I just luv gubmint

[bobzilla]

Proposal.... all EV charging stations pay a tax similar to our gas tax. Put school taxes onto the lottery taxes and sales tax. Take away the sales taxes for stadiums and professional sports franchises and apply that to schools. Police and fire aren't being paid out of rural taxes already, so they shouldn't be paid out of city property taxes. No more referendums for more money and remove the ones in place now. Go back to a MAX 1% of personal property and any referendums are to be placed on secondary and income properties only. That should get us close.

The rest the counties, towns and state need to figure out how to cinch their belts.

 

[CHCRandy]

This is part of the problem, those that do not understand are trying to figure things out without full knowledge of even what goes on. This post is based on a simplistic way of thinking. Ever hear of futures? Ever hear of contract pricing?

The produce is in a market, but costs do impact that market…

You and I will just have to agree to disagree on this. Futures market is based on world commodity pricing. I seriously doubt if we tax farm land in Indiana at it's true value....that the commodity futures market even notices it, when you are talking world pricing. And as for contract pricing....yes, many farmers wish they had contracted all their corn out last year at $6 a bushel before the rain came and saved the crop....but they didn't and now we have 8 billion bushels of corn in storage that can only be sold at a loss. Every time the price rises to near breakeven, the sellers come in and drive it back down.

 

[CHCRandy]

One thing you are doing is conflation, the tax was on farm land, no one paid over $64k for farm land. The sale is for another purpose, that is why it looks so skewed…

No, not at all. We all know any farm land is valued at $15K and up per acre, as farm land. I have been to many farm auctions the last year......and I have seen no land sell for under $15,000 per acre, and farmers is who buy it. So farm land does have value as farm land. We should tax it as such.

 

[bobzilla]

No, not at all. We all know any farm land is valued at $15K and up per acre, as farm land. I have been to many farm auctions the last year......and I have seen no land sell for under $15,000 per acre, and farmers is who buy it. So farm land does have value as farm land. We should tax it as such.

I don't know where you're going, but get away from the city and burbs and that land is not $15k per acre. Not to mention, I already ran those numbers for you above. Putting it at an inflated rate WILL run farmers out of business.

EDIT: to use your made up number, that would make the average farm worth $4M dollars. That would cost them $48k in property taxes on property they can barely turn $45k in pre-income tax profit. Would you pay $3k a year to do your job with no income?

 

[Ingomike]

No, not at all. We all know any farm land is valued at $15K and up per acre, as farm land. I have been to many farm auctions the last year......and I have seen no land sell for under $15,000 per acre, and farmers is who buy it. So farm land does have value as farm land. We should tax it as such.

You do realize foreign investors are driving up prices for our farmers..

 

[bobzilla]

You do realize foreign investors are driving up prices for our farmers..

and urban sprawl/industrialization. The developers around us are offering $80-90k per acre for farmland to build $million+ warehouses. As a farmer, you can't compete with that. you have 80 acres that they offer you $80k per acre for what are you going to do? Take the $6.4M or try to keep farming while people that whine you don't pay enough taxes tax you out of your property that has been farmed for 5 generations?

 

[CHCRandy]

We did about 11 years ago. That's what the other 90 acres sold for in Putnam county, and what it STILL goes for. Property being overtaken by suburbs and warehouses are artificially inflated intentionally to run out the smaller farmers.

You make the farmer pay $18k per year just to keep the property they have owned for generations, it makes it untenable to be used as farmland and they will be forced to sell out. Look at the actual costs to farm 100 acred of corn. According to this study it costs an average of $825/ acre to buy seed, fuel, fertilzer, weedkillers and labor. So for 100 acres you're talking about $82500 in costs. A good year for corn is about 180bu/acre, at a cost between $4.50-6.50/bu. Averages out to about $990/ acre. So the farmer makes about $165/ac, or $16500 total on that. You're saying that he also now needs to pay more taxes. Say you triple their rated value of $2k to $6k/ acre, now they're paying $6000 a year. So now your total profits off that field are $10k if prices stay high and the yield works out. Otherwise he's now $5k in the hole. to take care of his family of 4, instead of working 500 acres, he now has to magically find 1000 acres to make the same amount of money he did before. But to do that will need more equipment, more people, driving up his costs even more.

