So general is this method of evasion that the law stationers carry regular forms for evasion, embodying "a contract, separate and distinct from the mortgage, in which the creditor agrees to reduce the interest in case the debtor agrees to pay the tax." Corporations. Bonds and stocks of corporations are not taxed to the holders. The law says "shares of stock in corporations possess no intrinsic value over and above the actual value of the property of the corporation, which they stand for and represent."-Sec. 3608. "A tax upon the bonds of railroad companies secured by mortgage upon their property, which is required to be assessed at its full value to such companies, is double taxation, forbidden by the constitution." - 128 Cal., 607 (1900). Other Debts.—"In assessing solvent credits, not secured by mortgage or trust deed, a reduction therefrom shall be made of debts due to bona fide residents of this State."-Sec. 3628, amended 1895. OREGON. Constitution.-Article 11. "The legislative assembly shall provide by law for uniform and equal rate of assessment and taxation; and shall prescribe such regulations as shall secure a just valuation for taxation of all property, both real and personal, excepting such only for municipal, educational, literary, scientific, religious or charitable purposes, as may be especially exempted by law. Mortgage Tax Law.-In 1880 the legislature provided for the deduction of debts owing within the State from all taxable property, provided the debtor furnished the name and address of the creditors. In 1882 the legislature enacted a law almost identical with that of California respecting mortgage loans on real estate. In 1885 this was made applicable to railroad corporations and in 1889 to iron, steel and mining corporations. The entire law was repealed in 1893 and the legislature enacted that "No deduction of indebtedness from assessments or taxations shall be allowed in any case." MISSOURI. Constitution.-In November, 1900, the people of Missouri adopted a constitutional amendment almost identical with that of California. Like the California law, the amendment excepted mortgages of railroads and other quasi-public corporations. This exception led to a decision by the Supreme Court of the State on June 18, 1901 (Russell v. Croy), holding that the constitutional amendment is void on the ground of inequality in taxation, in violation of the fourteenth amendment of the Constitution of the United States. The same point was raised in California by a railroad company, but was overruled by the Supreme Court of the State (R. R. Co. v. Bd. of Equalization, 60 Cal., 35; 1881). It was sustained, however, in the United States Circuit Court (18 Fed. R., 385; 1834) but has never been decided by the Supreme Court of the United States.-F. N. Judson, National Conference on Taxation, p. 68. Effects of the Law. - The adoption of the Missouri amendment was "so unexpected that it caused at first a panic among money lenders, and a few foreign companies withdrew from the State, refusing to renew their loans. But others soon discovered the successful expedients adopted in California for shifting the tax back upon the mortgagor. The usual method is to take with the interest notes at the agreed rate, additional notes for the probable amount of taxes, payable annually until the maturity of the principal, with a collateral agreement for the cancellation of these notes upon the production by the mortgagor of receipts for all taxes upon the land."- F. N. Judson. So unsatisfactory was the law that the next general assembly voted to resubmit the amendment. Meanwhile the Supreme Court declared it unconstitutional as conflicting with the Constitution of the United States. INDIANA. Constitution.- Section 193. "The General Assembly shall provide by law for a uniform and equal rate of assessment and taxation; and shall prescribe such regulations as shall secure a just valuation for taxation of all property both real and personal, excepting such only for municipal, educational, literary, scientific, religious or charitable purposes, as may be especially exempted by law." Mortgage deduction law. - The legislature of 1899 enacted a law permitting the mortgagor of real estate to deduct from the assessed value of his realty mortgage indebtedness to the amount of $700.00. The law is as follows: "That any person being the owner of real estate liable for taxation within the State of Indiana, and being indebted in any sum secured by mortgage upon real estate, may have the amount of such mortgage indebtedness, not exceeding seven huudred dollars, existing and unpaid upon the first day of April of any year, deducted from the asesssed valuation of mortgaged premises for that year, and the amount of such valuation remaining after such deduction shall have been made shall form the basis for assessment and taxation for said real estate for said year: Provided, That no deduction shall be allowed greater than one-half of such assessed valuation of said real estate. Section 2. "Any person desiring to avail himself or herself of the provisions of this act shall, between the first day of March and the first day of May of each year, file with the auditor of the county wherein said real estate is situate a sworn statement of the amount of such mortgage indebtedness existing and unpaid on the first day of March of that year; giving the name and residence of the mortgagee, and shall also give the name and residence of the assignee, or bona fide owner or holder of said mortgage, if known, and if not known, said person shall state that fact, and shall also state the record and page where said mortgage is recorded, and a brief description of the real estate upon which such incumbrance exists." Section 3. "The County Auditor with whom such statement is filed, in case the money, notes or credits evidenced by such mortgage indebtedness be liable for taxation in any county in the state of Indiana other than the one wherein such real estate is situate, shall immediately certify and transmit a copy of such sworn statement to the auditor of the county wherein the mortgagee, assignee or bona fide holder or owner of said mortgage resides, or wherein the money, notes, or credits evidenced by mortgage is otherwise taxable." Section 4. Any person who shall wilfully make a false statement of the facts provided for in section 2 of this act shall be deemed guilty of misdemeanor, and upon conviction thereof shall be fined in any sum not less than fifty, nor more than five hundred dollars, to which may be added imprisonment in the county jail for any term not exceeding six months." Effects of the Law. The mortgage deduction law has two objects: First, to offer an inducement to mortgagors to declare the name and residence of the mortgagees, in order that as many of the latter as live in the State may be assessed on their mortgages. The deduction, at the average rate of taxation, 11⁄2 per cent., amounts to about $10.00. Second, to place mortgage debtors on a similar basis with creditors who are permitted to deduct their debts from their credits. Creditors are assessed on "all indebtedness due to inhabitants of this State above the amounts respectively owed by them." (Laws of Taxation, Sec. 4.) An investigation made by the labor statistician of the State showed that in the year 1900 the deductions claimed by creditors from personal credits were $38,325,642, and the deductions claimed by mortgage debtors were $33,493,912. There were 73,657 persons claiming mortgage deductions. The mortgage deduction law is attacked in a case now pending before the Supreme Court of the State on the ground of unconstitutionality. The attorney general of the State, in speaking of the law said: I know of no principle of law that will protect deductions from credits and destroy deductions from mortgaged property. . . Deductions have always been allowed from mortgage notes, and mortgages are generally better than money. . . Their debts ought in justice to be deducted from their credits. The deduction claimed on the $10,000,000 of credit should go down if the deduction claimed on account of the $40,000,000 of mortgages must go down."--Annual Conference of State Tax Commissioners and County Assessors, 1902, p. 42. AD VALOREM METHOD, OF RAILROAD TAXATION— General description of state Apportionment of values between districts within the Apportionment of values between states APPORTIONMENT- Of school fund income. See School Fund Income. APPROPRIATIONS- For state purposes. See State Budget. ASSESSMENT. See Assessments. Of banking capital. See Bank Taxation. Of credits. See Credits, assessment of ASSESSMENTS- By state board of assessment Increase in local Local compared with state 159 159, 162 162 162 182 9 7 16 10 |