That Mortgage Tax Law

In the humble opinión of The Dkmocrat, Rep. awyer and JudgeCheever have oveilooked some of the most important fundamental principies of taxation in their discussion of the merits of the moitgage tax law. It should be the aim of the legislator to so lay the burdens of tax;ition that they will be equitably distributed. That the present general system of taxation does not nccomplis'i that end is plain to all who take the trouble to investí gate the su'ject. Thit anything short of the natural system of taxation advocated by the single taxers will accom plish that desirable result. Tur. Democr vv veiy seriously doui ts. But natura] taxation is a reform that must come slowly if it comes at all. In the meantime it seems unwise to load the present unnatural system down -with incongruities like the lawnnder discus sion which traverse the plainest axioms of economie science. Th great objection, to tliis law is that it taxes sometuing that does not exist. A buys a farm of B. He pays one-lialf of the purchase price and gives B mortgage security (ir the other half. When B owned the farm it was assessed to him at its nominal valne. Now A is the nominal owner of the farm, but Bis in fact owner of one-half interest, condi;ional upon the payment of his mortgage. Yet A is forced to pay the f uil amount of taxes that were formerly paid by B, while B is also taxed upon the mortgaged interest in the premises which he still retains. No one will contend that new wealth has been created by the transaction, yet the valuation of the property in question has been raised fifty per cent. upon the assessor's books. This is a manifest discrimination against the property of the man who is anfortunate enough to be in debt and, as Judge Cheever so clearly indicated, almost universally falls upon the debtor. The only plausible argument that can be raised in favor of this law is th one put forth by Mr, Sawyer, viz: That the taxation of mortgages increases the sum total of the assessment roll and thereby decreases the rate of taxation. ]?ut this is not a safe conclusión to rest upon. It would be as reasonable to assess the merchant's stock of goods or the farmer's live stock twice in order to swell the footings of the roll, as it is to assess again the paper representative of an interest in lands which are already upon the rolls for their f uil value. Mr. Sawyer rests his case upon the following propositions: lst, Our banks are the sources of1 the great majority of loans and they pay no tax on mortgage loans. . 2d, The foreingn capitalist pays a larger per. cent. for making loans here than we pay in taxes. 3d, The foreign capitalist pays his home taxation which is probably equal to ours. We reply lirs't that the assessors rolls do not show the. banks to be the owners of the majority of the mortgage loans. The greater percentage of the credits of the banks are commercial loans. The fact that the mortgages held by banks, building and loan-associations etc. are not taxed is no argument why the mortgages held by individuals should be taxed. Second. The borrower always pays the agent's commission upon foreign loans. Third, There is no way in which the mort gage interest inlands in Michigan, owned by a capitalist living in Xew York, can be reached in the latter state. It is a fact knowu to all who draw papers of this kind that the tax clanse j is inserted in nine tenths of the mortgages drawn and the repeal of this law will relieve the debtor to that extent of an unjust tax.