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Meade County Republican and Ranchers Prefer Income Tax

Robert Heidgerken is a popular Meade County Republican. He won his seat on the Meade County Commission in 2010 with nearly 72% of the vote.

Chairman Heidgerken also agrees with me that we should replace South Dakota's Rube-Goldberg productivity-based agricultural property tax with a straight-up income tax:

A rancher himself, Heidgerken empathizes with the landowners dealing with drastic tax hikes. “Even though it’s a production based system I think their (the state’s) goal is to get it to market value and nobody can afford the taxes on market value. Recreation, development and investment - that’s what’s driving the value of land in Meade county, not production,” he said. Plus, he said, farmers from the Eastern side of the state may look at some of the soil types of Meade County grasslands and assume they can farm it for higher profit margins over cattle production. “But they’ve got crop insurance money backing them and that would be another case of investment driving the market.”

Heidgerken said that the current use of the land isn’t taken into consideration, so farmland and grassland with the same soil type are valued at the same dollar figure.

...“The fairest thing would be to go to an agricultural income tax,” said Heidgerken [Carrie Stadheim, "Meade County Property Owners Appeal Valuations," Tri-State Livestock News, 2013.04.30].

Commissioner Heidgerken is responding to complaints from his fellow Meade County ranchers who have seen their taxes jump since South Dakota switched to the ag-productivity assessment model in 2009. Mud Butte rancher Bill Kluck tells reporter Carrie Stadheim that he has seen his property taxes climb 10% a year for the last three years and now 88% this year. Wasta rancher Morris Linn faces a 75% hike this year, and he can't figure out why:

[Linn] added, “They (the county representatives) keep saying that they are going off soil type and topography but that’s been the same here for the last one hundred years. Nothing’s changed; you can only still raise so many pounds of beef and so many bushels of wheat on the same acreage.”

The cattle rancher and small grains farmer said he doesn’t know how he can improve his bottom line enough to pay the increased taxes. “The worst thing is that if they get our assessment up there and then raise the mill levy again that will compound our problem,” Linn said. “They will probably double our taxes if they raise our mill levy” [Stadheim, 2013.04.30].

These ranchers want taxes based on their ability to pay. They can deal with tax increases if they are keyed to income increases. They would happily trade the current productivity assessment—which is based on arcane math, wishes, and other people's good market luck—for a simple and transparent income tax.


  1. D Basel 2013.05.30

    I think you need some clarification between taxes and valuations. I am a central Meade Co. rancher not far from Bill Kluck. My taxes that I paid this year over last year were 11% higher. My valuations for next years tax were what took the big raise percentage wise. My big gripe was the variation across the place. In a three mile stretch the valuation varied 580%! That tells me with "production based valuation" the north end of my place will grow 580% more grass than the south end. Not possible. We were successful in this argument and got some of the valuations lowered. The error was so blatant that the commissioners could not, not fix it.

  2. caheidelberger Post author | 2013.05.30

    I'm just saying what Bill Kluck said... or at least what the reporter said he said. I agree, we do have to be careful in talking taxes and valuations. Your valuation may go up, but the Legislature adjusts the school levy to keep taxes from going up in direct proportion.

    580% variance in productivity? Wow: was that a straight data error, or did the formula actually produce that difference? The only way a difference like that happens in the real world is if you try to plant grass on rocks, right?

  3. Rorschach 2013.05.30

    If ag property taxes were done away with in favor of ag income taxes, then tax revenue would dry up and blow away. There are too many ways to eliminate taxable income, like buying equipment and depreciating it. All at once landowning millionaires wouldn't be paying any taxes at all.

  4. Bree S. 2013.05.30

    Rorschach is correct.

  5. D Basel 2013.05.30

    Rorschach is not correct. This new system is a way to tax ag income without exemptions. Grain (wheat, corn, soybeans) is income averaged over a eight year average. Also cattle prices are averaged over the same eight year period. I can't quote the law accurately, but I believe cash rents are included. In my situation with the 580% variation is being addressed in the legislature. It is the actual use verses best use. Currently soil types are relied upon heavily. My soil type could raise corn, so my land was valued as such. I use it for grass and cattle because of low rainfall (not part of the formula).
    On another note I do support a state income tax. This state currently has a two legged stool to support the state. We have a real property tax and a consumption tax (sales tax). Two legged stool don't stand very well. We need the third leg of the stool, income.

  6. Bree S. 2013.05.30

    Ah, so you want to add a new tax? I don't support that.

  7. caheidelberger Post author | 2013.05.30

    I understand Basel's three-legged stool argument. I nonetheless advocate replacing the current potential-productivity basis for property tax with a straight ag income tax.

  8. Bree S. 2013.05.30

    How will you keep the farmers from depreciating losses and capital improvements over a period of years?

