Another Tax Scheme

[Tap]

The Estate Tax argument brought something else to my mind. So instead of hijacking the other thread I thought I would start a new one.

We are going to have a ballot initiative this Nov. on whether or not to change the way real estate is taxed, or assessed. Currently our county assessors use sales to come up with our assessments, and then there is a formula that they multiply that by to come up with our taxes/ac. Generally the ag grazing land is assessed at around 100$/ac. and the tax averages about a dollar per acre. The initiative, if it passes, will change the assessment of any land sold, starting with next year, to the selling price. So if a chunk of land sold for 200$/ac., the tax would be around 2$. 300$/ac. would be 3$, and so forth. That is assuming all else stays equal.

So two ranches, with nothing but a fenceline between them, might be paying hugely different amounts of tax, and both would probably still be in production ag. I don't think this is a very fair system. The point of the initiative is to keep high land sales from bringing up local taxes, but it is also unfair to the new owners to not be taxed equally with land of the same production. If there was some scenery or etc. on the higher priced land, I might agree with a touch higher assessment for resale value, but most all land in these parts is going to be production ag even with the scenery. I think it gets to be a slippery slope when you start treating people differently becuase they have different means than others. And also, it is going to lower the selling prices, if you have to figure you are going to pay more tax on the higher assessed land for infinity. There is nothing in the initiative that says the assessment will ever be able to fall back through time. They did add in the initiative that the assessments on the rest of the land that stays in the same hands, cannot go up over a few percent a year, but in our county that hasn't been happening anyway.

There might be a better system than what we have now, but this one isn't it. I was wondering how other states handle this?

 

[Jinglebob]

I guess I feel that it would be a better system than what we have now.

If you and I both have the same pickup and do the same job with it, but mine is newer than yours, I will pay more tax on mine.

Why should those of us who have bought our land years ago, have to pay more tax, just because out of state people come in and raise the selling price of the land around us? Mine won't produce any more and the only way I will realize a profit is to sell out. Is that fair?

If those who buy land now can afford to pay a higher price than they ought to be able to afford to pay more in taxes. If they can't , don't pay so much for the property.

Why should those of us who have been here for a long time , subsidize the new comers, who can afford to give more for the land? If the land was similar to mine, it should sell for what I payed for mine, 15 years ago. Then it would be fair?

The only other solution I see is to take away property tax and go strictly to an income tax. If you don't make monery, you don't pay any tax. If you have a good year and make a profit, then you pay taxes. Of course this type of system would encourge people to try and not make a profit.

I'm not sure what they need to do, but I don't like to have to pay more, because someone buys land next to me and can afford to give more for it. If they can afford to pay more for the property, they can afford to pay more tax.

Jmho.

 

[Bullhauler]

I agree with you Jinglebob. Here a neighbor just sold out to the hutterites for 1800 an acre. This is land that would be a chore to pay for on borrowed money at more then 500 an acre. The tax evaluation on my land is still around 400 but I could see it easily tripling in the next five years. South Dakota is long overdue for a state income tax. The tax just needs to be revenue neutral meaning property taxes are lowered by the amount the income tax would bring in. If someone wants to pay three times what the land is worth for production they can pay more taxes on their land too. It might just slow down some of these guys that think the sky is the limit on what they will pay for land.

 

[Ranchy]

It's government, it doesn't have to be fair. :evil: :evil: :evil:

JMHO, too.

 

[Faster horses]

It would be good to find out what Wyoming does. They have a good handle on taxes in that state, better than any state around them.
And they have a sales tax, which to me is the fairest tax of all.

In Montana, with no sales tax, the property owner bears most, if not all, of the burden. That is really unfair. They do have a state income tax. Actually, we are one of the highest states as far as taxes go. Last I looked, we were right behind California.

 

[Jinglebob]

It would be good to find out what Wyoming does. They have a good handle on taxes in that state, better than any state around them.
And they have a sales tax, which to me is the fairest tax of all.

In Montana, with no sales tax, the property owner bears most, if not all, of the burden. That is really unfair. They do have a state income tax. Actually, we are one of the highest states as far as taxes go. Last I looked, we were right behind California.

Wyoming is about 85% federal land and they have oil, gas and coal to tax. Not a lot of population either. Think that is the "handle" they have on taxes.

I've heard that more of the tax burden falls on poorer people, with a sales tax. I understand what they are saying, but don't know if I totally agree with it.

Maybe instead of more tax, we need less spending. But everyoner has gotten used to the government handouts and forget that "we the people" are the government.

If we threw out so many of the BS laws and stopped the lawsuits, I think that would help.

What we need in this country is tort reform and less lawyers.[/i]

 

[Big Muddy rancher]

We have the same problems. What about tax assessment on Productivity of the land? Higher producing land pays more tax. Land that will run 40 cows to the quarter would pay more then one that would run 4 cows.

 

[Jinglebob]

We have the same problems. What about tax assessment on Productivity of the land? Higher producing land pays more tax. Land that will run 40 cows to the quarter would pay more then one that would run 4 cows.

Isn't that basicly the same as income tax. They tax on what you make, not what you could possibly make.

