Property Taxes Are For Parasites: Billionaires Use The “Fake Farm Loophole” To Not Pay Any…

Class War For Idiots / April 14, 2011

By Yasha Levine

Michael Dell: “I’m smiling because I force Lone Star peasants to pay my property taxes!”

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A version of this article was first published by The Nation…

For all those feeling the pinch this Tax Day, rest assured America’s wealthiest one percent have no idea what you’re going through. Not only have they shaved over a $100 billion off their income taxes thanks to Bush’s tax cuts for the rich, but, thanks to misuse of agricultural tax breaks, many did not have to pay their property taxes, either.

Take Michael Dell, founder of Dell Computers and the second-richest Texan, who qualified for an agricultural property tax break on his sprawling 1,757-acre residential ranch in suburban Austin and saved over $1 million simply because his family and friends sometimes use the land as a private hunting preserve to shoot deer. Or take billionaire publisher Steve Forbes, who got more than a 90 percent property tax reduction on hundreds of acres of his multimillion dollar estate in upscale Bedminister, New Jersey, just by putting a couple of cows out to pasture. They are not alone. All across the country, a huge number of America’s wealthiest are tapping into agricultural tax breaks—and none of them have to do any real farming to qualify.

Not only are agricultural tax breaks allowing wealthy landowners to shift their tax burden onto other less-affluent taxpayers, but they are also helping bankrupt public schools, which derive the bulk of their funding from local property taxes.

Agricultural tax breaks got their start in the 50s and 60s, as a response to the explosive growth of suburban development, which was encroaching on farmland and raising agricultural property values to the point where farmers were having paying their tax bills. Fearing that this would pressure farmers into selling out to developers, states began granting exemptions that allowed agricultural land to be assessed at rates well below market value. The practice, called use-value assessment, is today used by all but one of the fifty states to artificially deflate the value of farmland, frequently by 90 percent or more.

The plan looked good on paper, but in the real world it was quickly manipulated to steer money to the rich.

Steve Forbes: “Mmmm-ummmm. Check out the tax-saving udder on that baby!”

Many states expanded the definition of “agricultural land” beyond land that was farmed to land that simply had not yet been developed. In South Carolina, all it takes is five acres of trees to qualify for a tax exemption. New Jersey requires that a landowner have five acres, but also sell $500 of agricultural goods a year from their farm. Steve Forbes and his wife, Sabrina, qualify for their exemption by breeding show cows on their 450-acre Bedminster estate. “You don’t make money selling hamburger meat. You make money breeding show cows; that’s the name of the game,” Forbes told Fortune magazine in 1996. Florida requires a couple of cows or a herd of goats, which don’t have to be on the property all the time. Texan law is so broadly defined that the PGA Tour golf resort in San Antonio has been trying get recognized as a “nature preserve” to get a farm tax break.

“You can go out and cut some brush, put out some feed and count the deer once a year and qualify,” a tax appraiser from Travis County in Texas told The American-Statesman.

That’s exactly what Michael Dell did with the suburban Austin ranch he uses as a second home. Periodically hunting and maintaining a “well-managed deer herd” reduced the property’s 2005 market value from $71.4 million to an agricultural value of $290,000, which saves him—and costs Texas—$1.2 million a year.

It’s all perfectly legal under Texan law. As long as property owners stick to the state guidelines, country officials have no right to deny them agricultural status. Korea’s Samsung Electronics qualified for a “wildlife management” agricultural tax exemption on 54 acres of land outside its semiconductor plant in the Northeast Austin by putting up a few birdhouses, eradicating ants, and taking a wildlife “census,” which reduced its tax bill from $21,080 to just over $135 (a reduction of over 99.4%), reported the Wall Street Journal in 2007. If wildlife isn’t your thing, dedicating a few acres to Christmas trees is enough to qualify for a property tax exemption under “timber production,” which is exactly what Hewlett-Packard opted for on its corporate campus in Houston. The company saved half a million dollars in property taxes in 2004, despite the fact that it openly plans to develop that land.

The exemption is such a money-saver that it’s hard to find rich Texans who aren’t moonlighting as farmers on their estates, and that includes President George W. Bush.

Bush has used the farm-tax dodge scheme on at least two properties in the last two decades. When he was governor of Texas, Bush’s lakeside home near Athens, nestled in a secluded pine forest shared with a few other high-powered homeowners, lost its agricultural tax exemption, but was then promptly redesignated as “scenic land” under a similar law and taxed at massively reduced value of $101,770. In 1998, his tax bill was a measly $543.07. (The owner of a $100,000 home in a drab tract development on the very outskirts of Austin would pay somewhere around $3,000.)

