The Brookings register. [volume] (Brookings, Brookings County, S.D.) 1903-1971, 1911-08-03
MORE LIGHT ON
MORTGAGE TAX
DE SMET INDEPENDENT PRE-.
Diets THAT STATE LAW is
UNCONSTITUTIONAL
ONLY AFEW STATES TAX MORTGAGES
II Mortgages Are Taxed Without
Doubt the Present Rates Of In
terest viii Be Raised.

In commenting on the action of the
county board OF Brookings county In
taxing the mortgages and credits the
De Smet Independent says:
The county commissioners Of Brook
ings county have ordered the register
of deeds to prepare a list OF all mort.
cages on record for taxation. The
state law provides that all money and
credits shall be taxed, but this has
never been done in any county In the
state, 10 far as we know. 1t has not
been customary to ak mortgages as
very few owners ever report them for
assessment. 1t Is said that the banks,
which hold most of the mortgages,
will take the matter into the courts to
test the constitutiOnality Of the law.
To predict what the outcome Of the
matter might be in the courts would
be foolish. There are two sides to
the matter. of course. However, It
looks az IL the owners Of mortgages
might have the best end Of the con-
.troversy. The mortgage Is an evil
dence of credit, 1t Is true, as It is
given to ecure the payment of the
debt. but Of itself 1t Is not a title to
property, although 1t can bring about
the transfer Of the property men,
ttnnnI thnpnin tndnV onvfotn nnndJ-
tons through process Of law. But
when taxes are paid On the land, the
tax on whatever value is represented
by the mortgage has also been paid.
The interest evidenced by the mort
gage is a fixed amount, and does not
bear the same relation 20 the property
as a deed, any advance in the value OF
the land goes to the holder of the
deed. Another reason why the law
may be unconstitutional Is that the
rate at which money and credits are
taxed is much higher than on a like
value invested In real estate, and IL
We are to have an assessment strictly
according to law We must remem.
Der that the constitution provides:
"All taxes to be raised in this state
shall be uniform on all real and per-
sonal property, "+* so that every
person and corporation shall pay q
tax in proportion to the value of his,
or her. or It's property"
The question of taxing mortgages
is one that has been raised in nearly
every state, and in very few states are
the mortgages taxed On the same
basis as the same value in property
unencumbered. The money value
represented by the mortgage Is a part
Of the vaiue Of the property, and when
the property mortgaged has been
taxed. There Is the practical side OF
this matter to be considered, also.
The borrowing of money is a business
transaction between the lender and
the borrower. Raise the expense
to the lender and the price Of the
borrower will be raised accordingly.
Make conditions by taxation and
limitation OF interest by statute such
that the lender cannot receive the
market value for the use Of his money
and you drive the lender to another
market where he can secure desired
returns. Any tax upon mortgages
will be added to the interest paid by
the borrower. The best way to secure
an additional evenue from mortgages
is to increase the cost of recording.
Make a fee high enough to bring a
reasonable revenue, but not so high as
to cause the lender to increase the in
terest rate.