TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, November 5, 2011

The Farm Tax Subsidy

Joshua Wilkins (J.D. 2011, Penn State), Clean & Green: Tidying Up the Farm Tax Subsidy, 115 Penn St. L. Rev. 473 (2010):

Agriculture is one of our most important industries, and it is under constant threat. Agricultural operations have been experiencing reduced profits, increased costs associated with working capital, and the expense of complying with ever-increasing environmental regulations. Combined with the developmental pressures accompanying population increases and urban sprawl, the economic conditions for agriculture have made it far less desirable for many farmers to continue operations. As a result, the federal and state governments have enacted several different programs to “save” agriculture.

One such program addresses the property tax burden borne by agricultural operations. Due to increased property demand from urban sprawl, the value of farmlands in many places has dramatically increased. One result of the appreciation in agricultural land value is that the associated property taxes have risen. For many operators, this cost may contribute significantly to unprofitability of the business. One of the primary methods to offset this burden is through providing some form of differential assessment, which lowers the property tax obligation for eligible landowners. Pennsylvania accomplishes this with a program commonly referred to as Clean and Green. Clean and Green provides for lower assessments by valuing eligible agricultural and other lands at their use value, rather than at their fair market value.

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