The Unintended Cost of Taxing Mortgages
A Spokane assessor's push to tax mortgages sparks a debate over whether the burden of public revenue falls unfairly on the borrower.
The story, cleaned up
A cleaned-up reading of the newspaper page: spelling and layout repaired, one story lifted off a crowded page. It follows the original closely but it is not a transcription. The original page is below; read it if a detail matters.
It is stated that the assessor of Spokane county will disregard the opinion of the attorney general of the state and of the county attorney, and will assess all mortgages that appear of record. Many of the Eastern loan companies have already taken advantage of the law by inserting a clause in the body of the instruments stating that should the mortgage be taxed, the mortgagee shall pay the taxes. This will double the burden upon the borrower, for a piece of property is mortgaged for half its value and the owner is compelled to pay taxes upon an assessed valuation of a half as much again as his property is really worth. It would be a misfortune to the state at large if it should be decided that mortgages are taxable. The only sufferer by such a system would be the owner of the mortgaged land. The lender of money can always protect himself by increasing the rate of interest or stipulating for the payment of all taxes on the loan by the borrower.
“The taxation of mortgages means an additional burden upon every farmer who is obliged to borrow money and upon every owner of real estate who is not so fortunate as to be free from debt.”
This 1891 debate over who bears the tax burden in a property-heavy economy mirrors modern anxieties about property tax pass-throughs to tenants. Then as now, the struggle revolves around whether public funding strategies ultimately punish the most vulnerable participants in the housing and land market.
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