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Proof that farmers needed real property tax reliefProof that farmers needed real property tax relief

Homeowner tax bills declined by one-third since 2007 while farmland taxes skyrocketed.

Tom Bechman 1

March 22, 2016

3 Min Read

The Indiana General Assembly members just didn’t wake up one morning, look at a graph and map sent to them by Indiana Farm Bureau, and collectively say, ‘Yes, it’s time to give farmers real property tax relief.’ That’s not how politics works.

Katrina Hall, director of legislative services for Indiana Farm Bureau, Inc., says an outpouring of visits, phone calls and other contacts by members and farmers in general pushed the property tax football over the goal line. However, the information that Farm Bureau and others uncovered gave farmers plenty of ammunition to help prove their point.

Here were two key pieces of information Indiana Farm Bureau and Larry Deboer, a Purdue University Extension ag economist, provided that helped make the need for true property tax relief crystal clear.

PAYING MORE THAN THEIR FAIR SHARE: Farmers are willing to pay for essential services, such as fire protection, but the rate being paid on bare farmland far exceeds the cost of services compared ot the rate paid by homeowners.

Farmland property tax bills soar while homeowner tax bills sink

Purdue’s Deboer cut through all the rhetoric and put the facts in a bar graph that tells the message quickly. For all the talk about property tax relief over the past decade and a half, total net tax after credits for all Indiana taxpayers for property tax declined only 3.9%. Gross assessed valuation actually increased by 9%.

The real difference was in who got decreases, and who paid more than before. Homeowners from 2007 to 2015 saw a net 30.4% decrease in property taxes. Gross assessed valuation rose only 2.7%. Farmers, on the other hand, saw a net increase of 62.6% on property tax bills for farmland. The gross assessed valuation was actually up by 81.7%

That’s a contrast no one can miss.

Property tax values on Indiana farmland tended to be higher than those in neighboring states

To find out Indiana Farm Bureau staff went to the phones and contacted counterparts in other states, Hall says. After 2015’s session but before any action this legislative session, Indiana’s property tax rate per acre was one of the highest in the Midwest. The range was greater in Illinois, with a few values higher and some much lower than in Indiana. Rates in other states were generally lower.

States differ on the mix of property taxes, income tax and sales tax from state to state. But when you look strictly at property taxes, and what it was costing Indiana farmland owners, Indiana’s rate was one of the highest, Hall said.

Data wasn’t available from a few states, and those were marked as NA for not available on the map.  Some states cap tax rates, others don’t.

There is a difference between capitalization rate and cap rate, Hall explains. Indiana showed a ‘cap’ rate of 4.77% as of 2015, but that wasn’t a cap on how high taxes could go. Instead, it was a measure of the rate of return per acre vs. the property tax rate.

A MIDWEST COMPARISON: This map shows how property taxes on farmland compare across the region. This was prepared by Indiana Farm Bureau.

About the Author(s)

Tom Bechman 1

Editor, Indiana Prairie Farm

Tom Bechman is an important cog in the Farm Progress machinery. In addition to serving as editor of Indiana Prairie Farmer, Tom is nationally known for his coverage of Midwest agronomy, conservation, no-till farming, farm management, farm safety, high-tech farming and personal property tax relief. His byline appears monthly in many of the 18 state and regional farm magazines published by Farm Progress.

"I consider it my responsibility and opportunity as a farm magazine editor to supply useful information that will help today's farm families survive and thrive," the veteran editor says.

Tom graduated from Whiteland (Ind.) High School, earned his B.S. in animal science and agricultural education from Purdue University in 1975 and an M.S. in dairy nutrition two years later. He first joined the magazine as a field editor in 1981 after four years as a vocational agriculture teacher.

Tom enjoys interacting with farm families, university specialists and industry leaders, gathering and sifting through loads of information available in agriculture today. "Whenever I find a new idea or a new thought that could either improve someone's life or their income, I consider it a personal challenge to discover how to present it in the most useful form, " he says.

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