Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1902-03-13
ESCAPE MORTGAGE TAX
New Form of Mortgage in Use
by Those Who Loan
Money.
Places a Double Burden on Kor.
rowers Who Give Real Es-
tate Security.
New Form the Outgrowth Of the
Aggressiveness Of Tax
Terrets.

one result of the work of the tax Ter
,ets and other extraordinary means
that have been adopted or are being de-
vised to secure the more compie1e LAX
alton of moneys and credits, IS tha'
lenders of money in their turn are de-
visine new forms of securities that
shall enable them to escape the leVles
which ferret methods have suddenly
forced upon them, and throwing a
double burden on the unfortunate
mortgagor. A mortgage which is now
coming into use contains, among oth-
ers, the following stipulation to Which
the mortgagor is bound:
"To pay, before they become delin-
ouent, all taxes or assessments that
may be levied on this mortgage or on
the debt hereby secured, or that may
be payable by or chargeable to the
holder hereof, or the owner of the debt
hereby secured on account of such
ownership, by the state of Iowa, or the
county or local municipality in which
the land is located
The clause which succeeds the above
provides that in the case the mort
gagor fails to pay the tax as above re-
quired the other party may pay 1T and
it will be added to the principal with
per cent interest thereon to be COL
lectable in the same way that the prin-
cipal and interest of the original debt
are collected. When this form is used
1t evidently becomes a matter of in
difference to the lender of money as to
how vigilant the assessors or the tax
ferrets may be for the tax that may be
levied is not a charge against him, but
against the borrower, who would not
only pay the taxes on the realty mort
gagged, but on the mortgage indebted
ness as we'll.
In case the stipulated interest and
the taxes levied on the debt should ex
coed the rate of interest permitted un-
der the laws of the state there is every
reason to believe that the above con-
tract would be held by the courts to be
usurious and therefore invalid If
their combined amount did not exceed
the legal rate of interest the contract
would probably hold good. These
points and others the courts may be
called upon to determine If this kind of
instrument comes into common use.
The form of mortgage from which
the above quotation is made has one
decided merit. 1t makes absolutely
clear and certain upon whom the bur
den of mortgage taxation must fall. II
shows beyond cavil that it is the Dor
rover and not the lender that is to pay
such tax. With the old form of secur-
ity this has been subject for dispute.
The tax was assessed against the len
der--if assessed at all-and was sup
posed to be paid by him. Nevertheless,
there were many who contended with
much reason that the borrower actual
ly paid it in the higher rate of interest
which the lender was bound to exact by
reason of the tax In spite of the
strong showing that could be made for
this view of the case there were few
borrowers who would have been willing
that notes and evidences of debt should
be exempt from taxation. So long as
it was not 80 written in the bond" they
could not realize that 1T was really
they upon whom such taxation must
finally fall. They wanted to see money
made to bear it's share of the burdens"
etc, oblivious of the fact that when
was loaned 1t carried it's share
of the burden directly to the man who
borrowed it. The form of mortgage
above quoted makes this fact so clear
that no one can escape it's meaning.
There can be little doubt that the
use of such form OF mort
gage would be a great stimulus 10 the
in favor of the exemption of
of money and credits from taxation. 1t
would enlist in favor of such a measure
the multitude of borrowers who have al
ways looked with disfavor upon it be-
fore as being a movement in the inter-
est of capital. The argument would
then be irresistible that taxation of
mortgag is double taxation and that
1t puts a double measure of the burden
of supporting the state and it's institu
lions upon the class, who, by reason of
their indebtedness, are least able to
bear even the share that should right
fully fall to them.