Clear Example of Tax Laws Favoring Agriculture
Via John Combest (who played a terrific first base in softball on Sunday, if I may say so), the Suburban Journals has a good story about a smart property tax move by developers in St. Charles County. What exactly are the developers who have found themselves sitting on large lots of undeveloped property during this recession doing with it? They are farming the land just enough to get it taxed at the agricultural rate instead of at the commercial or residential rate. As the story details, the differences can be huge:
For example, an acre that goes for $5 a square foot and is assessed as commercial would have taxes of $4,800 for an acre. That same acre, assessed as agriculture, would have taxes of $7.68.
This is a topic I have been writing about since the beginning of this blog. Low assessment of agricultural land is one of the main reasons why each year the state transfers money (taxes) taken from suburban taxpayers to give to rural school districts.
The suburban residents, with their higher assessments and rates, support their schools at a fiscal level that has resulted in the state holding aid flat for years; the so-called “hold harmless” school districts. Many rural districts, with their lower assessments, lower rates, and agricultural property, pay less for their schools. The state makes up the difference with general taxes. Let’s be clear — rural districts can often educate their kids at a much lower expense than suburban districts, but the annual transfer of wealth from the suburbs to the rural areas is exactly the type of transfer that is often decried in other situations.