Submitted by Elaine Magliaro, Guest Blogger
According to T. S. Elliott in his poem The Waste Land: “April is the cruellest month.” I think many of us would agree because April is the month in which we Americans are required to file our annual income taxes. And thinking about who is actually paying taxes these days, has really gotten my dander up.
Today, while many working class and middle class people are trying hard to survive from paycheck to paycheck and when millions of Americans are out of work and unable to find new jobs that pay them a living wage, it’s hard to accept the fact that huge corporations like GE may not be paying any taxes at all while receiving tax rebates. It’s also maddening to see millionaires and billionaires who blew a hole in our economy and nearly caused a financial meltdown getting bailed out with OUR tax dollars.
It appears that the ultra-rich get all the breaks. Still, it seems many of them keep looking for different ways to hold onto their wealth by avoiding taxes while letting those of us who are less fortunate financially pay more than our share. Some of the well-heeled have even found a way to pay less than their fair share of local property taxes. They do that by claiming their large estates and properties as agricultural land. Here are the names of some of the “faux farmers” in New Jersey who have had their real estate taxes drastically reduced: Malcolm “Steve” Forbes, Jon Bon Jovi, E Street Band drummer Max Weinberg, Publishing magnate Donald E. Newhouse, former CEO of Commerce Bank Vernon Hill II, and Robert Wood “Woody” Johnson IV, heir to Johnson & Johnson and owner of the New York Jets football team.
Wealthy gentleman “farmers” haven’t just been gaming the system in New Jersey—they’ve been doing it in Texas, Florida, Iowa, Colorado, Alabama, and in many other states across this country. The tragedy of this tax avoidance by those who can well afford to pay more is that it is costing local governments the revenue they need to run their communities properly.
Several years ago, Art Cory, who was the chief appraiser for Travis Central Appraisal district in Texas, said: “It just seems to me that everyone ought to pay their fair share. That’s not happening now (American-Statesman, 2003). In regard to the agricultural tax break, Cory added, “You can go out and cut some brush, put out some feed and count the deer once a year and qualify.”
According to an article in The Nation, that’s what Michael Dell did with his second home—a suburban ranch in Austin. Because he hunted there periodically and maintained a “well-managed deer herd,” he was able to reduce the property’s 2005 market value from $71.4 million to an agricultural value of $290,000. That saved Dell—but cost Texas—$1.2 million. In 2007, The Wall Street Journal reported that Korea’s Samsung Electronics was able to qualify for a “wildlife management” agricultural tax exemption on more than fifty acres of land outside its semiconductor plant in Austin simply by erecting some birdhouses, eradicating ants, and taking a wildlife census. By doing that, the company reduced its tax bill by nearly 100%–from $21, 080 to $135! It’s sad to note that all the agricultural tax breaks in Texas have cost public schools in the state $1.5 billion in lost revenue.
A Few More Examples of Agricultural Tax Breaks
Colorado: Assessors in the state were reported to have said that even parking lots have qualified for agricultural tax breaks after some cows were brought in to graze on grassy strips between lanes. (Common Dreams)
Florida: Walt Disney World has received a farming tax break on 1,600 acres where it grows plants for its theme parks. At the time this was reported, the land owned by Disney was actually valued at $194 million but was taxed on a value of $12.3 million. (Common Dreams)
Alabama: In Mobile County, Ala., Delaney’s Inc. has planted pine seedlings on 54 acres left over after building a Hampton Inn, Marriott Courtyard, Lowe’s and Wal-Mart. This “tree farm” has been subdivided and laced with paved streets in preparation for development, and local officials insist that the land is not suitable for growing timber. But the developer’s lawyer pointed out that the law doesn’t require Delaney’s to be a good farmer — just a farmer. The result: a 2003 tax bill of $152 instead of $64,230. (Common Dreams)
Here are more details on the wealthy “faux” farmers who have been getting agricultural tax breaks in New Jersey from New Jersey: “Fake” farms get tax breaks (Asbury Park Press)
The rolls of those with farm-assessed land in New Jersey read like a who’s who in the world of high finance, business and entertainment. Those in the rich-and-famous category with approved applications for tax breaks in 2009 and 2010 include:
— Financier Michael C. Price, with a net worth of $1.4 billion, Bedminster: 92 farm-assessed acres, on which he paid $359 in taxes in 2009.