After a hard day’s work executing mentally retarded minorities, Texas Governor George W. Bush sought refuge and solace at his rustic lakeside farm, comforted by the fact that he paid no property taxes…

Bush was cleared for another agricultural tax exemption a few years later on his new 1,582-acre ranch in Crawford, Texas, which reduced its taxable value from $2.1 million to $950,000, according to an AP investigation. In 2003, the year American invaded Iraq, the tax break saved Bush $23,679 in property taxes. Bush might have been a disastrous president, but he sure is good at tax-avoidance schemes—which is good for him, considering that Texas has one of the highest property tax rates in the nation.

While there is no definitive national study about the use of agricultural tax breaks, a patchwork of reports and investigations carried out by local news organizations over the past decade makes it clear that the exemptions are not being used as originally intended. All across the country, agricultural land is being used by wealthy landowners to dodge paying their share of property taxes. And it has been going on for decades.

Here are just a few examples:

* In the mid-1970s, then-California Governor Ronald Reagan was approved for an agricultural exemption by agreeing to not develop his 688-acre Santa Barbara ranch, which shrunk his tax bill from $12,600 to $1,100. The ranch was classified as farmland, despite the dubious fact that it sat on land “too rugged for serious ranching and almost impossible to farm,” reported UPI in 1974.

* In Florida, Walt Disney World planted a few trees and flowers and put some cows to pasture on its 1,600 acres of undeveloped land adjacent to the theme park. The company told the AP that it planned to develop the land in the future. In the meantime, Disney was content to pay taxes on the $194-million property as if it was worth only $12.3 million. Disney isn’t the only one taking advantage of Florida’s tax loophole. In 2004, two-thirds of the top 60 tax exemption recipients in South Florida were not farmers.

* A recent investigation by New Jersey’s Asbury Park Press found widespread abuse of agricultural tax breaks throughout the Garden State, where “fake farmers” qualified for tax exemptions simply by growing weeds or letting cows roam on their front lawns. Jon Bon Jovi, Steve Forbes and the billionaire heirs to the Johnson & Johnson fortune (one of whom is trying to build a helicopter pad on his “farm”) are just a few of New Jersey’s megarich who pay pennies on the dollar in property taxes.

Just another day at the Reagan Ranch: the Gipper and Papa Bush swap tax-dodging tips over a light lunch…

While there are plenty of real farmers who legitimately claim the tax exemption on their land, every year tens of billions of dollars in state and municipal revenue is lost due to farm tax breaks claimed by those who abuse the loophole.

California’s Monterey County loses about $1 billion a year due to a farm tax reduction program, in which 30 percent of all private land in the state is enrolled. In Texas, the state comptroller said that $409 million in agriculture tax savings goes to out-of-state interests, and $500 million goes to Texan families with incomes greater than than $90,000. Meanwhile, in Wisconsin, a study of a few counties revealed that half the land receiving agricultural tax breaks was owned by real estate developers. The report even included hilarious photographs of these subsidized “farms” being advertised as future shopping centers and tract home developments. One of them had a big yellow For Sale sign that read: “Great Restaurant Location.”

But while wealthy landowners and developers reap massive tax breaks, average Americans are forced to foot the bill. To recoup revenue lost to tax breaks given to phony farms, municipal governments have simply ratcheted up their taxation on the rest of us. Counties have raised taxes on non-agricultural property, cut services, and increased sales tax rates. (In fact, we can thank farm tax breaks for giving us the gift of the regressive sales tax, which has become the biggest source of tax revenue for local governments, outpacing property taxes. All across the nation, the rise in sales taxes coincides with the appearance—and expansion—of property breaks for the wealthy landowners.)

Raising taxes and cutting services for the benefit of speculators? Sounds a lot like an IMF austerity program designed to squeeze every last drop of money from impoverished nations. And in many ways that is exactly what agricultural tax breaks are doing to municipal governments by sucking money out of public services, including public education.

In Texas, agricultural tax breaks cost public schools $1.5 billion in lost revenue, according to a 2005 investigation by the Houston Chronicle. Just the tax break Michael Dell got on his $71.4 million suburban Austin ranch cost the local school district $1.2 million in lost revenue in 2005. But instead of trying to recoup these funds, Texas is considering cutting at least $3 billion from public education in order to close the state’s staggering $25 billion budget shortfall.

