As jobs are being cut for lack of revenue in states, millionaires and billionaires are increasing their revenue due to gaping loopholes in state tax structures.
I wrote a piece earlier this month here about how everybody should pay their fair share of taxes. This came on the heels of G.E.’s revelation that after making $5 billion in profits last year they paid zero taxes. G.E. argued that they filed their taxes as the law prescribed but that can only be speculated on because the defunded and under-manned IRS doesn’t always have enough people to check 25,000-page income reports similar to what G.E. provided the tax agency. Besides, so what if they did? The fact that the tax laws accommodate the wealthy is the problem, not that someone follows them.
Here are a few examples of how very wealthy people in this country and abroad abuse tax laws written initially to help farmers, allowing them to pay almost no taxes.
- Michael Dell of Dell Computers – By periodically hunting and maintaining a “well-managed deer herd” on the suburban Austin ranch he uses as a second home, Dell 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.
- After putting a couple of cows out to pasture, billionaire publisher Steve Forbes, got more than a 90 percent property tax reduction on hundreds of acres on his multimillion dollar estate in upscale Bedminister, New Jersey.
- Korea’s Samsung Electronics – Under a broadly defined Texas agricultural tax law this foreign-owned company was able to qualify for a “wildlife management” agricultural tax exemption on 54 acres of land outside its semiconductor plant in the Northeast Austin. Did chickens and pigs roam the views outside the lab windows at this facility to create a soothing pastoral mood for workers?
In an article “PROPERTY TAXES ARE FOR PARASITES: BILLIONAIRES USE THE “FAKE FARM LOOPHOLE” TO NOT PAY ANY…” by Yasha Levine, found on the eXiled Blog site, we’re informed that “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 [a hard time] 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.” (emphasis mine)
In these economically tough times, where states are cutting school budgets and social safety net programs for children and the elderly retirees, billionaires are lining their pockets with tax revenue that would help eliminate these cuts. These laws may have been set up to help not-so-rich farmers but leave it to conservative state legislators that turn a blind eye to the wealthy as they exploit these laws to the detriment of working class families.
Yasha Levine’s report is an eye-opener on how the politically powerful and wealthy in this country avoid paying their fair share of taxes by masking as farmers. George Bush has done so on his Crawford ranch reducing its taxable value from $2.1 million to $950,000. Back in 1970 Ronald Reagan was able to reduce his tax bill by nearly $12,000 on land that was viewed as “too rugged for serious ranching and almost impossible to farm.”
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 their Florida theme park and reduced their tax liability as they were able to lower the land’s value from $194 million to only $12.3 million under that state’s poorly worded agricultural tax law. Now there’s a “dream come true” for this wealthy interest. In New Jersey “ fake farmers” have sprung up in the likes on Jon BonJovi, Stephen Forbes and the billionaire heirs to Johnson and Johnson by simply making a few cosmetic alterations or additions to land that will never see a traditional farm worker work the soil.
What makes this doubly infuriating is the tact that Congressional Republicans and a few conservative Democrats have taken to balance the budget on spending cuts to vital social programs like Social Security, Medicare and Medicaid. When revenue is available by simply closing these tax loopholes for the very wealthy, the GOP is totally focused on how best to bleed them that have the least in this country.
In his recent fiscal speech at George Washington University President Obama drew a line in the sand on wasteful tax cuts for the rich as he noted: “In the last decade, the average income of the bottom 90% of all working Americans actually declined. The top 1% saw their income rise by an average of more than a quarter of a million dollars each. And that’s who needs to pay less taxes? They want to give people like me a two hundred thousand dollar tax cut that’s paid for by asking thirty-three seniors to each pay six thousand dollars more in health costs? That’s not right, and it’s not going to happen as long as I’m President.”
In light of all this it will be interesting to see how the various parties that influence people and tax policy in politics and the media will skim over this critical information; ignoring that while more people are being laid off from their jobs to accommodate the wealthy tax cuts, billionaires and millionaires are the only ones now living that “American Dream” many so fondly allude to.