Subscribe
Jobs
Cars
Real Estate
Apartments
Classifieds
Shopping
The underassessed value of farmland is yet another example of the inequities inherent in Indiana’s property-tax system.
Now, that statement, while completely true, is certain to anger many Hoosier farmers. And, frankly, no one wants to get on the bad side of farmers – not only because farmers are generally honest people working hard to put food on everyone’s table, but because farmers are a mighty powerful political force.
Residential and business property owners are taxed based on the fair market value of their land – although many property taxpayers are quick to point out that the subjective nature of the assessment process means the value placed on properties too rarely reflects market value. But Indiana, like most states, assesses agricultural land based on use value rather than the fair market value.
Under state law, the Department of Local Government Finance calculates farmland value using a six-year rolling average of the use value of the farmland in the state. The final calculation takes into consideration the farmer’s cost of doing business, soil conditions and the amount of income farmers receive from crop sales.
Farmers will rightly argue that they make easy scapegoats for angry residential and business property owners because increased demand for Indiana crops is driving up farm profits, but people need to keep in mind the precarious nature of farming and the dismal profits farmers make when farm yields and crop prices drop. But the taxman never gives a break to homeowners who lose their jobs or otherwise have a rough year and struggle to pay the bills.
Farmers, like most Indiana property owners, are also seeing an increase in their property tax assessments. According to the Department of Local Government Finance, the assessed value for Indiana farmland is going up from $880 per acre to $1,140 per acre. But the value of farmland is much higher. The June 2006 Purdue Land Value Survey showed that the value of farmland statewide is increasing. According to the report, the value of cropland of average productivity quality is $3,162 per acre. The average value of transitional land – land farmers are selling for non-agricultural use – was $7,750 per acre in 2006.
Property taxes are not based on the property owner’s ability to pay. The answer is not making farmers pay more, but in making the system more equitable. And perhaps, shifting some of the burden away from property taxes.