Rural areas, which have a smaller and less diverse tax base, are being disproportionately affected. In southern Pennsylvania, the tax shift from agricultural exemptions increased taxes on non-agricultural properties by 27 percent, said State Rep. Bryan Cutler. But even that has not been enough.

Two school districts in Rep. Cutler’s district each lose roughly $5 million a year in funds as a result of an increasing number of properties being enrolled in the state’s “Clean & Green” agricultural tax exemption program. For one of the districts, the loss represents nearly 10 percent of its annual budget—or $1,200 for each one of its students.

“The poorest population in our county is bearing the responsibility to provide green space for the county while our wealthiest areas bear little of the responsibility to assure there is green space in the county,” wrote Thomas L. Newcome, superintendent for the Octorara School District, in a testimony prepared for the Pennsylvania’s state legislature in 2009, while it was debating a bill that would help offset the drop in municipal revenues due to agricultural tax breaks. “The very people that pay more to provide a resource for others – their children receive less.”

Pay more; get less. That’s the brutal reality facing kids and parents today. And it is only going to get worse.

The financial threat to public education and other government services has only become more acute since the collapse of the financial and real estate markets. Just in 2010, home values dropped by $1.7 trillion, further eroding the property tax base that public schools rely on for revenue.

You would think that closing this loophole would be a high priority for cash-strapped states and municipalities. But apparently not. A few states, including California and Denver, plan on making minor adjustments to their farm property tax rates, but not much else. And it is not a partisan issue, either. It seems state legislators from both parties are more keen on slashing social spending, perfectly willing to plunge a whole generation of Americans into ignorance and poverty just so that a small number of millionaires and billionaires can keep dodging their property taxes.

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Yasha Levine is an editor of The eXiled. You can reach him at levine [at] exiledonline.com.

Want to know more? Read Yasha Levine’s award-winning exposé: “Manhattan’s Welfare Kings: How Billionaires Turned Farms Into Personal Tax Havens and Petty Cash Machines, Allowing Them to Give Less, While Taking More.” Then check out his reporting on California’s water wars: “The Story of How Beverly Hills Billionaire Farmers Stewart and Lynda Resnick Have Privatized California’s Water Supply.”