And in dry years you would pay less or none and better years you would pay more. Or at least thats how it would work in theory.

 

[Jinglebob]

Are other businesses taxed the same as ag?

Do they pay a tax on their property?

If I ran more cows, I would make more money, but I would have to spend more to make that money.

I do think we need incentives for people to create new jobs and try and make more as that is what fuels the economy, isn't it.

My father in law always worked for big wages and was always mad that ag got tax breaks. My argument was that the guy he worked for put all he had into the business and if it didn't work, he lost everything, My Fil only lost his job and had none of his money invested into the job. He could find another job easier than the guy could start another business.

 

[Cowpuncher]

You all need to borrow our Douglas Bruce who authored Colorado's TABOR Law. (Taxpayers Bill of Rights.)

Taxes can be raised no more than the population increase plus an inflation factor. Better, taxing agencies cannot raise their SPENDING by more that a similar amount. In rapid growth areas such as our, when the asseessed valuation goes, the mill levy has to go down.

A taxing agency can apply to the voters to de-Bruce - be allowed to spend whatever they collect and this has been done in a lot of cases. We passed a Referundum last fall to give the State a five-year moratorium on refunding excess funds to the taxpayers. This came about from the recession which reset the spending bar real low due to the recession. We will see how they act when the five years runs out.

California also has a limitation on Property taxes called Proposition 13 or Jarvis-Gann. Property taxes can only be increased by 1% a year unless the property is sold. The tax then becomes 1% of the selling priced. Unfair, probably, but it is well known that any government agency is quite capable of spending whatever money it collects.

Wyoming - without knowing the details, I would guess their severance tax on oil, gas and coal is a huge part of the budget. If someone knows, please post. (If I wasn't so lazy, I would look it up on the 'net.

The taxes on our ranch have gone down almost every year we have owned - mainly because we are planting farm ground back to grass. Even at that, our taxes are about 30 cents per acre - but then it is not Iowa farm ground.

When it all said and done, taxing agencies have only one source of funds -us. Those that can complain the loudest get the best treatment - and its not agriculture.

 

[TSR]

It would be good to find out what Wyoming does. They have a good handle on taxes in that state, better than any state around them.
And they have a sales tax, which to me is the fairest tax of all.

In Montana, with no sales tax, the property owner bears most, if not all, of the burden. That is really unfair. They do have a state income tax. Actually, we are one of the highest states as far as taxes go. Last I looked, we were right behind California.

Wyoming is about 85% federal land and they have oil, gas and coal to tax. Not a lot of population either. Think that is the "handle" they have on taxes.

I've heard that more of the tax burden falls on poorer people, with a sales tax. I understand what they are saying, but don't know if I totally agree with it.

Maybe instead of more tax, we need less spending. But everyoner has gotten used to the government handouts and forget that "we the people" are the government.

If we threw out so many of the BS laws and stopped the lawsuits, I think that would help.

What we need in this country is tort reform and less lawyers.[/i]

I agree on the less tax less spending idea 100%. And of course there are too many frivilous lawsuits it seems to me. But our legislators most of whom are lawyers, are the ones making the laws, redkon they are going to take care of themselves???
In TN where I live our land is reassessed every 5 yrs by law. All agricultural land is taxed at 25% of its assessed value. (I'm pretty sure I'm right on this) Some higher producing land (row crop land) that is worth more pays more taxes than land suitable only for cattle. You have the right to challenge tne reassessed value if you so desire, and many do-some are successful at getting their taxes lowered and some are not. I kind of like your thought-If someone can pay more for the land,then they can afford to pay more taxes. But you know many people paying more for it are very wealthy with influence and they are not going to let that happen-It would be discriminatory!

 

[Red Robin]

Maybe instead of more tax, we need less spending. But everyoner has gotten used to the government handouts and forget that "we the people" are the government.

Ding, Ding, Ding...we have a winner! we are the government and the tax payers.

 

[Tap]

Why should those of us who have been here for a long time , subsidize the new comers, who can afford to give more for the land? If the land was similar to mine, it should sell for what I payed for mine, 15 years ago. Then it would be fair?

Jinglebob, what do you mean by subsidize the new comers? The price paid for that land, shouldn't have any bearing on what the government needs to spend year to year. Just because your land is worth x dollars, and something near you sells for 4x, that doesn't mean there needs to be any extra dollars spent by state government. He is subsidizing YOU in that example. Our local government should only tax us in the amount needed to fund it, and no more. If the guy that bought the other land is paying 4 times the tax that you are, and cannot do anything about it, then who is getting the crappy deal? Land prices will be lower, along with housing etc. This is being sold to older people as a way to put a little extra money in their pockets, but it is just handing the burden off to someone else. The government still should have the same amount coming into it on average as before the new assessment. How about when the older people go to sell their homes someday, and find that this law effected what their house is worth? Consider that, or even what your ranch is worth should you ever want to sell it someday. I don't like the high price of land, but the free market should decide what it is worth, and not the politicians.

