Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 21, no. 527: April 20, 1878

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J Real Estate Record AND BUILDERS' GUIDE. Vol. XXI. NEW YORK, SATUEDAY, APEIL 20, 1878. No. 627. Pitblts^ied Weekly by TERJIS. ONE YEAR, in advance....SIO.OO. Communications should be addressed to C. AV. SWEET, Nos. 'MS AND 347 Broadway. BUNGLING LEGISLATION. The bungling and abortive elforts which have been recentlj- made iu the State Legislature to compass the subject of mortgage legislation, whether for exemption or taxation it is diflicult to discern, certainlj- constitute the verj- enibodi- inent of legislative incapacity. A fortnight ago we called attention to the manifold evils of a bill which had then passed the Senate. We are agreeablj^ disappointed in being able to congrat¬ ulate our readers upon the defeat of that bill in the Assembljr. Along with these glad tidings comes the information that another bill of kindred im- Iiorfc has been incubated iu the Waj's and Means Committee of the Lower House. The relation of these two bills appears to be that of father and sou. The text of the later oue will be found in our newscolumu. A superficial examiuatiou of it will convince those who have taken anj"^ interest iu the subject that, while some of the intricacies of the earlier bill have beeu removed, its greater evils and absurdities*have beeu intensified and perpetuated iu the new measure. Our best infor- uiatiou leads us to believe that these measures have had their origin principally, if not exclus- ivelj', among countrj' members, aud that their object is to relieve the farmei-s, who happen to own mortgaged farms, from some few dollai-s of taxation ivhich they find it iuconvenieut to bear. As the organic law requires such legislation to partake of a geuei-al character, the relief demand¬ ed bj' this rural coustitueucj' is likelj^ to impose upou the owners of landed interests iu cities a peculiar aud excruciating burden. It passes comprehension how such vicious, partial aud per¬ plexing legislation can escape the condemnation of keen lawyers and business men iu the commit¬ tees of the respective Houses. Such euac'.meuts arouse just suspicion as to the amount of wisdom which presides in our legislative councils. If the country at this moment is suffering from one evil more than another, it is from uuwi.se, in¬ trusive aud disturbing legislation. Ai a time, wheu of all others, its business interests need repose and exemption from irritating causes, they seem more than ever to be menaced with radical, special and ill-advised legislation. For five bitter J'ears the best business interests of the country, mercantile aud manufacturing, have writhed un¬ der the agitation of the currency question iu Congress, aud now these same interests are shak¬ en to their very centres by the prospect of a complete over turning and reconstruction of the tariff laws. In our own State,'real estate inter¬ ests, lying at the foundation of the whole social and mercantile fabric, have been burdened with a load of taxation piled mountain high; administer¬ ed under processes which are slowly strangling their very life. Instead of the permanent and sub¬ stantial relief which wholesome legislation would alfoi-d, the very fii-st preseutmeut of the subject of taxation iu tho State Legislature is m the shape of crude, bungling aud ill-digested devices, such as the lueiisures upou which we are animad¬ verting. It is not easj- to clearlj' define the real object sought to be attained by the promotei-s of this suspicious legislation. Many objects maj' be im¬ agined aud assigned, aud the evil effects of the proposed measures inaj' be readilj' traced bj' those accustomed to -watch the operation of .such laws. The least insight iuto the subject w-ill fur¬ nish an assured conviction that if the present proposed law finds a place upon the statute book, it will afford uo real i-elief to the ownei-s of prop¬ ertj' nor to the owners of mortgages, while it will be sure to entail upon the w-hole commiuiitj' con¬ fusion, distraction aud serious hardship. Assum¬ ing that in these measures a double object is con¬ templated, that of relieving the property owner aud the mortgage owuer, or of providing the means of equating taxation between the two, it is safe to say that thej' flj- flat iu the face of both of these propositions. It is proposed to allow a mortgage debtor to deduct the amount of his mortgage from the assessed valuation of his prop¬ erty for taxation, aud to impose upou hira the obligation of giving the authorities a clew to the owuer of the mortgage, so that if he happens to be a resident of this State, he maj' be made to respond to the full amount of the tax upon his mortgage. As a majority, probablj', of mortgages are held by mouej-ed institutions, which are al¬ ready exempt by law from taxation ou their mortgage investments, and as another propor¬ tion, uot a small