You don't see how that will drive up food costs?

I do not see how taxing farm land in Indiana, for its true value, would effect world commodity future prices.........but I could be wrong.

By taxing farm land at true/fair value, I would think it would help the smaller farmers in the end. If the tax makes corn/beans unprofitable....that means the farmer would have to adjust to make it profitable. Maybe this is by buying new machinery less frequently, or going no till, or developing hybrids that produce 300 bushels per acre, or using less fertilizer, lime and other chemicals or growing hemp or hay or wheat, grazing cattle, putting it in land bank or maybe paying less than $15K per acre for the land. SO then if the price of farmland drops, this would allow smaller farmers to purchase more land or pay less in rent.

The small farmers are already being driven out of business. I know many farmers that are multi millionaires on paper.....they refuse to sell the land because of taxes on the profit, so they keep it until they die....family inherits it and has to pay taxes, which means they have to sell part of the farm to pay the taxes....then they owe more taxes and have to sell more to pay those taxes on the land they sold to pay the first taxes. It is a never ending cycle.

Just seems if everyone paid .25% cap of true/fair value........it would be better for everyone. Instead of 1, 2, 3% caps and farms paying nearly nothing. Country and city folks would all share the costs. But maybe I am wrong on this thinking....I don't really care either way. I live in an old shack and my taxes are not that bad. I am just playing devils advocate.

 

[CHCRandy]

You do realize foreign investors are driving up prices for our farmers..

I am sure they are.....but all I seen buying was our local farmers in bibs and John Deere hats, lol.

 

[bobzilla]

I do not see how taxing farm land in Indiana, for its true value, would effect world commodity future prices.........but I could be wrong.

By taxing farm land at true/fair value, I would think it would help the smaller farmers in the end. If the tax makes corn/beans unprofitable....that means the farmer would have to adjust to make it profitable. Maybe this is by buying new machinery less frequently, or going no till, or developing hybrids that produce 300 bushels per acre, or using less fertilizer, lime and other chemicals or growing hemp or hay or wheat, grazing cattle, putting it in land bank or maybe paying less than $15K per acre for the land. SO then if the price of farmland drops, this would allow smaller farmers to purchase more land or pay less in rent.

The small farmers are already being driven out of business. I know many farmers that are multi millionaires on paper.....they refuse to sell the land because of taxes on the profit, so they keep it until they die....family inherits it and has to pay taxes, which means they have to sell part of the farm to pay the taxes....then they owe more taxes and have to sell more to pay those taxes on the land they sold to pay the first taxes. It is a never ending cycle.

Just seems if everyone paid .25% cap of true/fair value........it would be better for everyone. Instead of 1, 2, 3% caps and farms paying nearly nothing. Country and city folks would all share the costs. But maybe I am wrong on this thinking....I don't really care either way. I live in an old shack and my taxes are not that bad. I am just playing devils advocate.

I don't know where you're getting "nearly nothing". They're still paying the county/township rate at $2280/ acre. Most township rates are over 1.1%.

Small farmers also don't develop hybrid seeds, most aren't buying new equipment, but usually used equipment that isn't as bad as what they had. No till is actually MORE expensive because it doubles and triples the amount of chemicals that have to be put into the ground first. Less fertilizer/products to make the things grown would actually make LESS per bushel causing them to go further into debt. None of your options make any sense what so ever in regards to farming. They don't set prices for their crops so they can't just "sell it for more".

You still haven't answered whether you would go to work for a year, not make any money but pay your employer $3k to do it. Because that's what you're asking farmers to do.

 

[bobzilla]

I think I know one way we could eliminate property taxes, and I am about to **** off a bunch of people. We start taxing farmland the same as all other property. Let's say you own 35 acres that you bought 15 years ago for $350,000, and is now worth $500,000.......that is just an open tillable field. In Hendricks County they will assess that at about $2,000 an acre and your taxes will be about $850 a year. But yet a man with $600,000 house on 1/4 acre will pay $6,000 a year in taxes, or 7-8 times what the farmer pays for the same value of property. In Hendricks County, we have probably 60-70% of land that is taxed as farm land and them people pay very small amount compared to a home. I think farmers should be taxed on property value, just like the rest of us......and we would have such a surplus rates could be capped at .25% of assessed value, instead of 1%. Can someone tell me why a 35 acre farm is assessed at $60,000 when we all know it would sell for $500,000+??

