• Topics: Food and Resource Economics | Clouser, Rodney L | 2007 Agricultural Census Tidbits series

2007 Agricultural Census Tidbit: Florida Agricultural Property Taxes Show Small Increases¹

Introduction

The 2007 agricultural census data were reported for states and counties throughout the United States in February 2009. National, state, and local policy makers look forward to the census report for several reasons: they use the information to show the importance and size of the industry in their state and counties, and to show the importance of the industry in the state and local economy; and they use the information to make policy decisions. One of the limitations of the agricultural census is that the report, for the most part, is just data with limited or no discussion. This publication is one in a series of five that reorganizes some of the data collected in the census and offers some comments on trends and gaps in the data. The other publications in the 2007 Agricultural Census Tidbit series can be accessed online at http://edis.ifas.ufl.edu.

Property taxes are a hot topic in general, not just within the agricultural community. A national survey (Tax Foundation, What Does America Think about Taxes) indicates that Americans view property taxes as the second most unfair source of state and local taxes (only gas taxes were considered more unfair). Property taxes are a primary source of revenue for local units of government to provide services to local residents. In Florida, this is especially true as the state is only one of nine states in the United States without a broad-based personal income tax as reported by the International Revenue Service (the other states are Alaska, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington and Wyoming).

Census of Agriculture

The Census of Agriculture is conducted every five years and is an attempt by the U.S. government to collect data on the entire U.S. farm population in every state. Of course, not all agricultural producers provide the information requested and there is always the possibility for error in the data reported. A farm is defined as a place in which $1,000 of agricultural products were produced or sold, or typically would have been sold during the census year, including any government payments.

Property Taxes

Table 1 shows agricultural census data for property tax payments by states. Table 2 reports data for property tax payments as a percentage of total production costs, ranked by state. Florida agricultural property taxes are levied based on the land's use (also known as the state greenbelt law) in agriculture rather than at the market value of the land as specified in Florida Statute 193.46.

The census estimates that Florida producers paid approximately $139.3 million in property taxes in 2002; in 2007, this number had jumped to $180.2 million (Table 1). Property taxes represented 2.9 percent of total production costs in 2002 and 3.1 percent of total production costs in 2007. This increase implies that property tax payments were rising faster than other production costs.

Property taxes in Florida and eight other states represented a larger percentage of production costs in 2007 than in 2002. Some simple calculations reveal that if the property tax as a percentage of total production costs had remained at the 2002 level, Florida producers would have paid about $12 million less in property taxes in 2007. The $12 million increase in property tax payments seems like a significant increase but, calculated per farm operation, it amounts to about a $250 per farm increase, or $50 per year over the five-year period.

In 2002, the median property tax payment was 3.2 percent of total production expense and Florida was below this level at 2.9 percent. In 2007, the median property tax payment was 2.7 percent of total production expense and Florida was above the median level at 3.1 percent. Thirteen southern states are identified by italics in Table 2 and among these states Florida has the third highest property tax payment as a percent of total production expenses (Tennessee and Virginia exceed the Florida rate). Maybe more important is the fact that states such as California and Texas, which produce crops in competition with Florida, have tax payments as a percent of total production expenses close to 2.5 percent.

Summary

Property tax payments by farm producers will most likely remain an annoyance. However, the annoyance is not limited to agricultural producers. Property tax payments have been identified as one of the top two most unfair sources of state and local taxes by all taxpayers in the United States.

The payment of property taxes must be kept in perspective. In Florida, it is that source of local government revenue that provides police, fire, emergency medical services, and public works projects such as roads, etc. that agricultural producers consume along with the rest of the local population. And even though property tax payments as a percentage of total production expenses increased in Florida between 2002 and 2007, there is some positive news. Compared to other production expenses, such as fertilizer ($439.1 million), farm chemicals ($376.7 million), seeds and plants ($379.7 million), purchased feeds ($547.9 million), and hired farm labor ($1.2 billion), tax payments as a percentage of total production expenses in Florida remain much smaller.

References

Clouser, Rodney L. and W. David Mulkey. 2007. Florida's Property Tax Debate: Assessing the Situation and Why We Are Where We Are Today. Electronic Data Information Source (EDIS) FE703. Food and Resource Economics Department, University of Florida, Gainesville, FL.

USDA/NASS. 2007. 2007 Census of Agriculture, United States Summary and State Data, Volume 1, Geographic Area Series, Part 51. United States Department of Agriculture, National Agricultural Statistics Service, Washington, D.C.

IRS. 2009. States without a State Income Tax. United States Department of the Treasury, Internal Revenue Service, Washington, D.C. http://www.irs.gov/efile/article/0,,id=130684,00.html [19 September 2012].

Tables

The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national origin, political opinions or affiliations. For more information on obtaining other extension publications, contact your county Cooperative Extension service.

U.S. Department of Agriculture, Cooperative Extension Service, University of Florida, IFAS, Florida A. & M. University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Nick T. Place, Dean.

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