Recently some hay was made of the agricultural status of land owned by Terrence Wall, prospective conservative challenger to Russ Feingold. Wall is benefitting from a tax break brought to Wisconsin, in part by Democrats.
Have You Visited Terrence Wall's $2 Million 'Pumpkin Patch'?In July of 2009, using the use-value property tax classification designed to assist farmers, the properties were reclassified as agricultural (G4) and the valuation for each was reduced to $300. Using the tax formula, Wall will likely now pay an estimated $10 in property taxes for the properties – a savings of $34,000.
It's the Great Pumpkin, Terrence Wall It's also the kind of crap that drives voters crazy. The electorate draws no moral distinction between tax avoidance (legal) and tax evasion (illegal). Wall may have to learn that the hard way.
The Problem with Terrence Wall: He's recently come under fire for using sneaky, but legal, means to avoid paying some Wisconsin taxes.
Lets get one thing straight about Farmland Use-Value Assessment.
Democrats are as responsible for this travesty as much as Republicans.
The first step to creating this exemption to the uniformity clause of the Wisconsin Constitution was taken in taken in 1974. The Legislature adopted 1973 AJR 1 to place the proposed change on the ballot. it was a bipartisan action in the Assembly 66 ayes (33 D and 33R) to 32 noes (29 D and 3 R).
Urban leaders repeatedly pointed out that:
- Real agricultural land, away from the urban areas, would get no benefit from the new law.
- The benefits would go to speculators and developers who would get a tax break.
- There would be leap frogging of development over the exempted land.
- That despite the non-partisan Legislative Fiscal Bureau stating, “The purpose of the [use-value] law is to slow urban sprawl and allow farmers to keep their land in agricultural production without burdensome taxation," that would not be the result and developers would get the tax breaks.
All proved to be correct.
In 1970's Milwaukee Mayor Henry Maier and I fought this, and again in the 1990's Milwaukee Mayor John Norquist and I fought the 1990's budget amendment that accelerated the tax breaks.
While advocates of the measure claimed that the legislation was intended to preserve farm land by removing taxation pressures to develop it, all it did was provide a tax shelter for developers and shift $767 million in property taxes to urban and suburban communities by 2002.
It was mostly homeowners in urban areas that picked up the $767 million tax shift.
Democrats played a role in this every step of the way.
I have friends who are developers. They know how I feel about this.
A candid examination of right-wing policies and the Democrats who play along ...
Excellent point(s). Avoidance/evasion, "farmland preservation"/tax shift.
Posted by: Tim M. | November 17, 2009 at 07:29 AM
Thanks for the info. Although I didn't know the history, I've certainly see the effects. You are correct tax avoidance is immoral, particularly for someone seeking a leadership possition.
Posted by: Jim L | November 17, 2009 at 08:04 AM
A little language tweakng, a little political axle grease (i.e., campaign contributions) and the lobbyists persuade the legislators to insinuate loopholes into statutes that benefit the few at the expense of the many.
'twas ever thus.
Posted by: Marius | November 17, 2009 at 09:10 AM
This wouldn't make such a huge difference in a race between Wall and Herb Kohl, the richest member of Congress. However, running against Mr. "Full disclosure, poorest member of the Senate," hiding $34,000 might make a bigger difference.
Posted by: The Sconz | November 17, 2009 at 09:33 AM
Paul:
I remain a supporter of Farmland Preservation and the tax treatment provided for agricultural lands. I do agree, however, that lands, once platted or rezoned to permit development should not receive any tax breaks and should be assessed at their best potential use.
I disagree that the farmland tax treatment has not provided benefits. In my own Township of Primrose (Southern Dane County) all the land has been under real pressure to be developed into residential uses. But the farmland preservation tax treatment has had the effect of markedly slowing any such development. The Town and its residents, have instituted very restrictive land use requirements that prohibit building or crossing to build upon agricultural lands plus there are probitions on building near waterways, on steep slopes etc. plus a requirement to 'cluster' development when it does occur. The result is that Primrose actually has fewer residents today than we did in 1974 when farmland preservation was enacted. (We do have a small increse in new housing of approx 1-3 per year, but smaller family size combined with slower growth have kept the population below that of 1974 while also preserving virtually all agricultural land and all sensitive lands)
As a practical matter, all residential housing (including that as part of farms) have seen a sharp increase in assessment but the actual agricultural and conservation lands have not. The farmland preservation tax treatment has enabled our town to implement effective land-use control.
I would suggest--instead of trying to throw the whole thing out--that some changes to the implementation of the law allow a full assessment on those lands that are legally prepared for development regardless of pumpkins or corn or whatever--and that the land owner who feels agrieved be simply allowed to rezone and deplot their land back to agricultural permitted use to receive favored tax assessment.
And yes, I know that this was a constitutional amendment and that it is based upon use, but I also believe that this would be legally permitted if the statutes governing implementation were revised accordingly. It would be fair to do this if effected landowners were given a relatively short window (say two years) to re-establish their agricultural bonfides by going back to exclusive agricultural zoning. Otherwise, I agree, they should pay the full tax.
regards,
JB
Posted by: Jonathan | November 17, 2009 at 11:31 AM
In Mount Horeb a discussion was introduced to consider an Ordinance change that would no longer allow agricultural uses within Commercial and Industrial Zoning Districts. There will be further discussion on this at future Plan Commission meetings.
Residents who want to live near farming operations most likely live in townships. Theoretically, urban residents may not want tractors, manure, or the rodents that are part of rural farm operations in their back yards.
If Middleton did not allow agricultural uses in its Commercial zones, Wall would not have had permission to plant a (commercial farming operation) pumpkin patch in an urban area and the state law would have avoided this challenging and negative press.
Posted by: urban resident | November 17, 2009 at 11:52 AM
Please, this notion that tax avoidance is immoral is absurd. If it's unfair, change the law. Otherwise identify a single person who pays more than required by law because they feel the law doesn't tax them enough. I promise you anybody pontificating that taxes should be paid where no liability exists, is not facing that dilemna. Their deductions and exemptions are just fine.
"My mortgage interest deduction is a good thing, but your capital gains rate is immoral."
I think Huey Long put it best: "Let's not tax me and not tax thee, let's tax that man behind the tree."
Posted by: Bob Morant | November 17, 2009 at 11:55 AM
'I think Huey Long put it best: "Let's not tax me and not tax thee, let's tax that man behind the tree."'
Actually, I think that was Senator Russell Long...
This is a very useful post, Paul.
Posted by: Alderman Steve | November 17, 2009 at 02:18 PM
Would turning this into a tax deferment fix the scam?
So long as the land remains in agriculture, the difference between the tax paid and the tax that would have been due as developed land is rolled over. If and when development occurs, there's a bill due for the deferred tax, plus a rather high interest rate.
Posted by: Ben Masel | November 18, 2009 at 12:47 AM
T. Wall is against socialized healthcare* but he loooooooooves his socialized TIF. And now find out that he's also involved in those commie pinko pumpkin patch collectives. Reagan must be rolling over in his grave.
*http://ibmadison.com/againstwall?id=215
Posted by: Carlo Ponzi | November 19, 2009 at 12:09 PM