Reason #90 to Scrap Property Tax

[Also on KELOLand.com Political Blog Aggregator!]

KELO cheerily reports this morning that farmland values in South Dakota have risen 90% in the past five years [AP, "Farmland Values Increase," KELOLand.com, 2007.10.31]. This information comes from the "rosy economic report" issued by the State Bureau of Finance and Management. (KELO gives a link to the bureau, but leaves us hunting for the actual report, which actually came out on October 1.)

Concomitant with that increase in land value is an increase in the property tax assessment farmers face. Now the assessment may not be going up 90%, but farmers, you tell us: has the ethanol boom brought you increases in income proportional to the increases in your assessment?

Note also that two of the factors cited for the increased land values are "expanding farmers and those who want [the land] for hunting and recreation." Farmers thus face higher tax assessments because other people want to take their land for other purposes. Funny: free market principles should dictate that once you pay good money for something -- land, house, car, pickles -- you shouldn't have to pay more after the sale to keep it just because other people now want what you have.

Consider pickles: suppose you have a big party planned for next month and you buy a big jar of pickles on sale at Madison's Jubilee (soon to be Sunshine). You get it for sale at $10 (it's a big jar). Next week, MDL runs a story saying pickle juice can be used to run your four-wheeler. Suddenly everybody wants to buy pickles. Jubilee/Sunshine owner Dan Roemen comes knocking on your door and says, "Hey, you know those pickles you bought last week for $10? Well, they're going for $19 a jar now, so I need you to pay me another $9."

You'd tell Dan to take a hike, right? If anything, you'd expect him to pay you to get the pickles back and try selling them for a better price. The fact that everyone else wants pickles now doesn't mean you should have to pay more to keep the pickles you already bought, right?

So why do we impose the costs of higher demand on owners instead of the generators of demand with property tax? Property tax punishes landowners who had the good sense to buy early and cheap. Property tax also makes it easier for the rich guys -- in this case, big corporate farmers and wealthy hunters who fly in their overweight corporate jets to tear up our runways and blast away at our countryside for a couple hours -- to push the little guys off the land.

Property tax is unfair from a social justice perspective and from a free market perspective. But then South Dakota's whole tax system is based on unfairness: we tax the house you've already paid for, the food you have to find for your kids, and the ignorance of those who think they can beat the lottery (the house always wins, kids -- read your stats book).

Maybe if they can see through the confusion of the HUH? crowd and the impending election year, our legislature can take some time to look at reforming our wacky tax structure to bring some fairness to all landowners and workers in South Dakota.