A Farmer's Worst Enemy?

[FULLPULL]

All the ground hog's around here moved to the barn's or to the city when the coyote moved here about 15 year 's ago .

 

[jimmysisson]

I don't know how it is in Funk OH, but here there is a farmer I know with 900 acres and his tax bill was $27,000. A house on 5 acres around here is assessed at around $275,000 and has a tax bill of around $3800. Let's see, 27,000/900 is $30 and acre. $3800/5 is $760 an acre. Who's draining the economy?

The farm field requires no school buildings, buses or maintenance, doesn't call to complain about the road not being plowed, needs little police monitoring, etc. Farms are much cheaper for a town than houses, and their tax bills should reflect that. Most housing in rural areas costs towns more than they are taxed.
Jim

 

[riptides]

I don't know how it is in Funk OH, but here there is a farmer I know with 900 acres and his tax bill was $27,000. A house on 5 acres around here is assessed at around $275,000 and has a tax bill of around $3800. Let's see, 27,000/900 is $30 and acre. $3800/5 is $760 an acre. Who's draining the economy?

Seems fair to me, I'd opt for more taxes on the residential part. And the local government can do just that, or protect the ag land with easements, purchasing of rights, or other programs.

 

[N80]

IMHO, one of the worst enemies a farmer can have is himself. Failure to adapt to an ever-changing economy as well as resisting the use of new technology has sank many a farmer.

I think that is a double edged sword. I've seen, and heard of farmers chasing the technology, spending tons of money to get it and the ROI being too low to pay for it. Then there's a BIG yard sale. I think for smaller farmers, the technology issue is as precarious as the weather and the markets.

 

[mwood]

In New York we have a right to farm law. If people move into a farming area and later bi#^h about smells and noise, they are out of luck.

One of the reasons I really liked my area was this fact. While I don't have much land, there's a ~300 acre working dairy across the street. I had to sign a form when I moved in that I couldn't complan about smells or other farm type things.

Seeing as I want to start a small hobby farm, this was just fine with me!

 

[redlevel]

I don't know the circumstances surrounding that particular 900 acre farm, but I'll tell you what isn't fair.

Say that land has been in that family for 100 years or so, with several generations adding to what may have started as a 150-200 acre farm. The farmers worked hard over those 100 years, sometimes making a little, every now and then making a real good profit, and sometimes losing a lot. Anyhow, they plow everything they make back into the farm, especially buying up neighboring spreads when that particular new generation decided to move to the city.

All of a sudden, on paper, these people are multi-millionaires. If that land is worth $2500 an acre, and it probably is, those folks have a net worth of over two million, minus whatever they owe. Lets say 1.5 million. In many cases, these people aren't really rich. They probably live in modest homes, drive their cars four or five years, and wear clothes from Sears or Pennys. I know a lot of folks like this.

Hopefully, they have done some estate planning, and recent estate tax reform, raising the dollar value before the estate is heavily taxed, has helped tremendously. But, even if they have planned, suppose they die and leave their property to a couple of children who aren't farmers. Lets say the daughter is a school teacher, making maybe $50,000 per year, and the son is a mid level exec making maybe a little more than that. All of a sudden, they are faced with making a $27,000 per year property tax payment. Maybe the old folks didn't leave a whole lot of cash, just the property. Even if they did leave some cash assets, why should the children have to pay most of it out over four or five years in taxes?

Of course, the kids can cash-rent the farm, if they are lucky. Maybe there are some program payments, maybe there is some timber ready to cut, and maybe they just really don't want to keep the land and don't mind selling out. But what if they do want to keep it? In many instances, that property tax burden is just more than they can handle. I've seen it happen. There have probably been 50 or more people who have moved into my county in the last five years from Henry county, just South of Atlanta. They can't afford to keep their land, because they can't get enough out of it farming it to make the ad valorem tax payment. Sure, they can sell out for lots of money, but their home place is gone.

People who accumulate something should not be punished for their hard work and frugality, which is the best way to describe most farmers who accumulate lots of land. The argument there is usually, "well, their children aren't the ones who accumulated it, so they should have to ante up the taxes." Why shouldn't people expect to be able to pass on their possesions to their children?

My wife inherited her parents' 60 acre farm and 110 year old house a few years ago. It is valued on the tax books at about $240,000. Her father, who was still driving his 1966 model chevy pickup when he died in 2002, would have thought the place was worth maybe $500 per acre. Luckily, taxes in our county are still fairly reasonable, and there wasn't too much land. I know that sounds funny to say there wasn't too much land, but a whole lot more than that brings on that huge tax burden, even in a county with reasonable taxation.

