Alma record. (Alma, Mich.) 1878-1928, 1922-03-23
LAND CONTRACTS
MUST PAY A TAX
TAX COMMISSION CONDUCTING
CAMPAIGN TO SECURE
THIS TAX.

Quoted by that department TO cause
the payment of the specific tax on
land contracts is bearing much fruit
and that the effofts to uncover this
class of property are being so in
creased that when the campaign is
closed it is expected there will be
practically no land contracts in the
state upon which the tax has not
be, paid.
1t seems that prior to 1911 mort
cages and land contracts were sub
ject to taxation at the same rate as
real estate, merchandise and other
tangible property, but the Legislature
Of that year was persuaded by the
owners Of such credits that the state
would derive much greater revenue
il small specific or recording tax
Of u of l per cent was levied, and
chat owners of such credits would no
longer try to evade taxation. There
fore a law, Act No. 81 of the Public
Acts Of 1911, was passed which pro-
tided that a tax of five dollars per
thousand should be paid by every
mortgage and land contract at the
time it was offered for record and
that thereafter such credits should
he exempt from further taxation
The result, however, has not fulfilled
the promises. Not only has the rev
enue been less than under the gen
eral tax law, but there has been no
greater willingness to pay the tax
-. e.
every mortgage promptly in order to
protect the title to real estate, tine
tax on mortgages has been paid al
most without exception, but with land
contracts the result has been far diff
fcrcnt. 1t is very seldom a land
contract has been recorded and con-
seuuently no tax has been paid and
owners Of this class of credit have
evadcd the tax even more successful
~ than under the old law Until 1921
the law did not clearly provide that
contracts could be assessed under the
general tax law unless the specific
tax was paid, but as amended by Act
No. 2l3 there is now no question
but that it is the duty of the assess
ing officer 10 assess every contract
which has not paid the specific tax
. The Tax Commission at the pres
ent time is using almost its entire
force in investigating this class of
property and before the close of the
campaign every portion of the state
will have been visited. The Commits
sion will not only have It's own ex-
aminers engaged in this work, but
will also have the help of all the as
scssing officers in the state, more
than 400 in number and every own
er of land contract is advised TO
pay the specific tax at once, or he
will be subject TO the provisions of
the general tax law which provides
for an annual tax the rate of which
ranges from two per cent to six per
cent, depending upon the locality in
which the owner resides.
The attorney general of the state
has assured the Commission that the
law is constitutional and enforcible
and with the broad powers conferred
on the Tax Commission by the tax
law, by which it can compel the dis
closure Of information from many
sources, there is small chance that
many contracts will escape taxation.
Until the meeting of the Board Of Re
view Of the township or city, owners
of contracts have the privilege of
paying the specific tax and being ex-
empt from the general tax, but any
contracts found after that date will
be put on the rolls by special review,
provision for which. is made in the
tax. law.
No effort will be made to require
the recording Of the contract All
that the Commission intends to en-
force is the payment of the tax to
the county treasurer in the county i'm
which the property is located and the
recording of the contract will then be
optional with the owner.
The tax is a small one and is there
fore not burdensome and it is only a
spirit Of fairness to the owners of
other property that prompts this
campaign. IT. is only by enforcing
all the tax laws that the burden on
the owners Of real estate can be less
encd. Even though the spcific tax
is small, the amount of tax received
will amount to hundreds of thousands
of dollars, and as it is divided equal
~ between the state and county, it
will result in a measure Of relief to
every property owner. The owner Of
mortgages has had to pay the tax,
and in fairness to him the owner of
land contracts must do the same.
There is an idea held by some
that the purchaser of the property is
required TO pay the tax. This is not
true. This law presumcs that the
tax will be paid by the holder of the
contract, the party who sold the
property.
Ii must also be understood that no
allowance can be made for a prior
contract or mortgage OF the same
property. The tax must be paid on
each contract regardless of any other
cncumbrance on the property.
Reports from all over the state
are TO the effect that owners Of con-
tracts are availing themselves of the