Editor, Commonwealth:
Mississippi State University’s Extension Service and Department of Ag Economics continue to wage war, which began in 2010, on farmers and landowners in Mississippi and particularly in Leflore and other Delta counties. This war is in addition to the now uncertainty faced by the agriculture community because of trade disputes with major importers, such as China, of U.S. agriculture products. The deans, department chairs, directors and faculty involved should be ashamed of themselves.
Since at least 2010, MSU has been paid to provide land valuations to the Department of Revenue, which then makes its way to local tax assessors. They have been allowed to increase valuations by up to 10 percent each year through 2017 and by 4 percent in 2018. They do this with a phony “use model” that is only partially disclosed to allow a thorough evaluation.
What has Mississippi gotten for its money? Nothing. MSU has simply increased the value by the 10 percent/4 percent cap each year. Any local high school student could have told and programmed the tax assessors’ computers to do this simple task.
The phony “use model” is based on capitalizing some determined farm income. Thus, for reported land values to be positive and increasing, there would have to be a positive and increasing farm income. In addition, to justify a “use or income model” for tax valuation, they start with the implicit assumption that land property taxes are paid by farmers/operators out of farm income. Here are the facts, not opinion:
1. Do farmers/operators pay land property taxes out of “farm income”? No. Landowners, whether farmers or non-farmers, pay land taxes out of rental income. The USDA reports in a comprehensive study of land ownership and tenure that of the 2.1 million landowners who rent land to operators, 87 percent are non-farmers and that over one half of farmed cropland is rented. By any stretch this is a false assumption that would result in anyone advocating the “use model” for tax purposes to be laughed out of the state if presented in a learned forum. You do read and use these important studies in your work, don’t you, MSU?
2. Is recent farm income positive and increasing by 10 percent/4 percent? A resounding no! USDA reports from its Economic Research Service show negative and decreasing farm incomes since 2014 from cotton, soybeans and corn when all expenses are included. If capitalized at any rate, value would be negative, resulting in a nonsense negative tax. In addition, another study in 2016 from MSU Extension, Publication 2991, confirms the USDA results showing negative incomes at approximate current prices of $3.75/bushel for corn, $9.07/bushel for soybeans, and $0.79/pound for cotton. You do read and use these USDA studies and know what other MSU faculty are doing, don’t you, MSU?
3. USDA reports show only one year of double-digit land-value growth in the past 10 years, with recent values ranging from 0 percent to 2.48 percent. In 2018, land values rose by a mere 1.61 percent. Contrast this to the 10 percent/4 percent growths reported by MSU. You are aware of these studies by USDA, aren’t you, MSU?
In Leflore County, valuation and millage rate growth has resulted in taxes of $24.70 per acre, up from $8.62 per acre in 2009 when MSU began the war. This is a 12.4 percent annualized increase. Given reported average rent, which did not increase at all in 2018, in Leflore of $118 per acre, local tax per acre on rental income is now at 20.9 percent, with federal and state income tax pushing the overall tax rate above 50 percent.
Although the 4 percent cap on valuation growth is an improvement over the past 10 percent cap, it still is not sustainable and will eventually have devastating effects on the entire Leflore County and Delta economies. It is a mystery to me and should be to any discerning citizen why MSU does not recognize this and do something to promote this important economic activity instead of destroying it.
One would think that the state’s and one of the South’s premier land grand institutions historically tied to agriculture would be sensitive to this activity.
Jim McMinn
Murray, Kentucky