OK, I am going to go back to the beginning on this one. Highlighted. No one pays $350k for 35 acres to farm. Why? Because at the current rate of income that 35 acres will generate it will take 53 years to pay for itself before it even begins to turn a profit. More if you include property taxes(almost 60 years). You pay $350k for 35 acres to sell to a developer or develop yourself. That's not property you buy to farm, that's property you buy to put houses, warehouses, barns and farmhouse.... something other than tilling the land.

It's not financially possible to do it.

 

[CHCRandy]

I don't know where you're going, but get away from the city and burbs and that land is not $15k per acre. Not to mention, I already ran those numbers for you above. Putting it at an inflated rate WILL run farmers out of business.

EDIT: to use your made up number, that would make the average farm worth $4M dollars. That would cost them $48k in property taxes on property they can barely turn $45k in pre-income tax profit. Would you pay $3k a year to do your job with no income?

Well of course I wouldnt..........but the thing you are missing is FARMERS is who are paying $15K an acre for the farm land. My stance is by taxing it at a fair value, you would decrease what farmers will pay per acre, thereby decreasing the tax they would pay and the cost to operate and make a profit. I have no doubt, of that $990 cost per acre to farm you mentioned...... 50% of that is because of land cost and machinery, 2 somewhat controllable costs.

As for your Edit......not following your math. The taxes on $4M would not be $48K.......it would be .25%. It would be $10K in property taxes on something worth $4M, or about twice what they currently pay. I mean, a homeowner would pay $40K in property taxes on a $4M home. As it is now, a farmer pays around .12%, homeowner is capped at 1%. So the homeowner is paying 8 times what the farmer is paying, and the homeowner cant make a living on his yard.

 

[bobzilla]

Well of course I wouldnt..........but the thing you are missing is FARMERS is who are paying $15K an acre for the farm land. My stance is by taxing it at a fair value, you would decrease what farmers will pay per acre, thereby decreasing the tax they would pay and the cost to operate and make a profit. I have no doubt, of that $990 cost per acre to farm you mentioned...... 50% of that is because of land cost and machinery, 2 somewhat controllable costs.

As for your Edit......not following your math. The taxes on $4M would not be $48K.......it would be .25%. It would be $10K in property taxes on something worth $4M, or about twice what they currently pay. I mean, a homeowner would pay $40K in property taxes on a $4M home. As it is now, a farmer pays around .12%, homeowner is capped at 1%. So the homeowner is paying 8 times what the farmer is paying, and the homeowner cant make a living on his yard.

Here's the math:
Average farm acreage in Indiana 272acres.
Current tax rate 1.18% (depends on county) Believe me the guys around us would LOVE to only pay .12% property tax.
Current assessment per acre $1900 (going to $2280 next january).
272 X $1900 = $6100 per year in property taxes. ($7300 next year).

Homeowners also aren't capped at 1%. referendums, city addons, county addons etc have some counties pushing 2% on primary residences.

 

[bobzilla]

I am mistaken. I was under the impression farmland was at the 1% rate, instead it's at the 2% like a rental property. So at $1900 value per acre that would be $10,336 per year on 272 acres. I see there are some discounts but I haven't found how much.
Regardless, the premise that farmers aren't paying "their fair share" is just wrong.

 

[CHCRandy]

OK, I am going to go back to the beginning on this one. Highlighted. No one pays $350k for 35 acres to farm. Why? Because at the current rate of income that 35 acres will generate it will take 53 years to pay for itself before it even begins to turn a profit. More if you include property taxes(almost 60 years). You pay $350k for 35 acres to sell to a developer or develop yourself. That's not property you buy to farm, that's property you buy to put houses, warehouses, barns and farmhouse.... something other than tilling the land.

It's not financially possible to do it.

