Report on Nebraska Ag Taxes: “Almost any state would be better than here.”
A new report from Stateline, the nonprofit news wing of the Pew Charitable Trusts, gave a great look at how high property taxes are impacting ag producers in our state.
Farmers and ranchers are sometimes seen as a captive audience of taxpayers because they need the land under their feet to operate their businesses, but the article highlights how some producers are doing the math and realizing it might be better to farm or ranch anywhere but Nebraska.
I was interviewed for the story and in the process learned about how some data may even underestimate the burden on producers. As shown in the story, ag producers are said to have paid $686.5 million in property taxes in 2017, according to the USDA Census of Agriculture.
This is a true fact. But when I saw this number, it seemed to low to me. After all, Nebraskans pay a little over $4 billion in property taxes, and we know ag carried more than a quarter of the load. So, shouldn’t the number be over $1 billion?
As it turns out, the Census of Agriculture only includes the property taxes directly paid by ag producers who own their land. A large number of producers rent land from landowners. While the owners write the check for the property taxes, clearly, the cost of property taxes also falls on the producer.
Other data from the USDA Economic Research Service shows in 2017, ag land, buildings and equipment were paying more than $1.3 billion in property taxes and fees, in a year when the state’s industry netted $3.1 billion income. That means the local tax bill was more than 40% of their take-home pay!
Of course, if you talk to enough people in Nebraska in candid conversation, you will find that not everyone is sympathetic to farmers and ranchers. Just as some rural residents have their complaints about people who live in Omaha and Lincoln, there are urban (and even rural) Nebraskans who believe policymakers already do enough to cater to agriculture interests. And I think even some ag producers would also acknowledge that agriculture has some tax and public policy advantages other industries do not have.
But it is hard for me to look at the figures and not conclude that few of us would appreciate if the local tax system treated us the same way. Ag’s annual income has been more than cut in half while its property taxes have nearly doubled. Even as land prices slowly decline, the burden they are carrying is still unheard of in most of the country. In the last year when my residential property taxes increased significantly, it was a source of worry for me, and I wasn’t even facing a great loss of income at the time.
Even if you aren’t a farmer or rancher, the property tax burdens of ag producers should be cause for concern. Ag may only be the canary in the coal mine for a property tax system that can impose unsustainable tax burdens without the right limits from policymakers.