The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1914-01-14

such q tax would afford. The law was sc
strenuously opposed by the rea estate
dealers that it only remained in force
about a year. Tt was also opposed By
the New York Tax Reform associa-
ton, which, after the law had been III
operation a few months, showed thai
its effect had been to increase the rate
of interest by more than the tax above
the ordinary market rate, ~.
BY chapter $50 of the acts of 1905
as amended by chapter $40 of the acts
Of 1907, a recording "a with a single
payment was submitted for the annual
tax. The ideal sought was total ex-
emption, but those who believed thai
i capital invested in mortgages should
make contribution to governmental
expenses, succeeded in obtaining the
mortgage recording tax as q compro-
mise measure,
The act was amended in 1909, ir
1911 and in 1913, but the principal
features Of it remain the same. 1t pro-
Vides that all mortgages on real prop
erty, even though part Of the securt-
ty is personal property, and all exc
| cutory contracts by. which a secured
! ~.debtedness Is increased, may be re-
corded upon the payment Of so cents
for. each 500 of Indebtedness, which
is or may be secured thereby. Mort
cages by which additional security is
given without increasing the debt are
not taxable under the terms Of the act,
but mortgages made before the act
took effect may be voluntarily subject
ed to the tax. Unless the owner files
a sworn statement of the maximum
amount which is to be secured by the
mortgage it is taxed for the full value
of the property given as security. In
the case of trust mortgages to secure
bonds after. the original statement of
the amount of the bond issue has
been filed, and the tax paid on that
basis, subsequent statements may be
filed, covering further issues of bonds,
and these become valid upon payment
Of q further tax on the amount of the
new issue. Where land is located in
several counties the state board deter
mines the amount of the tax due in
each jurisdiction. Of the proceeds of
the tax, half goes to- the state and
half to the county. Mortgages which
have once paid the tax r exempt as
they become part of the assets of
banking and other institutions. No
mortgages are exempt from the re-
cording tax.
In order to induce holders Of securi-
ties recorded outside the state to make
them exempt from taxation in New
lOlh oily PEI sui ll1dy pay re pei CSAlI
on the face value of such security to
the state comptroller. Thereafter, it
is exempt from further taxation. The
proceeds from this course are urned
in to the state treasury.
AS a revenue measure the New York
mortgage recording a. has been a
decided success. The gross receipts
from the tax have been as follows:
1907-08, $3,399, 1898; 10000, $2,755, $40;
1 on0-1n GO ON QQT. 1QIn-11 60 COO 400.
1911-12.
The expenses of collection were as
follows: 1907-08, $500; 19OS-09,
$57,437; 1909-10, $57,872; 191O-11, $751;
500.
1t is interesting to note the effect
of the recording tax upon the rate
of interest in New York. The New
York Tax Reform association COM
piled statistics showing the average
rate of interest on loans secured by
mortgages in New York county for
three periods of eight. months each.
In the first period when mortgages
were liable to assessment as personal
property, the rate was 5.12 per cent;
in the second period, under the record
ing tax, the rate was 5.54 per cent in
the third period, under the recording
tax. the rate was. 5.15 per cent.
We car conclude from these figures
that the adoption of the mortgage re-
cording tax placed the rate at the
figure it would stand We're mortgages
exempt from taxation.
The chief criticism of the New York
recording tax has been that it is not
proportioned to the life of the mort
gage. There are so many practical
d~ificulties in the way of achieving
this result that no attempt to remedy
that defect in the law has been made.
Before proceeding to the discus
sion Of the Minnesota law, I desire
to state that the law passed in Michi-
gan in 1918, and which went into eff
feet in August of hat year is SUBJ
stantially the same in all it's require
ments, as the law enacted in Mime
sofa in 1907. The law is of such re-
cent enactment that nothing can be
said concerning it's operation
In 1907 Minnesota passed a mort
gage recording tax law which was
closely modelled On the New York act,
but was much less elaborate. The rate
of the tax was so cents on each 500
of Indebtedness, but it did not apply
to mortgages taken in good faith by
persons or corporations whose person
atty was exempt from taxation, or
phose property was taxed upon the
basis of gross earnings Or according to
some similar method in lieu of other
taxes. Except as the mortgage credits
figured as assets of estates taxable
under the inheritance tax, or as assets
Of banks and trust companies, the tax
exempted the mortgage from other
taxation. The proceeds We're dis
tributed to the local units where the
land covered by the mortgage, was
situated. This feature of the law was
repeatedly criticised by the state tax
commission. The commission in 1910
and again in 1912 recommended that
the law be amended SO as to turn into
the county revenue fund the %county's
proportion of the tax instead of dis
tributing it among the local funds.
But the legislature failed to pass an
amendment in conformity with this
recommendation. % '% %'#@
The same criticism was made of the
Minnesota law of 1907 as has been