Ottumwa tri-weekly courier. [volume] (Ottumwa, Iowa) 1903-1916, 1911-01-26
THE TAXATION QUESTION.

III 81 " 0cy 0Os
THE TAXATION QUESTION.
One Of the reasons why wealthy
Iowans leave this state to settle in
California Is given by Alfred Grundy,
a former Cedar Falls attorney, in a
letter to Cedar Falls paper. He says
the taxation methods in California at
tract, the investor and are fair, as
well, to the borrower. There is, says
he, something manifestly wrong with
the system as conducted in Iowa. he
cites the following as an instance OF
the unequal rate Of taxation in Iowa:
A farmer owns farm of 100 acres
that will sell in the open market for
$4,000. 1t is assessed for taxation on
a valuation of from $50 to $65 an acre.
He borrows on it $4,000 from money
lender who lives in town, where tax
rate are 70 mills. The farmer is taxed
on his land at valuation of $65 per
acre, and the lender is taxed at a val
uation of $4,000 or at a 35 per cent
higher rate on actual market values.
The farmer pays 80 mills and the
lender pays 70 mills. Then, too, both
pay on the same property.
He contrasts this Illustration Of the
methods of taxation employed in Iowa
with those of California. He says:
"In California, the statute expressly
prohibits double taxation. The mort
gagor pays on the valuation OF his
property, less the face of the loan, IN
paid, and the lender pays that. BY
statute it is possible for the lender to
SO contract with the borrower that the
latter pays the full tax on his land as
if it were unmortgaged, and on pro-
ducing his receipt therefor there is
usually 3 per cent deducted from the
interest rates. Both Of these con-
tracts are enforcible. The result is
that all property is taxed once, and no
more. The money lender is anxious
to have his funds out of course, and
when out under this sort Of agreement,
his money is to him untaxed, or, II
taxed, he is entitled to higher inter
est on that account.
"At the last election an amendment
to the constitution was carried, cover
ing the question of taxation, one clause
of which was as follows: All property
shall be taxed in proportion to
it's value provided that a mort
gage, deed of trust, contract or other
obligation by which a debt is secured
when land is pledged as security for
the payment thereof, together with
the money represented by such debt
shall not be considered property sub
ject to taxation
"This provision wipes out all taxes
on mortgages and moneys and credits
at one swoop, where the latter are
secured by lands and the requirement
of the borrower to pay tax on the mort
gagged property or the mortgage
are both eliminated There is an
other provision of the law adopted at
the last session which provides that all
moneys deposited in savings banks OH
interest are exempt from taxation.
"The effect of this letter provision is
astounding. There are many, many
millions of dollars deposited in the saw
ings banks here because OF this law.
On regular time deposits the banks
pay per cent interest, on checking
accounts they pay per cent, provided
the lowest balance is not under $500.
Naturally there are thousands OF peo-
pie here with money who do not know
the method of loaning to advantage, or
are afraid to trust their judgment or
that of people who would know, and
these all deposit in the savings banks.
This places millions of dollars in the
hands of the most astute financial men
of the state at very nominal rate OF
interest, and they in turn, possessing
the knowledge and business judgment,
loan it on real estate at per cent and
more, reaping tremendous harvest
in a perfectly legitimate manner ana
to the apparent satisfaction OF all.
81 mention these provisions of the
law to show the manner in which the
most rapidly populating state in the
union deals with moneys and credits.
The result Is that there are literally
millions of money in this state seeking
a market, yes, and finding it, without
cent of taxation.
"Yet, there are multiplied millions
of values in property made possible by
this means, and every dollar of it is
taxed, and at reasonable rates, and no
tax. and no tax ferrets and no perjury
necessary
The Iowa legislature this session is
giving careful consideration to the
question of revising the tax laws with
a view to removing the inequalities.
The letter of the Cedar Falls man is
of interest as showing how another
state successfully found solution to
this same question.
Following the announcement that