 

[Kate/wy]

Estate Taxes, the State of Wyoming variety is my subject. When I went thru the process many years ago, we had the opportunity :? to take the three lowest cost land deals (current) that were in our immediate area, in which to average the Wyo state tax upon. I am not currently up to date on that process. And at this moment in time, we are experiencing another boom from the Oil and Gas industries, so the State Vampires are working on that group and are not raising our Ag Taxes. The one thing I am sure of is that NO ONES property is safe while the legislature is in session. They have decided not tax certain items in the grocery line, but can't even agree on which will not be tax free. Of course this leaves us without labor for Ag, and any other store that needs clerks, waitress, oil and gas services....ad naseum. There is no housing for the people moving in to service the petro industry, and they are willing to pay such high $'s for help that it is impossible for anyother industry to get or keep help. Almost all the help comes from men that leave their families home and they live in the motels. The motel owners never have any empty rooms but want a bed tax, so they can advertise and get more renters......do you get the drift ...it is not easy here.

 

[Jinglebob]

Why should those of us who have been here for a long time , subsidize the new comers, who can afford to give more for the land? If the land was similar to mine, it should sell for what I payed for mine, 15 years ago. Then it would be fair?

Jinglebob, what do you mean by subsidize the new comers? The price paid for that land, shouldn't have any bearing on what the government needs to spend year to year. Just because your land is worth x dollars, and something near you sells for 4x, that doesn't mean there needs to be any extra dollars spent by state government. He is subsidizing YOU in that example. Our local government should only tax us in the amount needed to fund it, and no more. If the guy that bought the other land is paying 4 times the tax that you are, and cannot do anything about it, then who is getting the crappy deal? Land prices will be lower, along with housing etc. This is being sold to older people as a way to put a little extra money in their pockets, but it is just handing the burden off to someone else. The government still should have the same amount coming into it on average as before the new assessment. How about when the older people go to sell their homes someday, and find that this law effected what their house is worth? Consider that, or even what your ranch is worth should you ever want to sell it someday. I don't like the high price of land, but the free market should decide what it is worth, and not the politicians.

I've got a neigbor who bought land for over $200 an acre, quite a few years ago, when land was selling around $100 to $150 per acre. Every year he would go fight with the assesor or whoever you go to and his brag was that he had all of his land down to $100 per acre valuation, so that is what he paid taxes on. So I am paying more tax on the land I paid less for while he is paying less tax for what he paid more for. Who's subsidizing whom?

If he can afford to bid it up and buy it, he can afford to pay more tax. He would still pay the same percent, but on a higher valuation.

When the price of land goes up, my land valuations go up so I pay more for taxes, while the only way I can get any use out of that higher valuation, is to sell out. I don't think that is right.

I've no problem with the market setting the price, I just think those who pay more for their land should pay a higher tax. Just like when you trade your old pickup in on a newer one. When you trade, you know you have to pay taxes onb it and the more you spend the more tax you pay.

 

[Tap]

Jinglebob, I will admit that I don't understand everything about assessments, valuations, mill levies, etc. But I still don't see why the selling price has to have anything to do with the amount of tax paid. Your pickup example could be turned around another way. The pickup (land) is the same pickup that is was before the new buyer purchased it. It doesn't produce more or less than it did before the sale. It is the same piece of ground regardless of what the seller paid for it. If the new owner would improve it, or wreck it :wink: later, then maybe the assessment should be different then. It probably is the assessors fault if the guy you mentioned was treated better than you were. Also, if the county does not need the extra revenue with the higher valuations, shouldn't the mill levy be lowered to offset that? The other guy (if this initiative passes) is still subsidizing you whether you want to admit it or not.

I just don't see why if we were to buy a piece of land after this law went into effect, that we could pay 2 or 3 times the amount of tax on it that we were paying on what we already had. And only a fenceline might seperate it.

I just think laws that treat people differently are unfair. We will chose to disagree on this one. :wink:

 

[Jinglebob]

Jinglebob, I will admit that I don't understand everything about assessments, valuations, mill levies, etc. But I still don't see why the selling price has to have anything to do with the amount of tax paid. Your pickup example could be turned around another way. The pickup (land) is the same pickup that is was before the new buyer purchased it. It doesn't produce more or less than it did before the sale. It is the same piece of ground regardless of what the seller paid for it. If the new owner would improve it, or wreck it :wink: later, then maybe the assessment should be different then. It probably is the assessors fault if the guy you mentioned was treated better than you were. Also, if the county does not need the extra revenue with the higher valuations, shouldn't the mill levy be lowered to offset that? The other guy (if this initiative passes) is still subsidizing you whether you want to admit it or not.

I just don't see why if we were to buy a piece of land after this law went into effect, that we could pay 2 or 3 times the amount of tax on it that we were paying on what we already had. And only a fenceline might seperate it.

I just think laws that treat people differently are unfair. We will chose to disagree on this one. :wink:

OK, fine by me.

 

[Jason]

What about the aspect of what those taxes provide?

Weather you bought it 25 years ago or 5 years ago, roads etc all cost the same today to build and maintain to access that land.

The cost of providing all services has increased, taxes, hate them as we may, pay for them.