Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Monday, July 11, 2005

Be a Farmer;
Get a Tax Break

There are cows grazing on sites that are being prepared for suburban development outside Miami, Florida. The reason is that so long as the land is being used for agriculture, the owner receives a massive tax break.

The idea was to protect farmers from soaring taxes. But developers learned long ago that they too could seek tax relief by plunking a few cows on their land or planting a few rows of crops. ''They did not put anything in the law that said the property owner had to be a farmer,'' said Art Hurley, a horse rancher who campaigned for property appraiser in 2000. "The result was that it allowed developers to buy much more land than they could have afforded. So it hurt instead of helped.''
The policy may have hurt in the sense that it did not help keep farmers (in the traditional sense) on the land, but as Brian Ferguson points out at A Canadian Econoview, it helped the farmers who own developable land. In one instance property taxes were reduced to $461 instead of $340,000 because some cattle were kept on the land even though feed had to be trucked in for them every day. In another instance, land was purchased for $13.75million but assessed for only $18,354 because it was being used for agriculture. The low assessment meant the developer was willing to bid more to buy the land.

As Brian Ferguson notes, even though the tax break lasts only so long as the land is being used for agricultural purposes, if it used for agriculture on January 1, the owner receives the tax break for the entire year.

Cross-posted at The Western Standard.

Update: For more from someone who is taking advantage of the tax break, see Tom Luongo's recent posting on this topic.
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