Whether voters support Referendum A with their vote on Tuesday is
up to them, but I want voters to make their decisions based on
correct information about relative tax burdens.
Referendum A would exempt heavy farm equipment from local
property taxes. Farmers would no longer have to pay ad valorem
taxes on their tractors, combines and most other farm equipment
(pickups used on the farms would still be taxed).
Some reports have claimed this tax relief for farmers would
transfer the tax obligation to other property owners in rural
areas. This claim may be true, but the resulting distribution of
the tax burden will be more equitable than it is now.
Enhances Local Tax Fairness
Referendum A actually enhances local tax fairness.
Normally, as an economist, I don’t favor such targeted tax cuts
designed to benefit a specific group. Such policies tend to
distort the efficient working of our (supposed-to-be) free market
economy. However, in this case, we have clear evidence that such
tax relief is warranted on equity grounds.
A University of Georgia study showed that for two representative
Georgia counties (Habersham and Oconee), farm and forest land
owners paid considerably more in county property taxes and other
fees than they received back in services. In Oconee County,
farmers paid $1.06 for each dollar of county services they
received. In Habersham County, they paid $1.42 for every dollar
of services.
Conversely, homeowners paid only 92 cents in Oconee and only 81
cents in Habersham for every dollar they received in services.
These numbers don’t even include taxes paid for schools — just
those for local governments.
If schools are included, farmers are overpaying by even more. In
fact, more than 70 such studies have been done nationwide, and in
every case, farmers pay more in revenue than they receive in
services.
Tax Relief Wouldn’t Be Burden
Statewide, the total tax relief under Referendum A is estimated
at $12.9 million per year. In only seven counties is the tax
relief estimated to exceed $250,000 per year. In the two most
affected counties, Mitchell and Colquitt, the tax relief is
approximately 6.5 and 4.8 percent of the total property tax
collections, and even less than that of the overall county
budgets.
Looking at this evidence, it’s reasonable to conclude that
farmers aren’t getting an undeserved tax break under Referendum
A. They are simply getting a tax burden that’s more in line with
the services they receive from their local governments.
Such an argument may be why all but three states in the Southeast
already have similar legislation.
I suggest that Georgia and its county governments can easily
afford this tax relief for farmers. Most important, the new law
would actually enhance tax fairness, not reduce it.
