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)