Farm Progress

Property tax is top priority in coming legislative session; Farm Bureau pledges support for trade, regulatory reform and a change in nation's tax code under Trump administration.

Tyler Harris, Editor

December 9, 2016

5 Min Read

Right now, everyone in agriculture is feeling the effects of a down ag economy. These are challenging times for farmers and ranchers, and those in Nebraska are no exception. That's something Steve Nelson, Nebraska Farm Bureau president and a farmer from Axtell, discussed during his State of Agriculture address at the 2016 Nebraska Farm Bureau annual meeting in Kearney last week.

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"We all know agriculture is cyclical. Many of us in this room have had the opportunity to see what strong profitability can do in terms of reducing debt and creating opportunities for expansion, improvements in our family businesses," Nelson said. "Yet today, in the face of the third year of declining farm income, we are very much on the other side of that coin. The profitable years in agriculture that helped keep Nebraska moving forward when other states struggled are behind us for the time being."

With the additional burden of high property taxes, it's an even bigger challenge for producers in Nebraska. The No. 1 priority in the coming legislative session for farmers and ranchers is property tax reform. Nelson pointed out that Nebraska is now the seventh highest property taxed state in the nation. Today, he said, property taxes account for nearly half — about 48% of the total combined state taxes. Meanwhile, income taxes account for around 33%, while sales taxes account for 19%. Balancing this three-legged stool, or bringing the property tax load down to a third, however, will take a nearly $1.1 billion tax shift.

When both state and local option sales taxes are accounted for, sales taxes make up a higher percentage — about 30%, compared to income taxes at 27%, and property taxes at 35%. Either way, property taxes are paying the biggest load.

"Today I call on the governor and Legislature to pass tax reform in 2017 that broadens the sales tax base in order to lower property taxes," Nelson said, adding that this would involve a "revenue neutral" approach to keep the state budget balanced. "What we're talking about is a dollar-for-dollar shift from sales tax to offset property tax through the Property Tax Credit program."

New administration, new policy
Nelson also discussed policy at the national level with President-elect Donald Trump taking office in January. One concern moving forward is lost market opportunities if the U.S. does not take part in trade deals like the Trans-Pacific Partnership (TPP).

"While the president-elect has made it clear he has issues with certain trade deals, we cannot afford to ignore or abandon the opportunities that exist to help us move agricultural commodities into foreign markets," Nelson said. "Farm Bureau will continue to lead as we work with the new administration and Congress to make sure they understand the importance of expanded market opportunities in our farms and ranches."

With the new administration comes promise for regulatory reform. Throughout the campaign trail, Trump indicated a strong desire to cut down on federal regulatory overreach.

"Regulation for the sake of regulation is not good for agriculture. That's why Farm Bureau will take the lead to push back against measures like the EPA's Waters of the U.S. rule and OSHA's misguided efforts to overregulate the storage and handling of anhydrous ammonia," Nelson said. "Farm Bureau will make sure the promises of regulatory reform are not forgotten."

Nelson also emphasized the need for reform in the nation's tax code and health care system.

"It's clear that the Affordable Care Act is not affordable for farms and ranch families who purchase insurance in the individual marketplace as health care costs continue to climb. We must find ways to bring health care costs down. Now is the time for leadership in Washington, D.C., to address the flaws in the Affordable Care Act," he said. "It's also time to address comprehensive tax reform at the national level. That means it's time for the death of the estate tax. Death should not be a taxable event. It's time to lower taxes on capital investments in our operations as well, and we need to lower the overall effective tax rate."

As the U.S. begins to draft the next farm bill, Nelson also addressed a need for a viable safety net for agriculture.

"Access to food is what keeps a society from melting into chaos," Nelson said. "Farm bills were founded on that premise. But today, 77% of the costs associated with the farm bill are tied to nutrition programs, while only 23% remain dedicated to agricultural production interests, including crop insurance. As we move further into the conversations about the next farm bill, we know there will be some who will work to reduce or eliminate the safety net that helps farmers and ranchers manage risk. Be assured Farm Bureau will put significant time and effort toward ensuring the next farm bill contains a viable safety net that will help keep our farms and ranches sustainable as we meet the food demands of people in our country and around the world."

Nelson concluded by pointing out that agriculture is much stronger when it works together. Last summer, a number of Nebraska ag organizations came together to form the Ag Leaders Working Group — a coalition of Nebraska Farm Bureau, Nebraska Pork Producers, the Nebraska Dairy Association, Nebraska Corn Growers Association and Nebraska Soybean Association.

"Now more than ever agriculture needs to speak with a united voice when it can," Nelson added. "When it comes to issues like tax reform, agriculture is stronger when we work together."

About the Author(s)

Tyler Harris

Editor, Wallaces Farmer

Tyler Harris is the editor for Wallaces Farmer. He started at Farm Progress as a field editor, covering Missouri, Kansas and Iowa. Before joining Farm Progress, Tyler got his feet wet covering agriculture and rural issues while attending the University of Iowa, taking any chance he could to get outside the city limits and get on to the farm. This included working for Kalona News, south of Iowa City in the town of Kalona, followed by an internship at Wallaces Farmer in Des Moines after graduation.

Coming from a farm family in southwest Iowa, Tyler is largely interested in how issues impact people at the producer level. True to the reason he started reporting, he loves getting out of town and meeting with producers on the farm, which also gives him a firsthand look at how agriculture and urban interact.

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