St. Johnsbury Caledonian. [volume] (St. Johnsbury, Vt.) 1867-1919, 1908-12-16

and in some towns it is higher. We have
considered a town where it is $50 and
a town where it is $125 and to make
the comparisons perfectly fair we Will
consider the situation where the tax rate
is 81 10, first looking at it from the
standpoint Of the young man who does
not own his farm
UNDER PRESENT SYSTEM
Taxes on the farm at S1.75, S 1000
Interest at 6 per cent. on $500, $1,000
Total interest and taxes, S2sO.UO
UNDER NEW SYSTEM
Taxes on farm. 5 1000
Taxes on personal property. 20 70
Interest on $500 at per cent, 115.o"
Total interest and taxes, 1921 rs
This gives the poor young man an ad-
vantage of So rs per year.
Now after giving the figures showing
the condition of the man who holds this
mortgage in town where the tax rate
is $1.75 we will leave it for you to figure
out just what the effect will be in your
own town.
UNDER PRESENT SYSTEM.
Present income at per cent, $4,000
Taxes on $4,000 at ST -, 81 25
Net income on investment Sl+s.75
UNDER NEW SYSTEM
Income at 3 per cent. on $500, s175.00
Taxes at one.half OF one per cent, 1880
Net income on investment S157.50
This shows that in a town where the
tax rate is Sl.75 the poor young man
gets an advantage of SS.75 per year and
the man who holds the mortgage on the
farm gets a net income of $S.75 more
under the proposed law at per cent.
than under the present law at 6 per
cent. and he gets $3.50 per year more
even at 3 per cent. than he could yet
from any bank in the state. 1t must in
fairness he considered that the argument
thus far depends upon a reduction of the
rate of interest Money will naturally
seek fields OF profitable yet safe invest
ment and the rate of interest thereon is
determined wholly bv the laws of supply
and demand. The safety of the invest
ment determines in a large measure the
amount of money available for that
investment For that reason we find
many people in Vermont holding govern
ment bonds bearing 312 per cent instead
OF putting their money in the banks at
4 per cent. Many people prefer real
estate security netting them 4 per cent.
to deposit in bank netting only 4
per cent. With only a nominal tax on
farm mortgages in Vermont it is certain
that a large volume of money will be
withdrawn from the savings banks and
placed upon real estate and the amount
of money SO withdrawn will reduce the
rate Of interest. Just how much it will
be reduced no man knows for a certainty
but the figures above show that it can
be reduced to 5 per cent. and still be
more profitable than money deposited in
the banks. Real estate mortgage taken
upon business principles is as safe as a
bank deposit, because the safety of the
bank depends upon the investments held
bv that bank, and one of the favorite
bank investments is real estate mort.
gage. If it is safe for the bank to invest
your deposit in real estate mortgages
why is it not safe for you to invest your
own money in such mortgages? If the
proposed measures are passed and be.
come a law it is reasonably certain that
the interest rate on real estate security
will be reduced.
We have considered the case of the
farmer who has bought farm and given
mortgage on it. Against this mort.
gage he has offset $500 worth of stock
and tools and other personal property
We will now take up the case of the
laboring man in the cities and villages
who has become ambitious to own a
home of his own, but who must run ir
debt just as much as the man who
bought the farm. This laborer works
for wages and has absolutely no personal
|
too, that this class people are as mum
erous as the farmer and that together
, they represent large portion of the
population of the state. If this laboreI
buys home on which he owes $500 he
still has to pay taxes on the full value o.
the place both under the present and
under the proposed system. The offset
question does not affect him one way OF
the other, but if his mortgage were not
taxed he would certainly get some
benefit by a reduced rate of interest
Since he has no offset, his grand list
would remain the same under the new
system and he would get the benefit of a
reduced rate of taxes. Even the most
strenuous opponents OF the new measure
: do not question this proposition.