Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1904-10-20
LETTERS FROM THE PEOPLE
The Question Of Double Taxation.

II is enCoUra sing TO see that the farm
ers are taking hold Of our sntiquated TAX
laws, and TRYING to got rid OF the APP
parent double tax ation connected with
mortgages. Perhaps you will kindly Nve
space for rev consi derAtiors that may
be of service In the conn ectior. and even
for reiterations of some Of rpecl0i i'm
portance
There are two cases that appear vastly
different. but are essentially he same,
one of purchase money mortgu gss, "hero
the mortgage represents no value beyond
the mortgased property. and the other
whcYe the mortgage is given for money
or its equivalent actuai,y rec.ived by
tho mortkagor and in increase OF his
possessions beyond the mortgage prop
erty.
To illustrate the first ease: capitalist
owns a farm worth ten thousand ,iol-
lars and sells IT to former for 1880
cash. and Il mortgage for $500. BEFORE
this transac tion takes place. the state,
il it taxes personal property. gets taxes
on the capitalist's farm, $1,000 and on
the farmers $3.50 which ne subsequently
pays on account of the far.n-totdl
amount taxed. $1,000.
After the transaction, the state taxes
the farm si0uO. and If it carries out
Vcrmonts present principles taxes the
personal property-money Tor whatever it
Is put i'm received BY the SELLER, 5000
total taxed so far. 3l6 no as before tire
mortgage. But tho State also taxes IN"
NORTHUMBERLAND total taxed. SD"". Yet
no new value has been created so some
thing must hs taxed twice. What is ;t'
The farmer pays taxes on his whole
now farm $50, COO. and he also pays taxes
on ihy mortgage (35,no); FOR the rate of
interest in States that tax mortgages IS
higher than usual rates hv the amount
of tho tax. Total taxes paid by the farm
or on $4,000. Bat he has but 10000 Of the
means Of production: 50 he ie paving
taxes on s5.rD that he hasn't got lie IS
entitled 10 relief: now what is The most
reasonable way to get IT, At present
his tay-navinc consists Of three processes:
he paws the farm tax to the state, he
pevs the mortgage tax TO tho Ilortga sne.
and the mortgagee pays the mortG GO
tax to the state Tho farmer no* seeks
relief hv adding to these three processes
/ a fcurth-roducinE hi. aesessncnt on his
farm, ny the amount of the mortgage.
| Eut why these four steps when ono Will
| do the work Why not simply take off
| the mortgage tax. and let tho farmer
ray only in full on his farm as now?
| Here come IN the faIlacies which oh
scure tho case The obiector SAYS: Why.
the State then will get taxes on only
81. o0o when it was entitled to taxes on
$4,000 before tho mortgage was made
and the hloated holder Of tn" mortgage
eecapes scot-frec." Does he? Under your
| system. II II works. he pays taxes on The
$500 purchase money he got on account
| Of the farm. and as the farmer pays
taxes on $1,000 in the farm. the state
eets taxes on its 5000, after all. and
| moreover makes the mortGaeee pay on
S5cT more. because ne holds as evidence
OF Indebtedness piece Of paper called
! mortgage This is an attempt to tax
him twice, ard Of course he shoves that
tax on to tho borrower in such case, the
borrower always has 70 pay; hut the initial
Injustice is In trying to make the nortga-
| gee pays twice. AS long as that law
! stands ii anyhody pays tvi,e. It VIII
be the borrower True. If his farm b.
I exempted pro rata. he Will b. relieved
at the other cad. But whats the sense
in the complication--the four processe,
already Described? The old owner paid
| all the taxes on his place before the
mortgage let the new owner continue
10 pay them after the mortgage. but
| simply don't call upon anybody COR a ncw
tax when there is no new value; don't
tax the MORTGAGE. rhere is where the
iniuatico lics Why not cut il Mt the root
An unnecessarily complicated machine
always works badly. II the mortgage tay
is collected the farmer will pay it, lie
acknowledges the fact himself in tho in
direct remedy he proposes for that neccs-
sity
Now let us take the case OF loar
secured by a mortgage Before the mort
gage there is the farm. Sl0,Hl and per.
sonal property in the hands of The in
tending MORTGAGE s500N-sl5o>0 in all
paying taxes.
The iS5nO is transferred to the farmer
and he gives A mortgage on this mort
Rage he has to paw taxes lust as thu
,urchase-money mortgagor did. in IN,
shane of high interest Total to be oaiC
ON bv him farm 500 proceeds of loai
3So.D, mortgage SOM; $4,000 in all, whit,
there is only $lSuD actual value Tn,
mortgage is but a bit OF papcr; il car
produce nothing to paw taxes with an,
writing it creates no new value. III,
production to nav the taxes must com,
from the farm or from the invc.tmcn'
of the borrowed money The farmer
at once saws that the $500 ovcr-taxatior
is on his farm-that it is worth 500 is.
than it was before, because IT is mort
gagged But this is a fallacv: f,r t1Xat;n,
PURPOSES the farm is worth no loss thar
il was before II is worth tust the same
He saws: mo A part of il now zoe!
TO the mortyatcc in the interest . pa,.'
That is another fallacy; under norma
circumstances land We can reason ont,
upou such). the interest on the lnortgag,
money is paid by tho investment. (possi
hly farm imurov.ments) the farmer put,
if iuto NOT by the original farm IN,
mortgage merely gives the creditor :
second hold. His nrst and natural hoh
is ON the dabtor's general solyencv. an,