or in aught but mortgages, and
who are not clever at offsetting their
hn11inOC with nnnnror plalta1r1.
and other schemes of evasion. The tax
upon money loaned on mortgages will
therefore continue to be, with or with
out the ferret system, operating un.
equally and unjustly, expensive to col.
lect and yielding but little revenue.
If collected upon all mortgages made
in the state it would raise the rate of
interest, and thus work the singular
injustice of double taxation upon the
land owner in debt as compared with
his neighbor out of debt. Levied up,
on only a small portion of the mort.
cages it works the injustice Of com
pellingthe small class described above
to pay taxes out of an income which
is reduced by the competition of the
untaXed class.
The compensation of capital in ev.
cry KIM vi DuSlueSS is ADJUSTED IN the
long run to the conditions of that bus.
mess. There was a time when the Ii.
cense tax on saloons in Fort Dodge
was only 5000 a year. Now I believe
it is $1,000 per year, but the business
has adjusted itself to the new rate,
and the parties who have continued in
it doubtless make as much money as
they did under the old rate. A propo.
sal to remove taxation from mort.
cages seems at first thought to be a
discrimination in favor of those who
lend money, but the actual effect is to
create more competition for mort.
cages, thus reducing the rate of inter.
est until all of the promised advantage
to money lenders has been distributed
to the borrowers, and as nothing pro.
notes enterprise like a low interest
rate the benefits finally accrue to the
whole community. 1t may appear
that the relief of mortgages from tax.
alton will throw a larger burden upon
real estate, but on the other hand a
low interest rate advances the value
of real estate and stimulates a state
of business activity which enhances
the value of farm products. We have
had a demonstration of that in the last
few years. The drop in the interest