The Legislature's Ag Land Assessment Task Force gets me to notice a tiny portion of our agricultural land assessment rules that show South Dakota thinking like Earl Butz, telling farmers to get big or get out... of agricultural land classification.
The evaluation of ag land is currently a contorted potential income tax, but the important part here is that ag land is taxed much less per acre than residential land. SDCL 10-6-31.1 says that land must meet two of these three criteria to be taxed at the lower agricultural rate (farmers, legislators, let me know if I'm boiling them down correctly):
- A third of the gross family income must come from agricultural activities on the land;
- The principal use of the land is agriculture;
- The land in question is at least 20 acres (although counties can increase that minimum up to 160 acres).
The interim committee is considering rewording that statute to make the principal-use criterion mandatory and requiring the land additionally meet either the one-third-income or minimum-size requirement.
I understand that some of the angst over ag land assessment comes from Pennington County, where evidently some Black Hills residents have kept taxes on their scenic parcels low by harvesting a little timber and calling themselves tree farmers.
But consider this situation: suppose the Governor gets serious about rural development in his second term and retools Dakota Roots to recruit young families to take up small-scale farming. We encourage young couples to buy small farms, less than ten acres, to grow real food for local sale and consumption. These young farm couples dig in for some local-level garden farming, but at least one member of the family maintains professional employment teaching, lawyering, doctoring, carpenting, what-have-you to ensure some income stability.
Under either version, current or amended, of our tax rules, those intrepid young small farmers get hit with an extra tax burden. It seems odd to tax farmers more just because they have chosen to work on a smaller scale. It seems contradictory for our income-tax-averse Republican Legislature to impose a higher tax rate on farmers based on their income.
Our property tax code should be able to distinguish between farmers engaged in real farming and Black Hills retirees tricking the county by chopping a few trees. But if we can't write a law to recognize that difference, we shouldn't punish small farmers who choose to sell their goods to their neighbors at the farmers' market instead of Smithfield, ADM, and Bel Brands.
We could avoid all this land-evaluation rigamarole if we just replaced our antiquated property tax with an income tax. Short of that, we could write a tax code that encourages young people to get into farming without feeling like they have to commit to the Big-Ag cycle of corporate serfdom and debt.
Related: The Legislature may be inching toward turning the agricultural land assessment into something even closer to an income tax. At their Tuesday meeting, the ag land assessment task force voted unanimously to commission SDSU economists to study the impacts of assessing ag land on actual use instead of ideal use. (Hey, isn't that Rep. Charlie Hoffman's good idea?)32 comments