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292
F. G. Young

gage at the situs of the land mortgaged. As already stated, the inclusion of money and credits among the subjects of taxation was controlled by the constitution. Under these circumstances, the exemption of indebtedness represented the purpose of shielding the debtor from double taxation.

As early as 1856, during the territorial era, a deduction of indebtedness within the territory was allowed to the amount of solvent claims returned by each taxpayer to the assessor.[1] This was continued as the law under the state government until 1863. In 1865, the policy of exemption on account of indebtedness was revived, but differing from the earlier practice in that the whole amount "of indebtedness within this state," was to be deducted from the assessable property of the taxpayer.[2] Under this law the grossest iniquities in taxation were soon engendered. As property was generally assessed at about one-third its real value and every dollar of indebtedness offset a dollar on the assessment roll, it was only necessary for the tax-payer to borrow a sum equal to one- third of the value of his property to escape all taxation.[3]

And yet the law providing for deduction on account of indebtedness was retained. In 1874, however, the sum deducted for the indebtedness of any tax-payer was limited to one thousand dollars.[4] In 1880, it wias required that the liability


  1. Session Laws, 1855-6, pp. 77-8.
  2. General Laws (Special Session), 1865, pp. 26-7.
  3. "There is another defect in our taxing system, which works, perhaps, a greater inequality and injustice than those named (inequality in the assessments of the several counties). In assessing property, under the present law, the party assessed is permitted to deduct his indebtedness from the valuation of his property. In counties where property is assessed at one-third its real value, as is the case in most counties, a person being in debt one thousand dollars would pay no tax; for his property, worth three thousand dollars, would be valued at one thousand by the assessor, which would be balanced by his indebtedness of one thousand dollars. But a prudent neighbor, worth the two thousand dollars or any other sum, and not in debt, would be required to pay taxes on the full amount of his assessment. It will thus be seen, that every dollar of indebtedness, under our present mode of assessment, may balance real value of property to the amount of three dollars. And if the indebtedness of our citizens, taken collectively, amounts to ten million dollars, the amount of property untaxed, on this account, is thirty millions." — Bien- nial Message of Governor L. F. Grover, 1872, pp. 8-9.
  4. Session Laws, 1874, pp. 117-8.