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Quasi-Income Tax Increases Ag Land Assessments 20% or More; Thank Kristi Noem

Back in 2008, South Dakota passed an income tax on farmers... sort of. Instead of being honest, fair, and practical and saying to farmers, "We're going to tax you based on how much money you make this year," we created a rinky-dink system where we say to farmers, "We're going to tax you based on how much money we calculate that you could have made, based on soil type, statewide crop yields and prices, livestock prices, and other data packed into an eight-year average where we drop the high year and the low year."

Seriously? It wouldn't be easier to just ask each farmer (and every other South Dakotan) for Line 43 on the 1040 and say, "Send 7% of that to Pierre"?

Anyway, how's that agriculture assessment scheme working? Great... if you like seeing your ag property evaluation go up 20% or more:

Equalization Director Shirley Ebsen said crop land in Lake County will increase 20 percent for 2013 because crop land valuations are more than 30 percent below the values determined by the productivity model.

Noncrop land will increase 25 percent because valuations are more than 50 percent below productivity model valuations.

Ebsen said crop land is currently 30.31 percent below the productivity model; noncrop land is 246.54 percent below the productivity model [Elisa Sand, "Ag Property Values Will Increase 20%," Madison Daily Leader, August 9, 2012].

Ebsen says valuations in Lake County are going up in part because of 11,000 acres of marsh land that didn't use to count for diddly but which the new ag assessment formula says has productivity value. Marsh land. Wow—that sounds perfectly fair... assuming farmers can find a way to turn a profit on cattails and mosquitos. And we wonder why farmers are going bonkers draining every acre they can get their hands on.

The legislation that brought this ag assessment scheme to life was 2008's House Bill 1005. Who sat on the 2007 interim committee that proposed this bill, co-sponsored the bill, voted for it twice in the Legislature, and sat on the 2008 interim advisory task force that finalized the rules for this tax on potential agriculture income?

Why, none other than our current Congresswoman, Kristi Noem.

So farmers, ranchers, ag landholders all, when you get your 20% to 25% higher property assessment this fall, be sure to send a big thank you to the woman who's asking for your vote and asking you to trust her to lower your taxes.


  1. Michael Black 2012.08.13

    The productivity model is much fairer to the farmer than if we went with straight sales valuation. Crop ground is selling between $5000-$8000 right now. There are no signs of the rate of increase slowing anytime soon.

  2. Garyd 2012.08.13

    Michael: I agree with you! The ag groups all got together and had input and support for this bill because they could see what might happen and this method had been used in other states with some sucess.

    While I agree with Cory on many things he says about Kristi Noem, she did what the ag groups wanted to avoid a real train wreck that was going to occur in the very near future if nothing was done.

  3. Rorschach 2012.08.13

    The ag land assessment system is a tax break for farmers. While homeowners and business owners pay property taxes based on market value of their property, farmers pay property taxes that work out to be much less than if they were taxed based upon market value. But it's not just farmers. It's landowners in the black hills that have valuable but non-productive land who aren't paying their fair share of property taxes.

    So farmers worked out a "productivity" model that doesn't even require them to pay based upon full productivity. Just look at the Lake County numbers above. Cropland valuations are 30% below the productivity model but farmers only get a 20% increase in property taxes. Noncrop property valuations are 50% below the productivity model but farmers only get a 25% increase.

    Either farmers need to quit complaining about tax increases that are meager compared to their productivity, or they should just pay property taxes based upon market value as do homeowners and business owners.

  4. Dakfarm 2012.08.13

    How about if we just tax everyone by income and not just landowners? and in the current system aren't investments like stocks, bonds, cds etc. income producing property?

  5. caheidelberger Post author | 2012.08.13

    DakFarm, I'm perfectly fine with that.

  6. debbie 2012.08.13

    Because if we tax everyone by income all that money goes to the state and the county loses complete control of that money. There goes all your local control. Everyone needs to think a little longer before they're willing to just "hand" all the money over to the state or federal government

  7. caheidelberger Post author | 2012.08.13

    Debbie, that's a reasonable concern. So how about we craft the income tax so that cities, school districts, and other local entities still get dibs on their fair share of the revenue? We do that with sales tax: the locals set their own rates; the state collects the money but remits the full amount of the city tax to the city, no strings attached.

  8. Charlie Hoffman 2012.08.14

    This could take all day to fully expose and while I do not like the production model of property tax and am a landowner in McPherson County some historical timelines in tax law changes need to be explained in general concepts. We need to go back to the rocking 90's when the valuations of land were skyrocketing mostly due to outside interest for recreational purposes. The land sale used in determining assessed value was locked in sale price for five years for determining taxable valuations and then averaged into the county average. Governor Jankow and the legislature changed that to one year of locked in sale price used for taxable value and that is where the counties started seeing revenue problems and farmers started seeing auction sales explode in upward price hikes. If anyone remembers the movement for an income tax was building momentum and the property tax reduction fund with all the gambling revenue was begun to thwart that movement. It worked well for the Income Tax pros lost their fight and the property tax shift downward with the addition of $100 M plus or minus kept the tax payers happy. Personally I do believe that if we had not had the income tax fever hitting the State and Legislature, and the five year constant sale price used for taxable valuations continued instead of moving to a one year sale price taxable event we would never have needed a production model property tax system. Everyone living in the Black Hills and around large growing urban centers today gets a huge tax break on the actual value of their land while the folks out in the country who will never sell blue sky for development or a view will pay more as their local effort to schools becomes an issue when margins widen.

