Iowa farms minting millionaires

[WyoNewk]

Originally Posted by yousah

The lower taxation of farmland is a huge benefit to farmers. In our area we have farmers sitting on literally millions of dollars worth of acreage and only paying taxes based upon ag use. That's Ok so long as they want to continue as farmers. The problem is that many of these farmers end up holding onto their land and eventually selling it for prime residential usage and garnering the income that the res use entails.

There needs to be some way to phase out the low tax structure for those properties that eventually turn into residential development use as their highest and best use. Or, give the farmer the low taxes in exchange for agreeing that they won't sell their land as residential use. Right now it allows them to be real estate investors with a unique advantage that other investors don't have.

Some people just can't stand it when others make a little extra money, huh. There's just GOTTA be a way that the government can get its slimy hands on more of that money. Higher taxes, penalties, something, anything, but the government needs it. Right?

Wrong. The government will certainly find a way to spend it, yes. In fact, if they find a way to grub another $100 they'll also find a way to spend $200.

Don't worry your little head over this, yousah. The IRS and state will collect when the land is sold. The state and local government will collect when it becomes a development, and they'll collect again when something is built on it. Don't worry. Your government will be there with hands out to grab. Then they'll give it to those who have never done anything but sit on their butts and complain that the farmers are too rich... or that doctors or bankers or business people are too rich -- you know, anyone who actually works to get ahead.

[yousah]

Wow, you've added all sorts of comments that I didn't make then criticized those comments. You're basically arguing with youself.

I'm actually very conservative and would like much less gov't intervention in our lives. But the property taxation process simply needs to be fair. In my state it's an ad valoreum process that's based upon the value of one's property, except for farmland. All I'd like to see if farmers pay their taxes just like everyone else; especially considering that their business is extremely subsidized by their fellow taxpayers.

It's ironic that you talk about actually working to create wealth when there are plenty of ag incentives where farmers get paid for NOT planting any crops. I'm all for letting farmers compete without the use of my money, thank you.

[orthosophy]

I don't want to hijack this, although I don't know if that's possible now. In the long term, I'm not a proponent of the current subsidy system.

Much of the problems with that system (here in Iowa) can be tracked to the mid 80's farm crisis. To be fair, it didn't start with Reagan. He just handled wrong. When the dust settled, not only were the robust farmers still in business, the intent, but the factory and investment farms had dramatically increased, pushing the family farm (which was an argued reason for subsidies anyway) out of business. In the end, it would have been cheaper for Reagan to pay off the debt of farmers than tinker with the subsidy program, and allow the market to naturally cull the way it had been, instead of artificially aggregating farm land into the hands of the wealthy.

Now a days, about the only arguable use I buy for subsidies is to encourage environmental issues. In fact, if Iowa legalized industrial hemp, I think that would solve about 9 out of 10 of our problems with subsidies.

[yousah]

The problem is that you might not get agreement as to whether it's good or bad to support family farmers over larger corporate owned farming operations that have learned how to be more efficient- and thus, providing lower cost products to consumers. That's the problem with gov't getting involved to force markets to do something that otherwise wouldn't be done under normal market forces.

[orthosophy]

Originally Posted by yousah

The problem is that you might not get agreement as to whether it's good or bad to support family farmers over larger corporate owned farming operations that have learned how to be more efficient- and thus, providing lower cost products to consumers. That's the problem with gov't getting involved to force markets to do something that otherwise wouldn't be done under normal market forces.

Thats why I don't like subsidies in general. What happened (In a nutshell) in the 80s was that the issues of being in debt that started in the carter administration or even before came to a head when Reagan insisted he'd cut subsidies and tighten loan standards. While he did tighten standards, and it did ensure that robust farms survived, he dicked around and finally flipflopped on subsidies, probably because both sides want them for whatever they grow, to keep prices artificially low for the consumer so they will by the over-produced or slightly more expensive to produce crops. Eventually, enough farm land in Iowa had been lost by the family/small farm and gained by the investment/large farmers that subsidies ended up making the rich richer, and not helping the poor at all; Reagan wasn't even trying to be evil, he just effed up.

My overall responses are:

1. We need to get used to paying slightly more for everything. We keep more of our income than any first world country. There is a compromise involved...just like we don't socialize to the extent of, say, Sweden, we have to allow for costs for goods and services to be slightly higher when we don't federally subsidize them on the back end. That would even obviate the need for labor unions and allow more Americans to buy American products. The downside is that it's not as good for wealth concentration, so if you want to get super rich, super fast, this won't help.

2. Subsidies drop the prices of foods on a national level. The argument for that is that it makes us more globally competitive, and it actually does. The downside to that is that we now export food and not the expertise/machinery/ag products which will ultimately a) allow the developing countries who are most benefited by subsidies to simply by wheat or corn from us and never bother to develop the regional strategies for their own health ag sector (which will keep them as poor consumers, never as slightly less-poor producers) and b) kill manufacturing jobs here in the states. Before you get too derisive, remember that John Deere has a HUGE presence here in Iowa and I think Caterpillar has some near the quad cities. Rather than subsidies that increase overproduction of corn, I would love to see us look at things like value added processing for soy products, hemp production, and eventual increased sales and jobs for decent paying, moderately skilled jobs at John Deere or Cat.

[yousah]

What people often forget about is where the subsidy money comes from in the first place- from taxpayers. So while food may appear to be at a lower price on the shelf, you can to take into consideration what % of your taxes goes to keeping those prices reasonable. Susidies are just a transfer of wealth.

[orthosophy]

Originally Posted by yousah

What people often forget about is where the subsidy money comes from in the first place- from taxpayers. So while food may appear to be at a lower price on the shelf, you can to take into consideration what % of your taxes goes to keeping those prices reasonable. Susidies are just a transfer of wealth.

I agree with you completely, and I'd add that you should't make "transfer of wealth" a pejorative. Every time someone buys something; anything, its a transfer of wealth. If you make a shotgun for 200 and sell it to me for 500, that is a transfer of wealth.

I'd add that subsidies benefit large farms disproportionately...its a reverse tax break. We are in essence taxing everyone to give everyone a reduced price by paying the largest producers the most.

[duster1979]

Originally Posted by orthosophy

I agree with you completely, and I'd add that you should't make "transfer of wealth" a pejorative. Every time someone buys something; anything, its a transfer of wealth. If you make a shotgun for 200 and sell it to me for 500, that is a transfer of wealth.

I disagree, at least in the spirit of what I believe the previous poster meant by the phrase.

If I take $200 worth of parts and build a shotgun, my labor is adding value to those parts. If the finished product truly is worth what you pay me, that's not a transfer of wealth but an exchange of assets.

Now if the gun was really only worth $450 but I sold it to you for $500 because you could afford it, then sold the same gun to the next guy for $400 using the extra $50 I got from you to subsidize the sale, that would be a transfer of wealth.

[wingit]

If you would like to see just how much subsidies cost the tax payer state by state, here is a link that will give you the information: Iowa Summary || EWG Farm Subsidy Database

If you look around on the site you can search your state, county, and search by name for what subsidies farmers are receiving.