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20 Comments

Add your own

1. Karen | April 14th, 2011 at 3:18 pm
As Reagan Always Said: “Trust But Verify”
2. Mike | April 14th, 2011 at 4:13 pm
The plutocrats aught to have their mansions and ornate hunting and ski lodges burned to the ground. The ashes will feed the soil and provide for real nature preserves and farms.
I sympathize with many of the victims: those living in rural areas on Indian reservations, family farmers, multi-generation small town workers, etc. On the other hand, we should acknowledge that part of the problem is suburban sprawl. Racist white folk move as far away from the city as they can just to get away from people of color, and are surprised when there’s no infrastructure, no local money for schools, etc.
3. Duarte Guerreiro | April 14th, 2011 at 4:51 pm
Death by tax war, the faith of XXI century peasants.
I wonder if we will start to see poachers of wildlife hunting on “noble lands” like in the Middle Ages. Next thing you know half these rich fucks will go all friends of the animals and start demanding the death penalty for anyone who kills their prized show cows to feed their families, like they did in ye old feudal days.
4. so | April 14th, 2011 at 5:30 pm
If I become rich enough, how can I exploit this loophole? What’s the bare minimum I need to do?
Lol, this country is so fucked in the ass that I know jackshit ain’t gonna be done about this or any controversy. Unless you’re on Bill O’Reilly you may as well be deranged Commies to 99% of “Real Uhmerica.” And what you say is a threat to the billionaire class, so Mr. Murdoch will keep your ass off of tv. Thank Keith Olbermann that Msnbc became left-wing/intelligent/cool enough to let Ames on tv.
Anyway, my only reaction to this article is, “I may as well get in on the stealing since nothing will be done about it.”
5. Fissile | April 14th, 2011 at 6:09 pm
@Mike #2,
The racist White folk are actually moving back into many old city centers, as recent Census results have documented. For the first time in decades, Manhattan is becoming richer and whiter. The new America looks like this: Rich White people in places like Manhattan. Working class brown people in the first ring suburbs of New Jersey. Blacks and other “worthless” people in rural wastelands, like Northeastern Pennsylvania.
As for “farms” being used as a tax dodge, it’s been going on for decades. One doesn’t normally associate farm with New Jersey, but I’ve been to a number of New Jersey “farms” that have Manhattan views. I use to mention this to people and was told that I was a bitter, loser and should keep my commie mouth shut.
6. Samod | April 14th, 2011 at 7:11 pm
Mike and Fissile, what the hell are you talking about? Granted the white flight of the ’50s and ’60s was due to racism, but the modern white migration back to the cities is mostly composed of middle/upper-class yuppie Democrats looking for ‘diversity’ (and ironically driving out said ‘diversity’ through skyrocketing property prices) and/or cheap houses to flip.
The urbanised whites are more likely to attend “white privilege” seminars with Tim Weiss than cross-burnings with Brother Ross.
7. Nazidethpig | April 14th, 2011 at 8:38 pm
You guys keep bumming me out. Why do I keep returning?
8. wengler | April 14th, 2011 at 10:57 pm
The GOP is a wasteland filled with the cult of anti-taxers. This religion was propagated by St. Ronald and funded through massive deficits. ‘Americans can have their cake and eat it too!’ exclaimed St Ronald, and as the disgustingly rich got more disgustingly rich the little people shrugged their shoulders and took advantage of all of the consumer credit the idle rich were willing to extend.
It was a trap of course, but the anti-taxers are now demanding human sacrifices to keep their religion alive. They seek to spread misery in the name of their religion throughout the land, because they pretend it will transform in the country into some sort of 18th century wonderland.
9. cambells soup | April 14th, 2011 at 11:34 pm
If all you have to do is plant some weeds or take a census, then everybody can get into this. Seems like this loophole would close pretty quickly once the proles got in on the action.
10. SJJ | April 15th, 2011 at 12:16 am
Hey there sock puppet kiddies! I’m Sammy the New Media Strategy Sock Puppet and I want you to repeat after me this very important Libertard Pledge of Allegiance which I just learned here today! Ok? Put your hand on your heart… Here we go: “I, pathetic libertard troll, who would starve on the street if not for institutional support from right wing billionaires whom I serve, despite the fact that they pay me minimum wage and make me work over time, pledge an allegiance to eXiled editors, and the supreme media empire which they rule, to not paste dumbshit libertard links as was I was commanded to do by my overpaid rightwing republican boss, and promise to stop masturbating over and over to the memory of when David Koch once asked me to lick dog shit off his boot. Amen.”
11. Adam | April 15th, 2011 at 8:03 am
Lol wut?
12. franc black | April 15th, 2011 at 8:06 am
This is really easy to fix, if you can get one or two jurisdictions to set an example. A pan-USA media campaign will take care of the rest. This report could trigger it. Well done.
As for all the ‘burn it to the ground’ stuff … shut it ! You’re part of the problem. It’s not about class warfare, it’s a small elite being opportunistic and some simple policy changes could make it right.
Come on USA, you’re becoming such a friggin’ basketcase !
13. Mexican Tornado | April 15th, 2011 at 8:07 am
Sounds awesome! Thanks for the tip!
14. Brent | April 15th, 2011 at 8:18 am
I’m buying a couple of cows today!
15. Stephen Chudyk | April 23rd, 2011 at 4:13 pm
it would be a tragic and serious mistake to put a Republican in office, i want all colors to join together and get rid of these blood suckers!!!!!
16. Pete | November 20th, 2013 at 9:31 am
