New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1906-01-12
THE MORTGAGE TAX Law.
Some Important Features Which Have Been
Overlooked.

To the Editor OF The Tribune.
Sir: Your editorial in the issue OF January on
the subject of Mortgage Taxes is very inter
esting and deserving of attention. particularly as
apparently some very important features in con-
nection with the tax have been entirely overlooked
1t is settled principle in investments that other
things being equal the rate of interest depends on
the risk involved.
II does not necessarily follow that when the al
lied real estate interests that the average rate
~ interest has increased moro than the half or
per cent which the tax demands the increase over
the one half of per cent should De que H'e'eH I"
the greed of lenders. as you suggest
IN the first place municipal and railroad bonds
Of high class are marketable 3& per cent basis
and have been close to that figure for g. long time
prior to the passage of the Mortgage Tax law
the prevailing rate OF interest on CONSERVATIVE
loans i'm this city from to Az per cent-ho'
"a Won suggest I'm your editorial, per cent.
The difference In rate between the mortgage loans
and the municipal and railroad bonds was chiehy
due TO the additional care and responsibility ana
greater difficulty in lquidating the former seeurt-
ties.
11ndar the new Mortgage Tax law there has been
added to mortgage investments. not merely the tax
of one-half of per cent. but adoluoha4 care aIN
risk in connection with the mortgage 4e@ 4a"'
Even a careless reading Of the Mortgage IaN Id"
shows that the holder of mortgage IS mourning
serious risks and dangers in connection with MS
investment, and it would he very remarkable II
this additional risk were not reflected IN 'hs rate
of interest ,, 81,
The additional risk and care are particularly fel'
I'm the matter of small mortgages, such as are
largely made in the Borough of Brooklyn, and the
nrohability is that careful investigation OF the
rsfes of interest mortgages there would snow
or increase greater than that shown by MI SANDS
i'm his statement of the increase in the Boroughs OF
Manhattan and The Bronx, to which you refer.
Another feature of the situation, ana one wnlcn
The fact that the prevailing rate OF interest on
mortgages up the State has been per cent ana II
cannot be increased by the law. The tax or course
can he got back by the lender by adding 10 the
ogIral cost getting the Loan but IT is not nearly
so ant to affect the borrower directly unoer those
circ1n stances here. where the rate OF interest
IAN ba made to cover the tax for the whole term
oF the loan 1t is altogether probable, too. that
lenders on bonds and mortgages up the state nave
been much more generally and severely taxed on
,Scrt cages than have such investors mere ana the
law probably appeals to item by reducing their
ta ri .rruu,ent which YOU use in favor OF the tax
thSo the present. needs some notifications.
t. r,nst he remembered that a great many or our
,1etitI1tions lending bond and mortgage were
t1'eToyted from taxation the same. ana the faet
- tFsiI exemption practically made the market
~ ~ - of interest for this class OF investments.
Your dispatch from Albany in your issue or Jan
~. NOTABLY touches the keynote of the support
s IL ~ more exactly than anything else that has
basn said on the subject. You say: The Gov
rrs attitude is the attitude OF most of the leGs-
10 tore from the upStat counties They favor the
- because il provides revenue practically all
rf which comes from the large cities without any
in,nortsnt effect their rural supporters. Thls
is class legislation with vengeance $500
- VII, CITY Ian 1876