Barton County democrat. [volume] (Great Bend, Kan.) 1885-1915, 1911-12-22
WHY A MORTGAGE CANNOT BE
TAXED.

-. = HAnNSi VI hlOWd, hdn. On.
feus some views ON the question Of
mortgage taxation, in which he urges
the taxation Of all mortgages instead
OF The exemption Of amy. He would
have the Eastern man holding Kan
sas mortgage made TO pay the tax on
the amount Of the mortgage, deduct
ing the face Of the mortgage from the
valuation Of the farm, thus distrib-
uting the tax equitably between the
owner and the mortgage. To reach
the holder Of the mortgage, he would
have the tax lien for the unpaid tax
against the mortgage, or, as he puts
II, let the county sell the mortgage,
a. 1t does other personal or real
property.
Mr Elmore's position seems rea.
sonable on the surface, but he over
looks very essential facts.
Existing mortgages held outside Of
Kansas cannot be taxed except by
new legislation. Now Mr.. EmoUe is
an intelligent man and he will see at
once that such a law cannot apply TO
contracts made before the law. It is
unconstitutional in state and nation
10 pass ex post tacto laws. or laws
which are retroactiEe. The existing
mortgages then, cannot be taxed.
If the legislature passes a law sub
jecting future mortgages 10 taxation
in the manner suggested by Mr.. e.
more, who would advance the money
1t requires little sagacity TO under
stand that no eastern man, or outSid.
er would loan money on a mortgage
% present rates of interest the
rate Of taxation, and as that varies,
generally increasing, the rate would
be much higher than now. But as a
matter of fact, it would kill the mort.
gage industry both in and out Of the
state. Money would never seek in.
vestment under such law.
Sometimes by changing the point
Of view and looking at it from the
other fellows side, we get a broader
view. Suppose Mr.. Elmore has $1,000
which his neighbor would borrow, Civ
ing a mortgage on a quarter section
of Barber county alfalfa land. (That
is better security than a government
bond.)
The neighbor offers 6 per cent in.
terest. Mr.. ElmOne is about TO close
the dead and take the mortgage when
The assessor reminds him that the
mortgage viii be subject 10 one and
half per cent tax. Mr.. Blmore figures
quickly and finds ;hat he will net but
four and half PER cent for his mone
while the city Of Kiowa will sell HIM
five per cent m'axed bond.
He will tell the neighbor that he
must have seven and half pei
cent note. A New York man hearing
the conversation, eagerly takes the
mortgage at six per cent because the
assessor cannot reach him.
II he borrowed from Mr.. Elmore
paying the seven and a half per cent
would not the owner of the land pay
the tax?
The lender always has and always
will make the terms of the loan and
the borrower must meet them.
Mr.. Elmone may persist in taking
only the land owners or the borrow
Ell S side. Then let him seek the loa1
from a neighbor who has $1,000 L
loan. the neighbor knowing that he
must pay the tax on the mortgage
and then Mr.. Bmore will find thai
i will cost him seven and a hak PEI
cent instead Of six unless the New
Yorker is at hand 70 rescue him.
Study II as you will the tax mus
be paid by the borrower and not the
lender. You are permitting the
home man 10 loan his surplus 10 his
ne'gdbor on the same terms that the
outsider enjoys.