  9. rollin potter 2013.05.30

    AS i stated before when the county comissioners were trying to fix there roads. Tax the plow jockeys,dairies,ethanol producers etc. on there production.
    Average yield per bushel at the fsa office, gallons of milk produced, gallons of ethanol produced,Pounds of beef produced etc..

  10. Douglas Wiken 2013.05.30

    Bleed farmers some more for sure. How about taxing lawyers, doctors, etc on the income per square foot of their offices? How about a corporate income tax? We don't get any price breaks from big chains because South Dakota does not have an income tax.

    Farmers pay for a lot of other people's kids going to school as it is. Ag property taxes would drop to next to nothing if only the kids from rural areas were the basis of the tax.

    My social security just about pays our federal income tax. Property taxes wipe out my wife's wages. I do not think agriculture is under-taxed. We pay a lot of taxes that primarily benefit people who pay next to nothing to South Dakota.

    All that said, the increase in ag land prices is absurd.

  11. rollin potter 2013.05.30

    Mr. Wiken, I have been on the farm since 1957!!!!
    What i am saying is the people who are tearing up the roads with there big machinery,18 plus wheelers etc, and wanting more and better roads should be willing to pay for them!! Do you know what the maximum state wheel tax on a vehicle is??? Why should the person who lives in a town or city pay for the roads these mega dairies, cheese factories, ethanol producers, plow jockeys etc,, that are all subsidized by them already, pay for the roads they tear up?????

  12. Douglas Wiken 2013.05.30

    Heavy trucks should be taxed far more. No disagreement from me on that, but why shift that to ag land?

    I see the huge expensive equipment as well, but I suspect that the pounds per square inch of pressure from tires on farm equipment is not nearly as much as you might expect.

    Around here, we see the most damage to township roads from recreational 4x4 drivers who think ripping muddy roads up is real fun. Then more rain washes out the ruts until roads are nearly undriveable.

  13. rollin potter 2013.05.30

    Mr. Wiken: It is the ag land that causes these heavy trucks to be on the roads!!!!!!

  14. Bree S. 2013.05.30

    I'll trade you a higher tax on heavy trucks for not having to pay to put everyone else's kids through school.

  15. caheidelberger Post author | 2013.05.30

    Oop, now there you go again, Bree, forgetting that you (like every one of those Meade County ranchers) depend on a good public education system to keep everyone sufficiently civilized and employable to maintain a society and economy from which you richly benefit.

  16. Bree S. 2013.05.30

    Yeah, you said that because you know you can't say my kids will benefit because you probably remember I'm a homeschooler, lol.

  17. John 2013.05.31

    The sad facts are that farmers don't do capitalism because there is no chance of failure. Capitalism without failure is like religion without sin - both being feel good nothingness at others expense.

    The other sad fact is that farmers do not pay their own way because they are subsidized at every juncture - postal service, roads, utilities, farm subsidies, crop insurance, special tax breaks (fuel, inputs, outputs, etc.), non-"disaster" declarations with forgivable low interest loans, etc. Shoveling money at empty rural America didn't work 100 years ago and only serves to further hollow-out small towns.

    It's long past the time to demand a level playing field, that rural folks should pay their fair share for distributed services (far-flung services), and pay their fair share of taxes to pay for those high cost dispersed services.

  18. caheidelberger Post author | 2013.05.31

    Bree, your kids will benefit from having their fellow citizens all sufficiently educated to do business with them, do work for them, and vote for their clearly more intelligent policies when they run for office.

  19. Douglas Wiken 2013.05.31

    John, you are full of it. What are the fuel subsidies? Why should equipment on farms that never touches a highway pay road-fuel taxes? Postal service works both ways. It subsidizes bankers and credit card companies sending out bills too. It subsidizes newspapers and junk mailers.

    "Shoveling money" versus shoveling crap. Money into rural areas would help if the distribution wasn't by the SD rich buddy system rather than need or for potential benefit. Money in rural areas could do a lot if used properly.

    Our whole law enforcement system is actually designed to insure contracts for the very rich. That is another huge subsidy.

    So-called ag utility subsidies have allowed manufacturers to sell billions of electrical and communication equipment to markets that would not exist otherwise. Do you know of any REA or RTA systems that have not repaid loans?

    The subsidies on utilities primarily go to Native Americans. The rest of us pay that with all the taxes on utilities whether or not we live in rural areas or cities.

    Those whining for a "level-playing field" actually desire a bowling alley with their own bulldozer to knock down the pins. Check your banks for examples. Send out the highway patrol to help collect debts and seize farm equipment.

    I do wish we were able to get forgiveable loans. We have had to pay every dime of interest due on loans and never had a single penny forgiven.

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