  9. larry kurtz 2012.08.14

    your party is getting what it wants, charlie; red state failure on parade: the wants of the few outweigh the needs of the many.

  10. larry kurtz 2012.08.14

    Ag has tiled and tiled, wetlands cleared and cleared: now your aquifers are dry, charlie.

  11. larry kurtz 2012.08.14

    You guys wouldn't come to Madville unless Cory didn't scare the crap out you.

  12. Charlie Hoffman 2012.08.14

    Larry c'mon, you know that unless CAH is hiding some really big guns under that fast moving bike seat of his the only thing I'm afraid of is being made a fool of publicly by my own admission and his fast fingers. You ain't afraid of that though one teeny weeny bit now are you Mr. Kurtz? You ask a thoughtful question, kind of though in when does concrete and pavement impede our ablility to feed those living above both? Thank God for Monsanto or it would be happening already!!!!!!!!

  13. Justin 2012.08.14

    Monsanto a gift from God?

    He really does work in mysterious ways.

  14. debbie 2012.08.14

    If we "craft" the income tax the state still has CONTROL. If it's not about control why doesn't the state let the counties levy a sales tax like the cities and the state already do instead of the state talking about raising sales tax a penny or two. Simple answer - because it's not about the pennies, it's about who CONTROLS the pennies.

  15. larry kurtz 2012.08.14

    gee, debbie: as much as you make sense the state already has a surplus it plans to use to chill civil liberties and build prisons.

  16. Jana 2012.08.14

    Larry, are you saying that our friendly legislators that look to big business to write our laws through ALEC are going to sell out prisons to CCA and other for profit prisons? God knows Corrections Corporation of America (CCA) has a good gig going.

    They get to use prison labor for outside enterprise and have the states that use them guarantee that they will be at least 90% full.

    What could go wrong there?

  17. larry kurtz 2012.08.14

    like wipin' yer butt with a hula hoop, Jana: it's endless.

  18. Jana 2012.08.14

    Larry...I give you so much credit for creativity...but now I'm trying erase the visual.

    Amazingly enough...CCA helped ALEC write the unconstitutional immigration laws...I mean think of the profits from filling your prison with people who didn't pass the "Papers Please" laws.

    In many states, they used this to bust unions and then hire in at very low wages with less than adequate benefits. So their contribution is not only in profiting from new laws, giving the state an incentive to imprison more people...they get the added bonus of contributing to the ranks of the working poor.

    Real class act those people...all of them. ALEC, CCA and the state legislators who aren't smart enough to draft their own laws, but have enough greed and insecurity to adopt them as their own.

  19. larry kurtz 2012.08.14

    "The incarceration ratio for Native Americans in South Dakota is far out of proportion with the total state population. The main prisons in the state are top heavy with Native Americans.

    The prison in Sioux Falls reportedly houses a population that is 33 percent Native American. Since the total state population of Indians is about 10 percent, the number of Native Americans that are incarcerated should raise some concerns within the judiciary in this state.

    It does not." Tim Giago at The Buffalo Post.

  20. grudznick 2012.08.14

    Of course, Mr. Giagio does not take into account that the 33% should raise some concerns within Indian Country that a disproportionate percentage of the crimes is being committed by a relatively small segment of the population. Why is that?

  21. Jana 2012.08.14

    Grud, you ask, "Why is that?"

    I have to admit that I don't either. But it would be interesting to fashion a little "Trading Places" or "Prince and the Pauper" type of experiment. Only instead of just using an individual, we do an entire community and start with taking away anything they've ever owned...including their dignity and then keep the experiment going for a couple of generations.

    I wonder if that type of Mortimer and Randolph experiment would shed any light on the problem.

  22. grudznick 2012.08.14

    If that be the sitchiation, Ms. Jana, then there be the cause that 33% of the criminals come from 10% of the population and why those individuals are incarcerated. Because of some Mortimer and Randolf traded places thing that caused them to commit crimes that you have to go to prison for.

    Do you propose a racial quota like Mr. IP wants where after 100 kitties are shot only Hispanics can go to jail, or what?

  23. caheidelberger Post author | 2012.08.15

    Debbie, the state has the same control over property tax right now. Bill Janklow imposed a cap on how much local entities could levy. Charlie and his pals in Pierre could turn that cap down farther, require legislative approval, take X% of the revenue, you name it. Why would an income tax to replace the property tax pose any greater risk of state control?

  24. debbie 2012.08.15

    How about we do an income tax. Let's base it on gross, like they do my paycheck, with few or no write-offs. How far do you think that's going to fly? GROSS, for EVERYONE!!!! By the way, how did this conversation digress from taxes to incarcerated Indians.

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