— Robert Wood “Woody” Johnson IV, heir to Johnson & Johnson and owner of the New York Jets football team, Bedminster: 269 acres, $1,470 in 2009.
— Publishing magnate Donald E. Newhouse, with a net worth of $5.4 billion, Hopewell Township: 273 acres, $1,787 in taxes for 2010; in West Amwell, 77 acres, $611 in taxes in 2010.
— Publishing magnate Malcolm “Steve” Forbes, including properties with his wife, Sabina, Bedminster: 450 acres, $2,005 in taxes in 2009.
— E Street Band drummer Max Weinberg, Middletown: 34 acres, $122 in taxes in 2010.
— Rock star Jon Bon Jovi, Middletown: 7.1 acres, $104 in taxes in 2010.
— Lamington Farm Club, under the corporate umbrella of entrepreneur and TV personality Donald Trump, Bedminster: 195 acres; $277.
— John Whitman, husband of former Gov. Christie Whitman, Tewksbury: 167 acres, $1,521; in Bedminster: 65 acres; $173.
— Vernon Hill II, former CEO of Commerce Bank, Moorestown: 29 acres, $79 in 2010.
Now, let’s take a closer look at just one of the New Jersey “farmers” on the list above—Malcolm “Steve” Forbes. I bet you didn’t know that Forbes was into animal husbandry, did you? Well, Forbes actually raises show cows on his property, which qualifies for the agricultural tax break because it generates at least $500 in revenue annually. From The Center for Public Integrity (2000): “His New Jersey farm meets the state’s revenue test, with about $5,500 in yearly income, and he gets the federal write-offs for raising cattle, too.”
The Center for Public Integrity also reported the property that Forbes owns would have been valued at $9 million if he didn’t stock it with his show cows. An assessor had estimated that the land would be assessed at only $160, 531 because of the cows. So…Forbes paid a paltry $2,215 tax bill on his 449-acre estate because prize bovines were grazing there.
Well, there you have it, folks. That’s just one of the ways that the rich hold onto their riches. It’s also one of the ways that our cities and towns are losing out on essential tax revenues that are needed to pay for schools and other community services .
Because April is National Poetry Month, I’ve written another song parody for you in honor of Malcolm “Steve” Forbes:
Old Steve Forbes…He Had a Farm
A Song Parody By Elaine Magliaro (To be sung to the tune of Old MacDonald Had a Farm)
Old Steve Forbes
He had a farm.
E-I-E-I-O
And on that farm
He raised show cows.
E-I-E-I-O
He had moo-lah here.
He had moo-lah there.
He had lots and lots of moo-lah
Everywhere.
Old Steve Forbes
He had a farm.
E-I-E-I-O!
He milked them cows
For tax breaks. True!
E-I-E-I-O
He didn’t need
The money though.
E-I-E-I-O
He had moo-lah here.
He had moo-lah there.
He was a greedy billionaire.
Old Steve Forbes
He had a farm.
E-I-E-I-O
Old Steve was
A farmer—faux.
E-I-E-I-O
He knew how to make
His riches grow.
E-I-E-I-O
Did you hear him say
He’ll keep making hay
While all the little people pay their
E-I-E-I-DOUGH?
SOURCES
This Tax Day, ‘Farms’ Owned by the Rich Provide Massive Tax Shelter (The Nation)
Property Taxes Are For Parasites: Billionaires Use The “Fake Farm Loophole” To Not Pay Any… (Exiled Online)
Senate panel OKs rollback of some Colorado ag-land tax breaks (The Denver Post)
Faux Farmers Milk the System (Common Dreams)
Steve Forbes Cattle Farmer (The Center for Public Integrity)
New Jersey’s Farmland Assessment Act
Why Texas Firms Are Keeping Cattle On the Back Forty (Wall Street Journal)
Owners of $250 billion in property benefit from exemptions, loopholes amid school crisis (Statesman)
“Fake Farmers” Cost N.J. Taxpayers Millions (CBS Local, NY)
“Fake” farms get tax breaks (Asbury Park Press)
It isn’t just farmland of faux farmers.