I don't know where you are getting this from. I have seen it.....I have been to multiple auctions and seen FARMERS paying $15-30K per acre regularly. Here is one of the tracts...37 acres, $860,000 at the auction.

https://beacon.schneidercorp.com/Ap...PageID=2297&KeyValue=32-05-28-300-007.000-017

Here is another tract from same auction.....these are farmers buying it to farm!

https://beacon.schneidercorp.com/Application.aspx?AppID=327&LayerID=3469&PageTypeID=4&PageID=2297&KeyValue=32-05-28-300-004.000-017

Here is you another.....bought by a very good friend of mine. She is not a farmer but owns 1,000's of acres and rents it out. $390,000 for less than 30 acres.

https://beacon.schneidercorp.com/Application.aspx?AppID=327&LayerID=3469&PageTypeID=4&PageID=2297&KeyValue=32-05-29-400-009.000-017

This farm auction had like 18 tracts, almost all bought by local farmers paying cash and none less than $15K per acre, check the buyers names.......you will see they are almost all farmers.

 

[bobzilla]

I don't know where you are getting this from. I have seen it.....I have been to multiple auctions and seen FARMERS paying $15-30K per acre regularly. Here is one of the tracts...37 acres, $860,000 at the auction.

https://beacon.schneidercorp.com/Ap...PageID=2297&KeyValue=32-05-28-300-007.000-017

Here is another tract from same auction.....these are farmers buying it to farm!

https://beacon.schneidercorp.com/Application.aspx?AppID=327&LayerID=3469&PageTypeID=4&PageID=2297&KeyValue=32-05-28-300-004.000-017

Here is you another.....bought by a very good friend of mine. She is not a farmer but owns 1,000's of acres and rents it out. $390,000 for less than 30 acres.

https://beacon.schneidercorp.com/Application.aspx?AppID=327&LayerID=3469&PageTypeID=4&PageID=2297&KeyValue=32-05-29-400-009.000-017

This farm auction had like 18 tracts, almost all bought by local farmers paying cash and none less than $15K per acre, check the buyers names.......you will see they are almost all farmers.

Then they are either dumb, or have old money to waste. I've given the links and the numbers time and again. The profit off of 35 acres (that was your initial post) at $10k/acre the pay back is 5 decades to break even. after paying costs and supplies, they're going to make less than $200/ac per year in profit. for that 35 acres thats $7000 per year, or about 50 years to pay for that property.

Just on your last link the assessed value is listed on there at a little over $74k. Their tax rate is listed as 1.6%. That's $1200, already more than the "800" you listed before. So out of the $7000 in year of profit they would see (before paying income tax) they are also paying 1200 in taxes, reducing their profit to $5800/year. Even if there was a magic button to increase their profit 50%, it's still going to be over 40 years to make that back.

EDIT: two of those 3 have houses on them. That's going to skew numbers drastically.

 

[indykid]

I posted something like the following somewhere, but since we are ranting on property taxes (among other things)---

A friend and I were talking about the property tax bill we just received. I then gave him this comparison,
If you own a share of stock, do you pay tax on the current value? That share is worthless until you sell it, when at that time you pay tax on the "gains".

So a home, why do you pay taxes on it's current value, which is zero until you actually sell it and then and only then realize a "gain"?

He suddenly understood why I loudly complain about renting my home from the state based on a value only realized if I sell it!

PS, for the privilege of living in Westfield, Hamilton county, my property rent is now 2 month and one week of my social security. The American dream of owning your own home does not exist in any state that taxes the value of your home. There is no value other than a roof over your head until you sell, and then you don't have that roof over your head, and in today's market cannot afford a replacement!

 

[CHCRandy]

Then they are either dumb, or have old money to waste. I've given the links and the numbers time and again. The profit off of 35 acres (that was your initial post) at $10k/acre the pay back is 5 decades to break even. after paying costs and supplies, they're going to make less than $200/ac per year in profit. for that 35 acres thats $7000 per year, or about 50 years to pay for that property.

Just on your last link the assessed value is listed on there at a little over $74k. Their tax rate is listed as 1.6%. That's $1200, already more than the "800" you listed before. So out of the $7000 in year of profit they would see (before paying income tax) they are also paying 1200 in taxes, reducing their profit to $5800/year. Even if there was a magic button to increase their profit 50%, it's still going to be over 40 years to make that back.

EDIT: two of those 3 have houses on them. That's going to skew numbers drastically.

I don't think there are houses on the 3 tracts I posted links to. You can click map and see the tracts from satellite. Here is a link to the auction listing and tracts.....https://www.lawsonandco.com/wp-content/uploads/2023/05/MEECE-RE-auction-booklet-2023.pdf

All together it brought in around $10,000,000, if I am not mistaken.

