Should Farmers Pay More Property Taxes?
Last week, the State Tax Commission proposed a plan that would change the levels of taxation for Missouri farmland. Combest had a number of links to stories about this. In short, taxes on higher-quality farmland would rise, and taxes on the lower quality land would decrease. I'll admit that I learned a lot about how farmland is valued and assessed because of this story — which is nice, because it's my job to know stuff like that.
Let's start by admitting that property taxes on farms and farmland in Missouri are very low. That does not mean that I think they should be higher, just that we can all admit they're low. Under the new plan, the value of an acre of the best farmland, for tax purposes, would be $1,270. An acre of land in a nice part of St. Louis County can easily be valued at $50,000 for tax purposes — and that is the assessed value, not just the appraised value. I realize there is a big difference between someone paying taxes on those higher valuations for one or two acres, and a farmer paying them on hundreds of acres, but still it is quite a difference — especially when the farm land is making money for its owner, while the residential acre just sits there and looks pretty.
Farm buildings and equipment are also valued lower than personal property: 12 percent, compared to 33 percent. So, I pay higher taxes on my car than the farmer does on his or her tractor. Then again, my car just gets me around, while that tractor helps feed the world.
We keep farm property taxes low because high property taxes are an impediment to productivity in a resource-heavy usage like farming. Higher taxes on farms would lead directly to higher food prices for the rest of us. The people of Missouri decided a long time ago to encourage farming by levying lower taxes for it than for other land uses. I think that was a good decision then, and still a good decision now. The changes that would result from an average increase in farm taxes are not a good idea for Missouri.
Interesting article, David. Informative. The issue does seem a bit more complicated than might first meet the eye, and you illuminated that well. Contrast the farm issues here in Missouri compared to those 40,000 unemployed for the sake of a bait fish. 20 BILLION dollars in farm production…gone. So what will THAT do to our food prices?
Sometimes good old common sense in these matters can go a long way.
Comment by gina — December 22, 2009 @ 7:25 a.m.
All taxes distort behavior, but taxes are, well, pretty necessary.
Taxing one item, tractor, at a lower rate than another, auto, is not a good idea. Let the farmer get what the market will bear for the goods, and have the taxes be collected without favor to one industry or another.
‘But we’ll starve!!’ I doubt it, people will store up the food knowing that a famine will come, other suppliers will be found etc. The prices may spike every once in a while, but it is preferred to the alternative.
Comment by Papillon — December 23, 2009 @ 8:47 a.m.
Thanks for the excellent comments. To Papillon’s point, in my concluding paragraph I was primarily referring to the lower tax on the land, not the property. So I certainly agree with Papillon that the personal property (my car) and the farmer’s farm equipment (the tractor) should be taxed at the same rate. I don’t think the farm equipment should necessarily go up to 1/3 assessment. I am sure there is a revenue-neutral middle-ground where they can be made even.
Comment by David Stokes — December 26, 2009 @ 1:07 p.m.