Georgia Merged Family-Owned Farms and Dairy and Eggs Tax Exemption Measure would expand certain property tax exemptions for agricultural equipment and farm products to entities that are the result of the merger of two or more family farms, and also extends those tax exemptions to apply to dairy products and eggs.
Summary
Under current state law, family farms are exempt from paying certain property taxes on a wide range of farm equipment such as tractors, combines, balers, sprayers, and more and farm products such as livestock and crops. Georgia’s 2022 farm tax exemption measure would expand those tax exemptions to dairy products and eggs. The measure would also allow larger farms that are created by merging two or more family farms to qualify for tax exemptions. Equipment must be used for farm production and be owned or held under a lease-purchase agreement to qualify for the tax exemptions, and it does not apply to automobiles and trucks.
Fiscal Impact
Georgia’s poultry industry generates $1.3 billion in tax revenue annually. Information for dairy products and eggs, unfortunately, was not available. According to a representative of the Georgia Milk Producers, the industry’s impact, economically, on the state is estimated at $1.03 billion for the 2021 calendar year, some portion of which is tax revenue. Complete analysis of how this measure would impact Georgia taxpayers was not available.
Proponents’ Arguments
Georgia Gov. Brian Kemp supports the measure. He stated, “There’s no more generational business than a family farm…I know how important small business is to Georgia’s economy, and that’s what Georgia Farm Bureau and the Georgia Agribusiness Council are fighting for in the Capitol every day.”
The agriculture industry also supports the measure because it would provide their businesses with a considerable tax break.
Opponents‘ Arguments
While there is no active organized campaign against this measure, some members of the legislature expressed concerns about giving a selected group a special tax break that other groups do not get.
Discussion
This tax measure is an initiative promoted by Georgia Gov. Brian Kemp and is consistent with his efforts to provide tax relief and other favorable policies for the state’s agricultural sector. Support for the agricultural industry, however, extends far beyond just the governor. Because most of the state’s lawmakers, especially in the Republican Party, also represent constituencies in the rural parts of the state, tax breaks for the agricultural and timber industry have been politically popular.
This measure is very similar to one passed in 2000 that gave a tax exemption for certain farm equipment of family-owned farms for tools and trade implements of manual laborers. In 2006, voters also approved a measure expanding the homestead exemptions and property tax exemptions for agricultural products.
However, a key principle of good tax policy is that taxes should not pick winners. Broad-based tax cuts are always better than narrowly targeted ones that only benefit a select, politically-connected, or popular group. This measure is not a broad-based tax cut. At best, it would expand an existing tax break the agricultural industry already gets to apply more broadly across that industry.
Tax breaks for selected industries are not without consequences. They are not necessarily accompanied by state or local government spending cuts to offset any lost revenue, so the tax burden often shifts to taxpayers or industries that are not as favored by politicians.