Instead of whining about the rich getting tax breaks perhaps you should consider why the government has to steal so much tax from everybody in the first place. What exactly do we get for the money? Overseas wars that we lose? Bank bailouts? Repressive laws enforced by trigger happy thugs? Do away with taxation and we do away with the means that the rich use to steal from us.
17. William | December 3rd, 2014 at 9:53 am
Taxation is THEFT.
The rich guys are a little smarter than the average folk and avoid as much taxes as they can without getting into trouble with the unconstitutional tax laws.
Don’t pretend that you wouldn’t do the same if you knew how.
Then again, I’m obviously not rich or I wouldn’t be wasting time commenting here. And any rich person would sooner have the police arrest me than allow me onto their property. Still, I’m going to spend my worthless time trying to suck up to the rich who despise me by posting comments on social media. Because by gum that’s who I am.
18. Alex West | December 27th, 2015 at 9:48 am
I really don’t care and I would do it too. Who the hell wants to pay exorbitant taxes?
19. Required | April 11th, 2017 at 3:20 am
Property taxes ARE for parasites – and the government is the ultimate parasite feeding off of the host American population. Think about it. Taxes have ALWAYS been paid to the king, the emperor, the landlord, the aristocratic class, the feudal lord, the land baron, IOWs THE MAN.
And yet, here we have this malcontent Communist/Socialist layabout ne’er-do-wells bludgeoning American common sense and using their invincible stupidity to actually TRY and convince Americans that TAXES and GOVERNMENT are not only good but that we need MORE of BOTH!!!
Something humanity, leading up to and beyond the founding of America had sought for NOT HUNDREDS BUT THOUSANDS OF YEARS TO ESCAPE AND FIND ANOTHER – BETTER WAY
ergo SELF-GOVERNMENT
Think about the boundless freedom Americans had up until the era of big government descended upon them like a hellish specter. You could, as a 16th, 17th, 18th, 19th and even 20th century man 1. Go out into the wilderness 2.find a place miles away from any “incorporated town, city, whatever 3. Build yourself and your family a home – free from the heinous and stupid city Vogons called “inspectors” who wouldn’t know the Bauhaus from the Outhaus school of architecture 4. Plant a garden, hunt, trap, fish and 5. Live his ENTIRE LIFE free from the blood-sucking, lazy, worthless volumes of parasites that make up the gubmint.
ANYONE could do this.
Whereas now, because of the CREEPING Socialism propagated by the very same bankster parasite rentier class that propagated it in Russia then the rest of Europe and finally to America – because of these pieces of sh*ite, ONLY the wealthy can now enjoy this kind of freedom, and even they have to deal with the parasites of government.
If there is one lesson to learn from the Revolutionary War and the creation of the US Constitution and Bill of Rights, it is – small, limited government is what was and is intended for America. Jump from then to now and we have a behemoth tyrant, a leviathan, a criminal organization of Byzantine complexity that is now joined at the hip and in lock step with globalist private banksters who have been given UN-Constitutional power and authority to create America’s money – a money that has zero relation to the Constitutional law that is very clear as to whom and how American money shall be created.
To truly know how UN-Constitutional Federal, State and Local governments have become – ask yourself this simple question: If I am struck by/harmed by a police officer/government employee, what will happen to him vs if I strike/harm a police officer/government employee what will happen to me?
There are at present more than 25 MILLION government employees.
Frankly, nobody gives a G-D damn about taxes to pay the salaries of these parasites and to pay the interest on the debt created by their bankster masters.
According to the Constitution, the Founding Fathers and all original writings of the founding of America – The people of the United States of America should be free to live a life whereby they owe no – ZERO taxes – to THEIR government, least of all a TAX on their labor, their work, the sweat of their brow – which have always, throughout all of history, considered
S L A V E R Y. If you are taxed 100% on your labor or work product you are 100% slave. If you are taxed 10% on your labor or work product you are 10% slave.
The government in America has gone far beyond its Constitutional mandate of
1. Protect the American people from foreign invasion or having your life, liberty and/or property taken by a big/rich/any other kind of thug
2. A redress of grievances e.g. Constitutional courts of law
It’s such a simple and elegant idea. It worked great for Americans for the most part and gave America the longest uninterrupted economic, trial and wealth expansion from the founding up until 1913 and the simultaneous creation of the Federal Reserve Bank and their coercive money & property thugs the IRS (Yes, the IRS was created expressly for the private Federal Reserve bank to enforce their tax laws on the American people and make them pay – at first only to corporate entities and then everyone else – at first 1% Federal Income taxes and then. . . the nightmare percentages and amounts they FORCE Americans to pay today.
From 1% . . . . . . . . . .
To as high as 91 F*cking PERCENT
It is far past time to ABOLISH the Federal Reserve AND the IRS.
We don’t need either one.
We never have and we never will.
We would have no poverty
No homelessness
No hunger
IF it were not for these 2 very evil, very corrupt entities.
20. Slugger | November 19th, 2017 at 7:01 pm
Gotta agree with “Required”, no. 19 above. What the hell are you all complaining about? You want MORE money for the government to waste? Are you saying that if you busted your ass for the last 30 years creating a very successful business that you would volunteer MORE money to government in order for it to provide more of the incredibly wonderful services it offers? Don’t think so. I think you’re all a bunch of whiny crybabies that want someone to give you stuff. It’s that simple…