Few believe that anything but the local school, church, or museum should be tax exempt for property taxes, and certainly if they include housing. Empty buildings tax exempt is far different in community resource use than otherwise, or property held for speculative reasons. Why should all subsidize the wealth of a few, to their detriment?
These are not complex calculations in apportionment!
So what you own animals you get a tax break.
Growing, or renting it out to growers, or to teach kids farming is a waste of land that doesn’t deserve agricultural subsidies.
According to an article in The Nation, that’s what Michael Dell did with his second home—a suburban ranch in Austin. Because he hunted there periodically and maintained a “well-managed deer herd,” he was able to reduce the property’s 2005 market value from $71.4 million to an agricultural value of $290,000. That saved Dell—but cost Texas—$1.2 million. In 2007, The Wall Street Journal reported that Korea’s Samsung Electronics was able to qualify for a “wildlife management” agricultural tax exemption on more than fifty acres of land outside its semiconductor plant in Austin simply by erecting some birdhouses, eradicating ants, and taking a wildlife census. By doing that, the company reduced its tax bill by nearly 100%–from $21, 080 to $135! It’s sad to note that all the agricultural tax breaks in Texas have cost public schools in the state $1.5 billion in lost revenue.
relating to this: Nowhere in this article does it state that Dell pays the Full Market Value upon the structures upon the property, such as the home, barns, buildings, etc. Nor does it mention that he has a property manager doing more than just 3 of the basic requirements. He has an always improving habitat. So, many are just cutting a few paths, trowing out a mineral block and putting out corn, which is not protien for about 3 months, thats the group that need to have their lower valuations revoked.
My opinion, that 1d1 needs to be done away with, and only allow agricultural to the actural purdent producers or agricultural comodities.
Matt,
So right you are…
Just abolish the IRS.
Brent,
Read the actual story….. No one is talking about farmers…… Real farmers….. Just the ones that buy the farm and use it for personal use….. They raise and farm nothing……. Case in point….. You pay taxes on your entire property…… If you put in a garden….. Shouldn’t you be able to call it a farm…. And pay basically nothing in taxes….
Hey wait, i like that idea……
The only reason the “middle class” ever deride the wealthy is that they themselves aren’t wealthy. Taking from the wealthy to give to the poor makes everybody poor. When are we Americans as a whole going to quit whining about our lot in life and work to make it better? I don’t pay a lot of taxes most years, and that is because I stopped using crappy tax software and went to a tax accountant. The savings for LEGAL and QUALIFIED tax credits more than pay what they charge. Stop complaining because somebody else has something you don’t. And stop trying to take my money and give it to worthless people who never go out and actively seek a job. If the average “poor” American was willing to work, we would have less of an immigration issue because the jobs wouldn’t be there. Manual labor such as lawn work and unskilled construction is an opportunity to move up and not beneath your dignified ass. For the record I have done both on my way to a well-paying job, which supplements my farm income or lack of. So screw your sense of entitlement. You want farmers to stop taking incentives, then be prepared to pay more for your food instead of our nation having one of the cheapest food supplies on Earth.
Would it be preferrable if these people sold their land to developers? Then they could develop the former farm land and the towns and states could collect more taxes. Isn’t that what government at all levels really wants?
In Texas, when the land is reverted back to non-ag status, the current owner has to pay “rollback taxes”. This is essentially the difference between the taxes paid under the exemption and what they would have been without the exemption…..PLUS 7% interest on each years assessment from the month it would have been due in that year. This has to happen before the sale of the land closes. I don’t know about other states, but in Texas, it is not a free ride…….it merely pushes the payout down the road. I understand there may be some differences between counties, but this basically the concept.
TH,
If all things are equal and you give the folks at or below the regional adjusted poverty levels….. I think that make the most sense…..
I love the class warfare fight between the investment bankers and traders….. It seems the traders are paying 15% and the bankers about 30% on the same income…. Infighting on wall street is funny, if you think about it….
I do the same exact thing. Partly because the system lets me but mostly because I get rooked on income taxes and this just one way to bring my tax bill back to normalcy. Plain and simple, a flat (fair) tax would eliminate the need to use the aggregate tax system against itself and it ensures that EVERYONE pays their share. Right now, the tax system penalizes entrepreneurs; those willing to risk capital to build something; it’s rewards those who don’t.
Oh yeah.
