The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-03-04
TEE REAL ESTATE MARKET.
NOiPROSPECT OF RELIEF IRON
THE MORTGAGE TAX.

That Neither the GOvernOr Nor the
legislature Wants the Law Changed.
The hearing on Thursday before the
Joint Senate and Assembly Committee on
Taxation left no room for doubt that the
opposition to the mortgage tax IL wide
spread outside of as we'll az in New York
city. Delegations were present from
jamestown, Elmir0. Salamanca, Buffalo.
Rochester, Syracuse, Utica, Troy and
Saratoga Springs.
The ORGANIZATIONS in this city that sent
delegations were the Chamber OF Commerce,
the Washington Heights Taxpayers Asso-
citation, the Long Island City Taxpayers
Association, the Board OF Aldermen the
United Real Estate Owners Association,
the German-Amerioan League, the Manu-
facturers' Association Of Brooklyn, the
Broadway Board Of Trade Of Brooklyn.
the Harlem Property Owners Association,
the Patriotic Republican Club, the Hepub-
lear county committee, the New YORK
Maritime Association, the Jamaica South
Side Citizens Improvement Ass ociation,
the Real Estate Board OF Brokers', the
West End Association, the Builders Pro-
tective League. the Property Owners
Association Of The Bronx and the Allied
Real Estate interests.
About 500 delegates attended tue near
ing, of whom 200 we're from otter cities
than New York. The spokesmen what
ever the part of the State they rep 'esented,
were unanimous in saying that the AK
has increased the rate of interest, that the
tax is paid by the borrower and not by the
lender, as the law provides, and I aat since
the tax went into effect the amount OF
money seeking investment in loans on real
estate has been greatly educed All OF
them argued in asking for a repeal OF the
annual tax and the substitution OF a Rcord-
ing fee of one-half of l per cent.
One would think that a measure which
meets with opposition from so many ousi-
ness interests in so many sections of the
State as does the mortgage tax could not
remain long on the statute books. How
ever, it is apparent from the Governors
speech at the audience which he gave to the
delegates and from the questions asked by
committee members at the subsequent
hearing that there is no disposition at
Albany to interfere with the fundamental
principles" of the existing tax
A question put to most OF the speakers
was this: Isn't the present law better
than the old law?" The interrogation re-
fleets the idea that seems to prevail at
Albany. The old law demanded a tax
averaging upward of 2 per cent. This
was generally evaded, but worked great
hardships to some lenders, chiefly bene-
6ciaries of estates held in trust who could
not hide their personally from the tax
assessor Under the old law the state
was cheated of a large part OF the revenue
due it. Under the pr resent Jaw ppa eticaiIy
every mortga ge is compelled to yield a tax,
and the tax is only one-half of / per cent.
To the average Albany legislator it seems
plain that the new law must consequently
be better than the old
The conclusion would ~ndoubtedly be
correct, if the tax were paid by the same
class of people az formerly. Formerly
the tax was so generally evaded that it
did not affect the interest rate. When it
was collected the lender has no power
10 reimburse himself from the borrower.
At present, however, the tax Is 80 generally
enforced that all lenders, being equally
subject to it, are enabled, in the absence
of competition from any. considerable
tax from borrowers by adding it to the
interest. .,
old, Is not taken from the same class OF
introduces another which works far greater
hardship. The State has no intention OF
taxing borrowers, who do not own the
property that the Legislature desires to
reach, N lS not True, UHeielole, sIhdV Uilo
anew tax is better than the old" The
new tax. in fact, works injustice to a far
greater number of people than the old.
The protest called forth by the change
In the mortgage tax illustrates afresh
the futility of attempting to reach lenders
on real estate. Perhaps the most interest
ing speech at last Thursdays hearing was
that by Lawson Purdy,, in which he IN
stituted a comparison between mortgage
loan conditions in New York and Massa-
zl,.aktu Mr. p,rHv Ga ID in ma RI
In Massachusetts mortgages are exempt
from taxation, and the average rate of in
terest in Berkshire county in both 1904 and
1908 was almost exactly s per cent. In both
years it was 5.O3 per cent. In Columbia county.
N. Y. which borders Berkshire. the average
rate in 1904 was 5.37 per cent. and In 1905
b.7s per cent. In RENEE aer county. which
also borders Berkshire, the average rate in
1904 was 5.24 per cent, and in 1905 it was 5.54
per cent. We see that in spite of the usury
law the record itself shows an increase of
four mills in one county and three mills in
the other over the 1904 rate, and that the 1905
rate is seven and a half mills higher in Column
bin than Berkshire and five mills higher in
Rensselaer, than Berkshire.
II there We're no taxation of mortgages In
New York the record should show a lower
interest rate in New York county than in
Boston, for several reasons. The larger the
city the more money is attracted to II. There
Is no usury law in Massachusetts,, and the rec
ord tells the truth and shows that Z per cent.
of the money is loaned at rates in excess Of
q per cent. The Boston record shows that
money was loaned at every rate from 7 per
cent. TO 10 per cent, and at IL, 10. IA, Is and IS
per cent. The average rate of interest in
Boston in 1905 was 5.o7 per cent.
If all the money loaned at over O per cent.
were deemed 9 per cent. money the average
rate would be only Ala per cent. Daring the
last pix months of 1905 the average rate in
New York county was 5.54 per cent. as shown
by the record. but the record does not show
how much was paid in excess of 9 per cent.
nor the MORTGAGES made by corporations
which contracted to pay the tax themselves
in addition to the interest, II is clear. then,
that the mortgage tax increases interest in
New York county by at least six mills.
Until the hearing OF last week it has been
generally believed in this city that the
annual mortgage tax law would be repealed
by the present Legislature. Many mort
cages nave been made on condition that
II the tax is repealed the interest is to be
reduced by a of per cent. 1t is Of course
too aarly tn cav what affaot tho ohon-o