Property taxes and who pays them
The subject of property taxes and who pays them is a topic that always seems to create discussion. We have heard the explanation of how local property taxes are made up of a three-legged stool, with the three legs of revenue being agricultural land, residential homes, and commercial/industrial property. In recent years, because of the rapid escalation in farmland values, there has been a shift to more of the total property tax bill falling onto that category.
With the farm economy humming along with high commodity prices and profit margins comfortably in the “black,” at least for crop farming, there wasn’t much sympathy as taxes on ag land increased by large amounts. That scenario has completely changed in the past year as commodity prices have plummeted to less than one-half their peak values, and profit margins have disappeared. And even as land prices stabilize and begin to drop somewhat in value, it will take several years for that to show up in lower property taxes. As a result, farmers are looking at their tax statements and realizing that this is now a significant input cost, one that is adding to their negative cash flows for the upcoming year.