Don’t hate the player, hate the game.
Or you could hate the players that rigged the rules, in which case hating the player and the game concurrently makes perfectly good sense.
This discussion thread is ridiculous! The issue is not the intelligent wealthy who were smart enough to study the poorly written laws to find more ways to make money. The issue is the poorly written and thought out laws that make this possible. Quit vilifying the wealthy that provide jobs o the middle class and fix the laws.
I notice that everyone on this thread is so concerned about what they perceive these wealthy people or corporations have or have not paid in property taxes, but there is ZERO attention to the money the give to their local communities directly through hospitals, parks, endowments, etc.
Again, fix the law, don’t vilify the people that actually take the time to understand it and make it work to their advantage.
Steve,
“Fatal assumption…..”
Puleeeeeze!
These are local communities that would benefit from your paying your fair share of property taxes, Steve.
These are your local school, police and fire departments, special education. These are your NEIGHBORS and local community services that would benefit. These are areas YOU have benefitted from while you lived there.
Think about it, Steve!
Who else wants to be a deer farmer
Speaking of Colorado, someone might want to test these agricultural tax breaks in Routt County (Steamboat). If so, the following info might help them. Routt County is showing on pin # 222800001 that my former neighbor, Kevin M. Bennett, the convicted drug dealer who was president of the City of Steamboat Springs, has a garage and a guest house that were built in 1950. However, there is a survey registered with Routt County that shows that in 1999 at 701 Princeton Ave there was only a house and a shed, no garage and no guest house. I wrote to Routt County 7/18/2011 via priority mail 420 80477 9405 5036 9930 0162 4690 10 and complained about this being a false government certificate and attached a photocopy of the survey, a photo copy of pages of the building permits, a photocopy of photos of the detached garage with the space above and behind it with Bennetts’ Audi with the license plate number VX88869 visible, and a letter dated 11/26/2001 from the city manager to Kay Sieverding cc the city attorney and the city council discussing the building of Bennett’s garage and guest house. I sent a copy of that to the U.S. Attorney in Colorado via priority mail 420 80202 9405 5036 9930 0162 4689 90 so anyone can get a copy via FOIA. As of this date 8/6/2011, Routt County has not responded to my request to correct the official certificate and my complaints Issuing a false certificate is a felony see C.R.S. 18-8-406 and that knowingly failing to correct it to hurt me or help Kevin and Jane Bennett is official misconduct see C.R.S. 18-8-404.
I think that this information can be used to impeach any of the Routt County Commissioners or the assessor Gary Peterson.
Speaking of Colorado, someone might want to test these agricultural tax breaks in Routt County (Steamboat). If so, the following info might help them. Routt County is showing on pin # 222800001 that my former neighbor, Kevin M. Bennett, the convicted drug dealer who was president of the City of Steamboat Springs, has a garage and a guest house that were built in 1950. However, there is a survey registered with Routt County that shows that in 1999 at 701 Princeton Ave there was only a house and a shed, no garage and no guest house. I wrote to Routt County 7/18/2011 via priority mail 420 80477 9405 5036 9930 0162 4690 10 and complained about this being a false government certificate and attached a photocopy of the survey, a photo copy of pages of the building permits, a photocopy of photos of the detached garage with the space above and behind it with Bennetts’ Audi with the license plate number VX88869 visible, and a letter dated 11/26/2001 from the city manager to Kay Sieverding cc the city attorney and the city council discussing the building of Bennett’s garage and guest house. I sent a copy of that to the U.S. Attorney in Colorado via priority mail 420 80202 9405 5036 9930 0162 4689 90 so anyone can get a copy via FOIA. As of this date 8/6/2011, Routt County has not responded to my request to correct the official certificate and my complaints Issuing a false certificate is a felony see C.R.S. 18-8-406 and that knowingly failing to correct it to hurt me or help Kevin and Jane Bennett is official misconduct see C.R.S. 18-8-404.
I think that this information can be used to impeach any of the Routt County Comissioners or the assessor Gary Peterson.
You make the fatal assumption that the government deserves a hunk of whatever you produce. Rather than making the government live within its means, you assume rich people are evil and need to pay more. You must be liberal.
I wish I was a wealthy farmer. I would take advantage of all these LEGAL holes in the ILLEGAL tax system.