one, are held bj- lenders residing out of the State, it is more than likely that in practice the mortgage debtor will be debarred from availing himself of the exemption which this law professes to graut. In this light it is simply a discrimination against the private lender ou mortgage who happens to be a citizen of this State, and will certainlj', if the law is strictly enforced iu the interests of borrowei-s, drive our own capitalists out of the mortgage market. There is another provision, how-ever, in this law which resembles the Irishman's famous post¬ script to his letter, in w-hich, after writing it, ho announces his decision to uot send it. This other section provides that an agreement may be made between the borrower and lender as to which ono shall bear the tax, or w-hether it shall be divided between them iu au agreed proportion. The privilege of making such au agreement certainly does not require the authority or mandate of any statute. In effect this section will defeat} the operation of the whole law, or rather will so far suspend its action that the capitalist w-ill either decline altogether to lend on mortgage, or else will compel the borrower to pay the taxes as he is doing at present. To complete the farcical character of this statute it would be only neces¬ sary to add an additional section to the effect that this statute is intended for legislative pastime, and will probablj' have no application after all to the relations of borrowers and lenders. We are forced, however; to -welcome even such crude and bungling legislation as this, as the earnest of a desire on the part of our law makers to deal, if not intelligently then to the best of their abilities, with this pressing aud imperative subject of real estate taxation. Bj- the best authorities, the taxation of mortgages is recog¬ nized as a double taxation of real estate, and this proposition is too simple to require demon¬ stration. It is the highest injustice aud the exemplary evil of our preseut laws that real estate, tho least able to bear oppressive taxation, is reallj- subjected to a double tax. If there is an honest and sincere purpose ou the part of our law makei-s to mitigate the evils w-hich now oppress our real estate interests, especiallj- iu the matter of mortgages, the w-aj- is reallj' plaiu and clear. When we recall tho alile and lucid expositions which have beeu made of this subject during the past fifteen j'ears, w-e are siniplj- amazed at tho lack of inforinatiou at present displaj-ed by the legislature. To remove this double tax ou real estate and to lift in the most direct and effectual manner the burden of oppression from both property owner aud mortgage owner, wc merelj- require to have the tax entirelj' taken off mortgages. Probablj' three-quartei-s of the amount of exist¬ ing mortgages are exempt bj- previous enact¬ ments, aud J'et the fact that the remaining por¬ tion is held for taxation, that mortgages owned by individuals resident iu this State are subject to taxation whenever found, introduces au ele¬ ment of uncertainty and disadvantage in the negotiation of mortgage loans w-hich has a ten¬ dency to throw them into the hands of moneyeil corporations aud non-resident lendei-s. Were the taxation of mortgages ouce removed, large vol¬ umes of resident personal capital w-ould at once seek these investments, aud the rate of interest at which good mortgages w-ould be easilj' negotiable would correspond with the i-ate of interest paid on gov. rnment bonds or anj- other prime un¬ taxed securities. It is uot onlj- with reference to this single mat¬ ter of taxation of mortgages that legislative ac¬ tion is required. Sooner or later the w-hole sub¬ ject of State aud municipal taxation must forciblj- present itself to the minds of our law-makers, aud imperiouslj- demand broad, comprehensive and i-ational treatment. There is no subject at the present moment that is more profouudl j- agitating the minds of the people cf tho entire countrj-, aud especiallj- of this State aud citj-. The de- maud is outspoken aud clamorous for thorough reform of the wietched system of tax administra¬ tion with whicii we have struggled, and by which we have beeu cursed aud oppressed for so many J-ears. Partial, piecemeal, bungling legislation will uot afford the desired relieL The subject must be taken bj- the roots and dealt with intel¬ ligently, decisivelj- aud promptlj'. THE TAX ROLLS. It is the glorious privilege of Americau citizens to be taxed. Foriuerlj- we rebelledlagamst tax¬ ation without representation, but now, having re¬ presentation, w-e are called u[k>u to bear content- edlj- the fullest measure of taxation. In what¬ ever respect our sj'stem of republican government may excel or fall short of European systems, it has certainlj' reached a point where it can chaL lenge comparison with the most absolute and despotic of the old governments in the matter of levying and collecting taxation. The annual pro-