New-York tribune., 1903-03-24
THE PROPOSED MORTGAGE TAX.
1ts Eject Upon Nonresident Creditors.

To the Editor of The Tribune.
sir: The public seems not 20 be awake 10 the
radical change in the policy OF the State OF Ne"
York which will he erected II the pending Mort-
gage Tax bill becomes law Hitherto capital has
been invited into the State by the exemption OF
every bond. mortgage note. contract account VI
other demand belonging to any person not resi-
dent Of this State. sent to or deposited IN tniS
for collection (Tax law. Section ~ Ana ''e
debts evidenced by them have always been enuIe-
iy exempt This bill singles out debts secuFed "S
mortgages ard imposes a tax upon the mortgages
and the debts which shall become hen up'"
every debt and obligation now or 1T any tlme mere
after secured IN whole or in part. by mortgage OF
real property IN the state No exemption. except
where the debt owned by charitable. reiglouS of
educational organizations. is to be permitted. by
Of non-residenCe within this state OF lo'
any other cause"
This provfsIon Is obviously in direct conflict with
the principle decided by the Supreme Court OF the
United States in the famous foreign held tax case
rs Wallace page son The court held that g. TAX
imposed nv Pennsylvania upon bonds secured oy
mortgage Of property within the State. but owned
by non-resIdents. impaired the obligation OF the
contract with the bondholder. and was unconstith-
toral The pending bill" therefore. II enacted VIII
clearly be void against all nonresident o"neFS
OF mortgages already in force
II IS true that where a tax imposed upon mort
ga ses was in force at the time the mortgage was
made it's enforcement has been permitted ny 'he
courts against nonresident owners Thus oregon
rnposed a tax on all mortgages upon realty IN the
State and savings bank in San Francisco wrlch
afterwerd made loans upon mortgase Wlthln 'iIe
state required to gay the tax The principe
laid down by the Supreme Court OF the Vn1teo
States distinctly points out the extent 10 WHICH
the State can properly go. The court saws:
The State may tax real estate mortgaged. as IT
ia FIJI vaiuS t may DO this either by taxing the
whole the mortcageor. or by taxing 70 te I,Or
Ea2ee the interest therein represented by the lI
gage and TO the n0rtFageor the remaining duIel
in the land. Savings Bank agt County 10y L p
425)
In point Of fact. the State Of Oregon chose the
second alternative It taxed the mortgage at 1ts
value to the mortgage. whether resident or nom
resident and taxed the mortgegeor only on 'he
value Of the property after dtductng the mon
gage This is equitable and avoids double taXa'l"I'
but no taxation Of mortgages to non-Testdents mas
been approved by the highest courts. except on
the theory which recognizes the mortgage as an
interest In the real estate
The pending bill not only defes the restrictions
OF the constitution with reference TO existing con-
tracts and violates equity by imposing double 'aN-
alton. but by attempting to impose dlrect TAX
upon persons not within lis Jurisdiction 1t onends
against the recognized limits Of riShtful ieEisau'e
authoritv in ali civilized countries. In the IAN
grace Of the Supreme Court oS New-Jersey:
4 nersonaI tax is the burden imposed by govern
ynenf on its own citizens fo- the benefits when
that govern rnent affords by It's profecton ana us
laws and any government which should atternpt
impose such tax on ctlzens ot ouIe+
would Justly incur the rebuke of the intel1seIlC
sentiment of the civilized world 1State Az
New-York March q. 1903