New-York tribune., 1905-04-20
TIE TAX PROBLEM.

Now that the Mortgage Tax bill has been
recalled from the Governor and sent 10 him
anew. so as to secure ten days for further
consideration and the curing OF defects. 1t VIII
be well for the legislature TO see if 1t cannot
Get the necessary revenue for State purposes
by mea sures less calculated TO interfere with
business The advocates OF mortgage taxation
do not count on securing more than $I0O'OOO
TO the State treasury next year from that
source. and there is no trustworthy estimate OF
the cost Of the machinery for executing its elab-
crate provisions. When the need of the State is
for several millions. is the game Of $150,OOO
worth the candle? Have the lawmakers not at
hand projects of indirect taxation which Will
produce more revenue with less disturbance
to business and invite capital into the state IN
stead Of driving it out?
The Mortgage Tax bill as drawn offers little
ragement to the holders of existing mort
cages other than the minority-mostly es-
tates-who are now taxed at local rates, to
come in and pay the indirect tax The ma
jority who in one way or another now escape
taxation will prefer to continue TO run their
chance of local assessment recording tax,
however, TO be imposed once for all, in lieu OF
other taxation. would bring in for record mill
ions on millions of existing mortgages, and
would make rea, estate loans so attractive to
investors as 10 stimulate business, relieve bOr-
rowers. especially in the country. and bring an
increasing revenue To the State. For immediate
purposes the recording tax would bring much
more revenue than the annual tax The amount
per mortgage would be the same. and the in
centive to take advantage Of the new law
would be much greater.
If such tax were supplemented by an op-
tOnal securities tax on bonds and mortgages
upon property outside the State we are con
vinced that the revenue would vastly exceed
l H. nv
and would offer an attraction 10 capital to
domicile itself in this State which would moro
than Offset the possible repelling influence OF
the stock sales tax. Bonds are taxable as per
sonal property. \ glance at the market quota
tions SLOWS that they are not taxed. Plenty Of
Bonds sell on 324 per cent basis, which would
be impossible if any considerable proportion Of
them were taxed by LEGAL assessors at 10 to ,
per cent If the owner of these securities could,
/ by paying one-half of per cent, be free from
further tax and, what is worse for his com
fort and for public morals, uncertainty and
pressure TO hide his property, the treasury
would be literally overwhelmed with enthuSi-
astic taxpayers. Security holding in New
York would be popular enough to bring here
wealth from other states Corporations, TO mar
ket their bonds. would advertise them as hav-
ing paid the New-YOTk tax. We should do
away with the bulk Of the inequtable, perjury
I producing personal assessment, anu IN lieu
thereof secure larger revenues both for the
State and its local divisions. A fax which
promotes business is better than one which
discourages Il. and while the legislature is seek
ing improvements on its pending scheme
/ commend this plan TO its consideration. r.
could well afford to adopt it and leave the wis
dom Of the Governor 10 choose between the
two devices.
Whatever il may do il should not forget to
correct the anti-usury provision OF the pending
measure. That is intended to prevent the mort
gagec from eXacting the payment of the tax BY
the borrower The legislature might as we'll
Try TO make the sun stand still. Economic law
viii adjust the tax il viii inevitably be shift
ed. Indirectly if not directly, 10 the borrower.
An agreement may not be made that he pay
the tax, but the lender will simply fix his rate
with the tax in mind. So the law Will do no
good. On the other hand. il will do harm by
frightening timid lenders. Men will be afraid
that q rise Of the interest rate in making
mortgage may be construed by some court
ms an indirect exaction Of the tax from the bor-
rover and a forfeiture OF the whole debt That
viii discourage lending, depresS the real estate
business and building, interfere with home
making and cut or the State revenues and all
TO no purpose SO far as the borrower is con
cerned.