The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1912-05-24
(Fifteenth Article)
The Mortgage Registry Tax

The Mortgage Registry Tax
Prior to 1907 mortgages were as
sessed and taxed in the same man
ner as other classes of personal
property. The register of deeds
was required to furnish list of all
mortgages or other real estate
securities held, owned or controlled
by residence of each district. Such
list was appended to the personal
property assessment book and was
assessed in accordance with the
amount due OIL each instrument.
The tax could rarely be enforced
against non-residents of the state,
and as a result, nonresident
could loan money at slightly lower
rate of interest and still derive
greater net revenue from his loan
than a citizen of the state. To
overcome this disadvantage the
practice became common of having
the mortgage recorded in the name
of a nonresident, even when
actually owned by citizen, thus
evading the tax. As a result of
this practice very small amout of
public revenue was derived from
this source of taxation.
In 1907 the legislature passed a
law imposing tax of fifty cents,
in lieu of all other taxes, on each
hundred dollars of the principal
debt or obligation secured by the
mortgage. This law applies to all
mortgages whether owned by
residents or non-residents of the
state, except mortgages taken by
persons or corporations whose per-
sonal property is expressly ex-
empted by law. The revenue de-
rived under the law for the year
ending September 80, 1909
amounted to $685., o1O.e1, and for
the year ending September 80,
1910, $5O9. 542.2 the total collected
since the enactment of the law to
the last named date being 81 $780,
e72.69.
The mortgage registry tax is in
measure a compromise between
those who believe that mortgages
should not be taxed at all and those
who believe they should be taxed
It is contended by some that to tax
both the mortgage and the proper
ty upon which the mortgage is
secured is double taxation. If this
be true, then the mortgage registry
tax law practically removes the
double burden, for the tax is now
so light on the former as to be
scarcely noticeable. The average
life of mortgage is said to about
five years. This would make an
annual rate of only one-tenth OF
one per cent instead of from two to
three per cent as under the old law
Such tax can scarcely be called
burdensom. 1t may be interesting
to note that the supreme court has
construed the law as tax on the
security and not on the debt. Ir
other words, the tax is imposed or
the right to record the mortgage
and not on the debt secured by the
mortgage.
| One objection to the law is thai
the mortgagor pays the tax. The
answer to this objection is that the
mortgagor practically always paic
the tax either directly, or in
directly, in increased interest rates
"Under the forces of supply ano
demand the rate of interest is con
trolled by economic law. TIL,
lender under this principle gets /:
compensation for his capital that il
based on its value to the commun
lily. Every attempt by usury Law
to take any part of this from thu
lender results in the removal of tn,
capital elsewhere" Men are no
obliged to loan their capital anc
| will only do so upon conditions
that appear to them satisfactory
Unless the borrower complies with
these conditions he cannot secure
the loan. Under such circumstan-
ces it is coubtful if any law could
be enacted that would compel the
lender to pay the registry tax.
The mortgage registry tax, like
the three mills tax on money an6
credits. is a distinct departure from
the principal of the general prop.
erty tax. Both laws in a measure
recognize the now generally admit,
ted fact that our attempts to tax
intangible personal property in the
same manner as tangible property
has everywhere and always result.