Rensselaer Journal, Volume 12, Number 9, Rensselaer, Jasper County, 7 August 1902 — A BENEFICENT LAW [ARTICLE]

A BENEFICENT LAW

Indiana Mortgage Deduction Law Has Afforded Just Relief to ... , Thousands. FAIR PLAY FOR HOME HOLDERS: Secured Through the Measure Which j Has Just Been Sustained by the Supreme Court—Attorney General Taylor Talks of the Purpose and Effect of the Law. A law which has lifted a heavy burden from the shoulders of the small home-holder, and Which has not at the same time added to the general weight of taxation, is the mortgage deduction law passed by the Republican legislature of 1899, ably and diligently upheld by Attorney General W. L. Taylor, and through his efforts vindicated in the supreme court of the state the other day. So firmly convinced was Mr. Taylor of the justice of this measure, and so determined to maintain It, that he paid out of his own pocket the cost of carrying a test case to the supreme court, where the constitutionality of the law has been affirmed. The law provides that mortgage Indebtedness to the amount of S7OO shall be deducted from the assessed value of any piece of property, where the property is worth at least double the amount of the mortgage Indebtedness. This is the first law of the kind ever passed in the history of the state. Its purpose was and its effect has been to relieve mortgagors of an unjust burden of taxation. Justification for the Law. At the annual conference of township assessors held at Indianapolis In 1900 Attorney General Taylor said: “A vigorous protest is being entered everywhere against the owner of a lot In town or a farm in the country, deducting S7OO of the mortgage from that lot or that farm, and yet for 45 years, without one word of protest, the holder of the mortgage upon that lot or that farm has been using that mortgage as a shield to protect himself against his indebtedness. , If the mortgage upon the farm can be used 1 as a shield, why cannot the farm itself be used as a shield? This is simple, homely, everyday common honesty. * * * A man may own a million dollars of first-class securities, and because he has some money in tion in some distant state he can deduct the total amount of such speculation

from suck 'first-class securities which have no connection with the debt. It is true the S7OO law will take a great deal of property from the duplicate, but it will not take a tithe of the prop: erty already taken from the duplicate by the system of deductions that has fastened itself upon our law. lam for the S7OO law and shall defend it in the courts wherever assailed, until the vicious system of deductions shall have been greatly modified.’* Mr. Taylor further said that in his Judgment there would not be a great loss upon the duplicate for the reason that property that had escaped under the.deduction law would now go on duplicate. Operations of the Law. N Mr. Taylor’s prediction has been fulfilled. The of the state statistician made the next year showed that the total amount of deductions unuer the S7OO law was $29,159,931, while the total gain of taxable property for 1899, exclusive of mortgage deductions, was $31,723,152, a net gain of $2,653,152. Speaking recently of the operations of the law, the attorney general said: “From the report of the statistician it appears that $40,000,000 of taxable property this year is withheld from the duplicate In Indiana because of debts being deducted from credits by taxpayers. It is a remarkable coincidence, but true, that the total deductions on account of the mortgage indebtedness in Indiana for the year 1900 amounts to $40,000,000. Here is a grand total of $80,000,000 of deductions, claimed by taxpayers In Indiana In one year under the two deduction laws on the statute book 3. “Eighty thousand taxpayers in Indiana have filed affidavits and made claims for these deductions under the new mortgage deduction law.” Credits and Mortgage Deductions. ‘"ffesjs said that credits ought not to be taxbd because they may not be collected. True. But they are appraised at their probable value, which includes the hazard of collecting. Eut credits are generally more valuable than money. A mortgage on your home Is more valuable to the holder of the mortgage than gold, and yet that is a credit from which the mortgagee can deduct his indebtedness. It is nonsense to talk about repealing the law on credits. It would be highly improper and unjust to charge holders of property their full value when they owe almost every dollar for them. Persons of moderate means are not those who claim great deductions. I looked up this question in Marion county a short time ago—began with the letter C In the alphabet, and I found thirteen names: the first thirteen that I struck claimed and took deductions of nearly $300,000. I know a man in Indiana who can give his check for nearly a million dollars that got a deduction of SBO,OOO this year on account of credits. If he can get a deduction of SBO,OOO on account of credits why can’t a poor man paying for his home get a deduction on account of a mortgage on that home?

If the man that holds this mortgage on his home get a deduction from that very mortgage, why can’t the man that gives the mortgage get a deduction from that mortgage on that little home that rests on it like a blanket? Taxation Should Be Equal. ‘ If a deduction can be taken by a mortgagee from the ftiortgage on your home, what principle is there that stands in the way of your receiving a deduction on the same mortgage on your home? There should not be one law in this country for the creditor and another law for the debtor classes. There should not be one law for the mortgage owner and another to the lot owner. All should be taxed alike. The deduction claimed on the $40,000,000 of credit should go down if the deductions claimed on account of the $40,000,000 of mortgages must go down. I insist that the whole $80,000,000 of credits should rise or fall together.’’ The Most Perfect Tax System. In upholding the mortgage law before the state supreme court Attorney General Taylor said: “On what principle of law can the holder of a mortgage on lots or lands be entitled to a deduction from such mortgage security, because the‘holder thereof is indebted to some third person, while he who owns the lot or land upon which such mortgage security is based is denied the right to deduct his indebtedness from the very lot or land that furnishes the basis of such mortgage security? Why should the lot owner be denied the right of deduction from his lot, when the note owner who holds a mortgage upon such lot is granted the privilege of deducting all of his indebtedness from the value of such note? No substantial reason can be given. "If the Indiana mortgage deduction law Is stricken down the mandate of the constitution will not be complied I with which commands that a ‘just valuation of all property shall be had.’ l Nor will such a mandate be obeyed I a tilt; lot. owner in denied the right

that is granted to the note owner. “As long as governments are maintained and civil liberty prevails among men taxes will be imposed. We cannot expect these tax laws to be perfect. The legislature and the legislature alone can correct the evils that experience makes manifest. “That tax system is the most perfect which most nearly casts upon every citizen of the state his fair share of the public burdens.’’ For fine job work call at the JOURNAL office.