Next time I'll rant about the unfairness of the Capital Gains Tax.

 

[john_bud]

I don't know how it is in Funk OH, but here there is a farmer I know with 900 acres and his tax bill was $27,000. A house on 5 acres around here is assessed at around $275,000 and has a tax bill of around $3800. Let's see, 27,000/900 is $30 and acre. $3800/5 is $760 an acre. Who's draining the economy?

The farm field requires no school buildings, buses or maintenance, doesn't call to complain about the road not being plowed, needs little police monitoring, etc. Farms are much cheaper for a town than houses, and their tax bills should reflect that. Most housing in rural areas costs towns more than they are taxed.
Jim

Actually, Jim - my point was supposed to be that the government is charging too much for taxes here in Taxconsin and that is draining everybodies pocket books. Also, "I" have only called the police once in 20 years and that was about a couple drunks that drove into the ditch. Never called about streets being plowed or anything else for that matter. The only "drain" from me is sending one kid to government brainwash school.


Redlevel, The person that bought the farm paid just over $150,000 about 18 years ago. He raises organic beef and native prairie plant seeds (little blue stem, big blue stem and various flowers). If his farm was cut up into 5 acre ranchettes at only $275k each the tax revenue would be $684,000. His cash out would be probably 8-9 million as land has jumped to near 10k per acre in that area. (nice appreciation!) There is a STRONG push to get that done as the county wants the extra tax revenues. But, he bought it to retire early on and farm for expenses. His plans are changing with each change in the tax laws. Some recent things are positive for farms - some future things are looking negative. Only time will tell.

Still, the biggest enemy around here seems to be screaming high taxes. Other areas sound like it's people that move to the country and complain when they find they aren't in the city.

jb

 

[daTeacha]

There is a bill working through the Ohio legislature to bring some degree of fairness to what Farm Bureau calls the "death tax" or inheritance tax. I'm all for it. Right now about the only way around it is to start giving the value of your property to your heirs at the maximum annual rate of $10,000 per year as a non-taxable gift. That way, when you die the kids already own it.

John-bud: There have been numerous studies done that show subdivision development is a drain on the tax base, not a plus. Contact the American Farmland Trust if you need particulars.

I find myself seeing both sides of the farmland issue. I definitely don't want to see farms turned into malls, subdivisions, farmettes, or anything of the sort. But I also feel a guy who views his farm as his retirement income should be able to get as much out of it as possible. I hate it when a big farm is broken up into small pieces, but I live on 6.5 acres. It was never farmed -- I don't think I could ever be part of taking cropland out of production -- but it was part of a farm woodlot at some time in the past.

There are mechanisms for preserving farmland such as selling or donating the development rights, but using them usually means giving up some of your personal future income.

It's a quandary with no easy solutions for any of us.

On the tax issue, I think Ohio has something like the 4th highest overall tax rate in the country, counting in all forms of taxation and items taxed. It's bad enough that many people are blaming it for the migration of business out of the state and losing many attempts to attract new ones.

 

[riptides]

There is a bill working through the Ohio legislature to bring some degree of fairness to what Farm Bureau calls the "death tax" or inheritance tax. I'm all for it. Right now about the only way around it is to start giving the value of your property to your heirs at the maximum annual rate of $10,000 per year as a non-taxable gift. That way, when you die the kids already own it..

I thought the feds allow you to do this already, up to a million, if coming out of an estate with the owner still living?

I find myself seeing both sides of the farmland issue. I definitely don't want to see farms turned into malls, subdivisions, farmettes, or anything of the sort. But I also feel a guy who views his farm as his retirement income should be able to get as much out of it as possible. I hate it when a big farm is broken up into small pieces, but I live on 6.5 acres. It was never farmed -- I don't think I could ever be part of taking cropland out of production -- but it was part of a farm woodlot at some time in the past.

Interesting comment, but that retirement income is linked into a value that may not be shared by the county tax collectors. Then again, when the developers come a knocking, I don't think they are looking at the county book values.

There are mechanisms for preserving farmland such as selling or donating the development rights, but using them usually means giving up some of your personal future income. .

Not only YOUR personal income is at stake, but these PDR "Purchase of Developers Rights" lay with the land. If they sign up for it, they are making something happen for possibly *many* generations to come.

It's a quandary with no easy solutions for any of us..

Agree....

 

[lawn_king]

Being a farmer myself, my #1 enemy is insects. Insecticides are our largest expense, more than fuel,more than insurence,more than equipment!