Ag Policy Blog

Farmers and Battles Over State Taxes

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Farm states are looking at a variety of options to generate revenue. Here are a couple of recent examples as Iowa and Kansas seek to address infrastructure or budget holes.

The Iowa's Dusty Winnebago Road

In Iowa, Gov. Terry Branstad on Wednesday signed a bill that will increase taxes on gasoline and diesel fuel by 10 cents a gallon on March 1. The bill marks the first time since 1989 that the state has increased the gas tax.

The changing dynamics of agriculture contributes to rural-road challenges because more farmers these days operate semi-trucks and they also market their grain year-round, particularly for deliveries to ethanol facilities that have limited storage capacity.

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The Iowa House and Senate passed the bill on Tuesday with the support of the Iowa Farm Bureau, though conservative and anti-tax groups opposed the bill. Farm Bureau noted the state has more than 5,000 structurally deficient bridges and 13% of rural roads are in poor condition while another 45% are in mediocre or fair shape.

“Our members have told us that improving Iowa’s deteriorating roads and bridges should be a major legislative priority for the Iowa Farm Bureau,” said Craig Hill, president of the Iowa Farm Bureau. “We are thankful that the bipartisan Legislature and Gov. Branstad have acknowledged this serious concern and acted to improve our current road and bridge infrastructure.”

What's the Matter with Kansas?

Kansas, meanwhile, is trying to dig out of a hole of its own making. The state is dealing with a $600 million shortfall because of tax cuts that took effect in 2013. State officials stated earlier this week that 281,000 business owners paid no income taxes in 2013 -- a figure 47% higher than the state expected when they passed a provision exempting business profits. 53,000 farmers did not pay income taxes, the Lawrence Journal-World reported. http://www2.ljworld.com/…

Thus, farmers could be hit with higher property taxes as a result. Kansas farm groups are almost universally opposed to a bill that would change the way agricultural land is assessed for property taxes. The bill would increase assessed valuations for farm land from $1.7 billion to more than $9.7 billion. Such an increase would generate roughly $800 million more in taxes. The Kansas Livestock Association and Kansas Farmers Union are both opposed to the bill, according to an articling in the McPherson (Kan.) Sentinel. http://www.mcphersonsentinel.com/…

Lawmakers in Kansas also are considering dropping sales-tax exemptions on farm machinery and other equipment. Another proposal in Kansas would raise the state's gas tax by 5 cents a gallon.

Kansas is also looking to generate more revenue from "sin taxes" by increasing the tax on liquor from 8% to 12% while increasing taxes on cigarettes from 79 cents a pack to $2.29 a pack.

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tom vogel
2/26/2015 | 8:41 PM CST
Here in Ohio farmland taxes have gone up by an average of 62 percent. This increase is surfacing due to changes in the so-called CAUV formula for discounting farmland taxes as well as huge increases in farmland prices over the last decade. This is really squeezing farmers and landowners who lease out farmland. On the one hand lower commodity prices are hitting both of these people, and on top of that, the higher taxes are either being swallowed by the landowners or passed on to farmers in the form of higher rents. The winner is of course the state and local governments. I recently asked one of the county treasurers of a major agricultural county what she was going to do with the gushing of revenue flowing into her coffers. She couldn't tell me. Oh Lord, I am sure it will be spent on something that they have been eyeballing for years!