Little Falls herald. [volume] (Little Falls, Morrison County, Minn.) 1889-1950, 1912-05-10
! AXAfl0N IN MINNESOTA
FIFTEENTH ARTICLE MORT
GAGE REGISTRY TAX-BY TAX
COMMISSION

S0SSeQ anu Cd1eO III Tie same manner
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 residents Of each dis
trict. Such list was appended to the
personal property assessment book and
was assessed in accordance with the
amount due ,on each instrument.
The tax could rarely be enforced
against non-residents of the state, and
as result, nonresident could loan
money at slightly lower rate Of in
terest and still derive q greater net
revenue from his loan than citizen
Of the state. To overcome this advan-
tage the practice became common Of
having the mortgage recorded in the
name of nonresident, even when &C.
tually owned by citizen, thus evad-
ing the tax. As result of this practice
a very small amount Of public revenue
was derived from this source Of taxa
tion. .s. =.
In 1907 the legislature passed q law
imposing tax Of fifty cents in lieu Of
all other taxes, on each hundred dol
lars Of the principal debt or obligation
secured by the mortgage. This law ap-
plies to all mortgages whether owned
by residents or non-residents Of the
state, except mortgages by persons or
corporations whose personal property
lis expressly exempted by law. The
revenue derived under the law for the
year ending Septmber 80, 1909 amount
ed to 1886, 5,910.91, and for the year end
ing September 80, 1910, $500, ,542.26 the
total collected since the enactment Of
the law to the last named date being
81, 1920, $780,.
The mortgage registry tax is in q
measure 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 property upon which the mort
gage is secured is double taxation. II
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 be 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
8 tax can scarcely be called burden
some. It may be interesting to note that
the supreme court has constructed the
law as tax on the security and not on
the debt.zIa~ other words, the tax .is Inn
posed on the right to record the
mortgage and not on the debt secured
by the mortgage. -
One objection to the law is that the
mortgagor practically always paid the
tax either directly, or indirectly, in
Increased interest rates. "Under the
forces Of supply and demand the rate of
interest is controlled by economic law.
i The lender under this principle gets a
compensation for his capital that is
based on it's value to the community.
Every attempt by usury law to take
any part of this from the lender re-
suits in the removal of the capital else
where.' Men are not obliged to loan
their capital and will only do so upon
conditions that appear to them salts
factory. Unless the borrower complies
, with these conditions he cannot secure
the loan. Under such circumstances it
is doubtful if any law could be enact
ed that would compel the lender to pay
the registry tax.
The mortgage registry tax, like the
three mills tax on money and credlts,
is distinct departure from the prin;-.
ciple of the general property tax. Both
laws in a measure recognize the now
generally admitted. fact that our at
tempts to tax intangible personal prop
erty in the same manner as taglble
property has elsewhere and always re-
suited in failure.
Il -.