The Topeka state journal., 1909-03-13
GOVernOr StubbS Kills the Mort
gage Registration Bill.
Says That 1t Violates Principles
of Taxation.
BORROWERS PAY FEE.
Would Also Exempt Much Prop
erty From Taxation.
Also VetOes the Bill Changing
Tax Paying Methods.

the Case bill providing for a
registration fee of s5 per $1,000 on all
| mortgages. He also vetoed the bill
| which provided for the payment of
| two-thirds of all taxes in December
| and one-third in June instead Of the
present method of one-half in Deem
| Der and June.
| The governor had these bills before
him all day yesterday trying to decide
whether he should approve or veto.
His action is likely to be generally
commended. There is little cause for
J the change in the method of paying
taxes. and for the registration fee of
mortgages, the bill while pretending to
pc method of taxation, violated sew
erals basic principles of taxation. 1t
was lnequitable to begin with in that it
taxed a man $5 on a 81, 900 mortgage
1or one year and taxed" the same
amount on a mortgage of s., 900 for five
years or ten years. In the next place,
per cent at the most on the mortgage;
that Is, IS per $1,000, and if the mortgage
runs Tor hVe years, there would be only
one-tenth of 1 per cent, whereas mort
gage notes now pay the same rate of
taxation that other property does and
lne same rate that notes secured by
cnatteI mortgages or by other or no
mortgage bill was that it permitted a
large amount of property to escape
run run xatlon, and property of the kind
which has just come into taxation
lists to a large extent, through the new
tax law; for instance, $47,OOO,OOO
worth of mortgage notes were taxed
last year against $4.000,000 worth the
previous year
While the farmers were alleged in
certain Instances to favor this mort
gage tax Zee, they are very largely be-
HeVed to be against it, while the bank
ers and money loaners appeared, in
the main, to favor it,
The governor was also convinced
lnat tne borrowers would have ito
pay the freight" The bill was gem
orally not satisfactory to borrower or
lender.
In his message to the legislature We
toing the bill the governor said:
Ihis Is an act providing for a regis
trat1on fee on mortgages of real pro-
perty and for their exemption from
taxation after being recorded, regulat-
ing the effect of nonpayment of regis
tration fees and prohibiting the enforce
ment of mortgages upon which regis
tratfon fees have not been paid as here
in provided, and repeating all acts and
parts of acts in conflict herewith.
RMS Dill proposes to exempt mort
cages of real estate from taxation and
to charge in lieu thereof a fiat rate of
so cents on each 800 as a registration
fee. Under the law mortgages on real
estate are property. Our constitution
provides that all property shall bear a
uniform rate of taxation. Senate bill
No. 247 violates the spirit of this provis-
ion even though it may be so skilfully
framed as to bring it technically with
in the letter of the constitutional
which fact there is reason for grave
doubt.
ct had hoped to see the legislature at
this session submit to a vote of the peo-
pie a constitutional amendment provid-
"a he icof
methods of taxation which would per-
nit the state to raise lis revenues
through franchise and corporation
taxes upon state wide public utilities
to be taxed only for county. township
city and school district purposes, but
the legislature in its wisdom saw fit to
vote against that proposition.
'I fully appreciate the necessity of
establishing just and scientific meth
cd of taxation of mortgaged properties
so that the debtor and creditor will
each pay their just share according to
perty, but this bill falls far short of
so doing.
"a patient, careful investigation of
this subject has fully convinced me
that the registration fee provided for
in Senate Bill No. 247 would be paid
by the borrower, and the exemption
of mortgages from taxation would
inure wholly to the benefit of the man
who loaned the money
"In Massachusetts, where the mort
gagee's interest in the land is taxed,
and his mortgage is exempt from
taxation, the state tax commission of
that state says: The practical effect
is that all mortgages stipulate for the
payment of the tax by the mortgagor
or borrower And they also make the |
further statement that in loans on
farming real estate the rate of interest |
has failed to decline
'In Minnesota the law exempts |
mortgages from taxation except for
this same registration fee of SO cents
on each one hundred dollars. The
Minnesota tax xcomm1sslon IN discussing
their law SAYS that the borrower pays
the registration tax and that there is /
no change in the rate of interest.
sNThe principal argument made by |
the members of the legislature in ia
vor of this proposed law was that it |
would be to the advantage of the bor-
rover by reason of a lower rate of in |
terest which argument is not borne |
ont bv the experience of the above
named states where similar laws are
in operation.
violates Taxation Principles.
Mr.. Hills P. Haughen. member of
the Wisconsin tax commission, in dis
cussing the Minnesota law said:
CA recording fee of SO cents on
each one hundred dollars indebted
ness secured by mortgage is called a
tax but it violates every principle of
taxation. It bears no relation to the
of revenue. 1t violates the rule of
as the rate on a mortgage
due in one year is ten times that of
any due in ten years
Senate bill No. 247 has exactly this
provision and the same. Identical tax is