In a Commonwealth article on June 25 entitled “Farmers worried about school taxes,” Managing Editor Gavin Maliska recounted frustrations of farmers over the potential 7.4 percent increase in farmland taxes in Leflore County.
Landowners and farmers (they are not the same) certainly have a right to be extremely concerned. As a matter of fact, all discerning citizens of Leflore County should be concerned as escalating land taxes threaten the entire economy of Leflore County as well as all Delta counties.
The problem, however, is not primarily with the local officials but secondarily with the Legislature, most of whose members don’t knowing doodley-squat about valuation, economic consequences and statistical analysis, and primarily with Mississippi State University’s Department of Ag Economics and Extension Service, which should know doodley-squat but obviously does not care about the plight of the agricultural economy.
I have confirmed in a conversation with a former MSU faculty member, now a land value expert at a Midwestern university, that the leadership at MSU does not always have the best interest of the farm community in mind and the faculty who do tend not to express their opinions.
Local officials have very little to say about property taxes on farmland. Of the three factors affecting taxes, valuation, assessment rate and millage rate, they only have control over millage rate, which they set to collect enough revenue to cover expenditures. The Legislature mandates the assessment rate and that farmland value be determined by capitalizing farm income, setting only a minimum cap rate of 10% and from 2010 to 2017 a maximum increase year to year in valuation of 10%, dropping to 4% in 2018 and after. (That decrease came thanks to the efforts of the local Mississippi Property Tax Alliance, with which I have closely worked.) The Legislature then farms out to Mississippi State Extension Service to determine farm income. Consequently, landowners’ so-called “property tax” is no property tax at all but an income tax, since it is determined by capitalizing income. To make matters worse, it is levied on people, landowners, who do not even earn the income.
The problem with the MSU methodology is that it uses a “use model” that is as phony as a $3.33 dollar bill, and of which they will not disclose the nitty-gritty detail. They start with the false implied assumption that land taxes are paid by farmers instead of by landowners, whether the landowner is also the farmer or not; and the income they derive has no likeness to reality.
Here are the facts:
1.Most farmed cropland is rented, not owned, and most of the owners do not have the expertise or equipment to farm the land.
2.MSU shows positive income for 2010-2018. A review of the U.S. Department of Agriculture’s Economic Research Data confirmed by comprehensive MSU Extension Publication 2991 shows negative income over most of these years. Capitalizing negative income would result in a negative value, leading to a negative tax. Leadership at MSU will tell you that income determined for tax valuation and income determined by USDA is like “apples and oranges.” This is an insult to one’s intelligence. There is but one way to determine income, regardless of who determines it or for what purpose: revenue generated from selling the crop less expenses.
Finally, MSU does not even go through the motions. They have simply increased the values each year by the constrained 10% from 2010 to 2017, and 4% in 2018 and apparently in 2019, indicating that they will continue to do so. I would point out that any high school student in Leflore County could, as a public service, have done this simple task without the payment MSU receives for doing nothing.
Consequently, landowners and farmers find themselves in a dilemma with taxes increasing at a 12.84% per year rate since 2009 to $24.70 per acre in 2018. At this rate, taxes will be $82.77 in 10 years and $267.67 in 20 years. At this point, land will have no value to the landowner, as rent will no longer cover the tax bill and farmers will no longer be able to farm the land.
I would recommend two possible courses of action:
1. Landowners and farmers should tell MSU that no further financial support will be forthcoming until this mess is addressed.
2. Farmers, landowners and all discerning citizens of Leflore County should form a caravan of tractors, combines, and cotton pickers and proceed east on U.S. 82 to the MSU campus and demand answers. I would be happy to come down, assist the caravan in demanding answers, and accompany it on my green-and-yellow lawn mower or, if anyone has a pair of mules and wagon, I would be happy to drive it as I did growing up there in the ’40s and ’50s.
I would be happy to expand on this topic to any interested party.