These farmers around here just walk in and smack down $1,000,000 in cash at auctions like it don't even matter. Old, old school money. Many generations of money and farms. The fella that owned all this land was a 100 year old man. His wife had died about 15-20 years ago. They had no kids. I use to do a lot of work for him and he still raised cattle and farmed up until his death. He started buying these farms in the 1950's for less than $100 an acre. He left it all to his brother and his church I believe. He also gave one farm and house to the tenant who rented from him. He was a good old man....I liked Truesdell.

On another note.....I agree with you, I don't know why they pay $15-20K an acre for farm land that has no chance or plans of ever being developed. I mean, I look at it like this. You buy 100 acres for $1.5M, you rent it out for $300 an acre (I have no idea what farm rent costs). So you take in $30,000 a year rent, you then pay say $3,000 property taxes, and I imagine there is income taxes on the $27,000 profit? Regardless....that is only what, 2% a year return on investment! I can take $1.5M and buy preferred shares in stock of RITM and make 8-10% ROI, or $150,000 a year. Seems silly to me to buy land......but what do I know. I mean CD's pay twice what they are making renting land. Now granted, they will collect that $30K, plus appreciation to rent and land forever. To me though, I would much rather put my money in a secured dividend of 8-10% a year instead of buying land that is going to pay me 1/4 the ROI every year. I must be missing something. I mean one way you recoup your $1.5M in 10 years, and that is assuming the stock never goes up......the land way takes 40-50 years, like you said, and who knows how much or which way farm land prices may fluctuate in the next 5 decades.

Bobzilla.......are you a farmer?

 

[Ingomike]

Let's say you own 35 acres that you bought 15 years ago for $350,000, and is now worth $500,000.......that is just an open tillable field. In Hendricks County they will assess that at about $2,000 an acre and your taxes will be about $850 a year.

Can you give us a couple of links to this? Or even an address we can look up? If you go to Hendricks county GIS you should be able to find some property that is assessed like this. Maybe a link to the 28 acres.

Edit, never mind I saw them.

 

[Ingomike]

I don't know where you are getting this from. I have seen it.....I have been to multiple auctions and seen FARMERS paying $15-30K per acre regularly. Here is one of the tracts...37 acres, $860,000 at the auction.

https://beacon.schneidercorp.com/Ap...PageID=2297&KeyValue=32-05-28-300-007.000-017

Here is another tract from same auction.....these are farmers buying it to farm!

https://beacon.schneidercorp.com/Application.aspx?AppID=327&LayerID=3469&PageTypeID=4&PageID=2297&KeyValue=32-05-28-300-004.000-017

Here is you another.....bought by a very good friend of mine. She is not a farmer but owns 1,000's of acres and rents it out. $390,000 for less than 30 acres.

https://beacon.schneidercorp.com/Application.aspx?AppID=327&LayerID=3469&PageTypeID=4&PageID=2297&KeyValue=32-05-29-400-009.000-017

This farm auction had like 18 tracts, almost all bought by local farmers paying cash and none less than $15K per acre, check the buyers names.......you will see they are almost all farmers.

You don’t know who is bidding, could be the guy you think is the farmer is the farmer bidding for the investor. Have you ever just thought of calling you local assessor and asking?

 

[CHCRandy]

You don’t know who is bidding, could be the guy you think is the farmer is the farmer bidding for the investor. Have you ever just thought of calling you local assessor and asking?

No, I know who is buying.......a lot of them are my friends and customers buying. In fact my best buddy bought one of these tracts and paid $680,000 for it, he turned and sold it a few days later to the same farmer who had bought a couple of the other tracts. My buddy got nervous after he bought it and decided to sell it, he still made $30-40K in 3 days on it. If you look at the links I provided, then run the buyers names in beacon......you will see most of these buyers own 1,000's and 1,000's of acres of land. The one lady, who is a customer and friend of mine......she owns probably 20-25 farms in this area. She was the daughter of one of the largest farmers in our county, when her mom and dad passed........the non farming sisters inherited it all. They bought one sister out who wanted to cash out and the other 2 sisters have just been buying and never selling. They rent the farm land out to farmers.