The Leon reporter. (Leon, Iowa) 1887-1930, 1907-05-16
MINNESOTA SHOWS GOOD SENSE.

The state of Minnesota has taken the
lead in reform which commends itself
to the common sense of every business
man. Beginning on the first day of May
all real estate mortgages will be taxed
at the rate OF so cents per thousand
dollars of value and the tax must be
paid as filing fee when the mortgage
is recorded. In this manner every
mortgage will pay the same tax instead
of penalizing the honest man with an
excessive tax as is the custom in Iowa
and many another state. 1t is motor
ious fact that less than one tenth of the
moneys and credits owned in this state
are returned for taxation and it is in
the interest of fair and equitable taxa
ton to levy the tax as a recording fee.
The Minnesota law is weak in that
the recording fee is too small. One
twentieth of one per cent is too small a
tax for this class of property. 1t would
do no serious harm and work no hard
ship if mortgages escaped taxation alto
gether but if they are to be taxed at all
as moneys the entire tax should be
levied at the time of recording where
no mortgage could ever escape.
The trouble with the tax of two per
cent on moneys and credits in Iowa is
that the tax is so easily evaded that
the untaXed money establishes the
rate of interest and forces the honest
taxpayer to accept two per cent less
for his money than the dishonest tax
payers gets which is practically con-
fiscation of half his income. In the
case of real estate none escapes. The
result is in Marshalltown, for instance,
rents are established at 10 per cent
gross on the value. Owners allow two
per cent for taxes, three for repairs and
depreciation and have five per cent left
for interest on the investment. Every
body is treated alike and rents are
established on the same basis to all.
In the case of moneys and credits the
trouble starts with the money from out
side the state. 1t can come in here at
81 and per cent and escape taxation.
The money of a resident must either go
out of the state where it will escape an
assessors notice or it must evade taxa
ton by deliberate lying and false affi-
davits to the assessor in order to COM
pete with the money which is loaned at
| 81 and 6 per cent free of taxation.
Since money loaning breeds an easy
conscience the great majority of moneys
and credits evades taxation. They add
their volume to the outside money and
| help establish rates of interest based on
no taxation at all. Then comes the
money of the banks which at certain
seasons helps to make firmer the same
low rates and the fellow who is honest
enough to list his money is simply COM
PEELED to loan at three and half or
four per cent while his dishonest neigh
Dor gets five and half and six per cent
or he is compelled to invest his money
in some property on which taxes fall to
the honest and dishonest alike. One
Marshalltown man has just recently re-
moved to California with $4,000, be-
cause he did not like the tax ferret.
The tax on moneys and credits does
not accomplish what was intended by it.
1t should be revised by the next legis-
lature; if it could reach everybody alike
the borrower would pay it the same as
| the renter pays the real estate tax. AS
it is now, the honest man pays it while
the dishonest man helps to fix the rate
of interest very low so as to virtually
confiscate one half the honest mans
income and the honest man is generally
widow or the defendant heirs of an
estate. The tax should be fixed at
about one half of one per cent and
levied as stamp tax on the instrument
before it becomes valid in law or as
recording fee. 1t would then hit every
body alike and, being low, would not be
so likely to be passed on to the borrow
err who pays the interest," Marshall
town Times Republican.