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Holy Cow! How Senators and Movie Stars Use Livestock to Game the Tax Code

Bigwigs are using sheep and cows to gain big tax benefits for themselves at our expense. These loopholes must end.

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"People recoil when you have people that have one beehive taking advantage of a program, and they're not truly farmers," Republican State Sen. Jennifer Beck (NJ) told the Philadelphia Inquirer. "There's a 'fake farmer' charade, and I think when you look at it, there is a moral aspect here, as well as a public-policy problem."

Indeed, states across the country, New Jersey included, have had to slash their budgets in the wake of the Great Recession. And every dollar lost to a millionaire’s donkeys is one less dollar being spent on schools and infrastructure, or going toward middle-class tax relief.

And it’s not only states that hand out agricultural tax breaks to millionaires. According to the Internal Revenue Service, the U.S. Department of Agriculture paid 3,432 millionaires more than $45 million in farm program subsidies in 2009. The Government Accountability Office found that between 2003 and 2009, more than $300 million in farm program payments went to millionaires. (In October 2011, the Senate voted to end farm program payments to millionaires…for one year.)

Congress, of course, could simply vote to end these programs, though the entrenched interests would put up quite a fight, if the years-long battle to abolish ethanol subsidies is any indication.  At the state level, though, where rising property taxes present a real public policy problem, CTJ suggests using a property tax “ circuit breaker” in order to end the reign of the faux farmers.

Such a policy, as outlined by the Institute for Taxation and Economic Policy, means that when an individual’s property taxes exceed a certain percentage of his/her income, the “circuit breaker” kicks in, providing her with tax relief. The breaker would be set such that millionaires making a few bucks off their estates would never pay a large enough percentage in property tax to actually trigger it, but actual farmers would reap the benefits.

This would be a better choice than that made by many states, which simply try to tighten up eligibility requirements or force “farms” to make more in sales in order to qualify for a use value assessment. Colorado, for instance, changed its law so that a person’s residence must be “integral” to the farming operation in order for the tax breaks to kick in. Presumably, Tom Cruise and Goldie Hawn won’t be adding silos to their homes in order to preserve their low tax bills, but the law still has large loopholes that the change didn’t address.

The U.S. tax system is already tilted in favor of members of the 1 percent – and that same 1 percent has collected the lion’s share of a decade’s worth of tax cuts at the federal level – so there is no reason that owning a few cows should let them force their tax bill down even lower. If Sen. Nelson wants to keep letting cows graze on his land, that’s his business. But there’s no reason the people of Florida should have to pay for it.

Pat Garofalo is economic policy editor for ThinkProgress.org. His writing on economic issues has also appeared in the Nation, the Atlantic, the Guardian, and other publications. Follow him on Twitter at @Pat_Garofalo.

 
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