How many acres do you need to be considered a farm for taxes

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The classifications of the farm tax rates are dependent on the acreage of the property. The IRS classifies a farm as any land used primarily or occasionally to produce crops, livestock, or other agricultural products.

There are about 10 million farms in America, cultivating around four billion acres of land. However, the definition of “farm” is vague and many owners of single family homes may be considered farmers. To understand how many acres you need to be considered a farm for tax purposes – check out answers to frequently asked questions below.

The answer to this question depends on the county in which you live. Many counties have their own rules about what constitutes a farm, but the federal government has set a minimum threshold of 10 acres for any property to be considered a farm for tax purposes.

In addition to the number of acres, some counties have additional requirements for what types of animals or crops need to be present on your property in order for it to be considered a farm.

According to the Internal Revenue Service, to be considered a farm for tax purposes, you must have at least $1,000 in gross receipts from farming. In other words, if you’re making at least $1,000 from selling your crops or livestock and/or other agricultural products (such as eggs or milk), you’re a farmer.

What is the definition of a farm?

A farm is a tract of land cultivated for the purpose of agricultural production.  A farm is classified of having $1,000 or more of agricultural products  being produced or sold.  A Small Farm, according to USDA census is a farm that is 179 acres or less in size, or earns $50,000 or less in gross income per year.

What is “land use tax” & how does it affect me as a landowner?

Land use tax assesses the real estate base on the “use value” instead of “fair market value”.  “Use value” is the agricultural productive potential of the land.  This gives the landowner a reduction in his or her real estate taxes.

To be eligible for present-use values, a farm unit consisting of one or more tracts must meet the following requirements (North Carolina G.S. 105-277). 

To apply for the Present use value contact your local tax assessor’s office.

Forestry

Why Do I Need a Woodland/Forestry Managment Plan?

If you’re like most woodland owners, you know the sense of pride you gain from being a good steward of your land. But you may not realize that your woodland property could be working harder for you and your family, providing more of the benefits you value most. It all starts with a plan! Typically prepared by a forester or other resource professional and customized for your unique property and interests, your woodland plan is an essential roadmap for going forward.

There are numerous financial and environmental benefits to having a woodland plan. Notable benefits include but are not limited to:

  • significant property tax savings
  • costshare program eligibility
  • getting connected with the right forestry professionals
  • understanding how to protect your woods and its resources
  • making it easier to pass your woods onto future generations

What qualifies as a farm in Alabama?

According to the United States Department of Agriculture, “A farm is defined as any place from which $1,000 or more of agricultural products were produced and sold, or normally would have been sold, during the year.”

This definition takes into account that farms that may not have sold $1,000 or more of products in a specific year, but normally do every other year. According to the USDA, these tend to be smaller farms that experience low sales in a particular year. These farms tend to be very small and normally have profitable seasons. In some years, however, they experience low sales due to bad weather, disease or changes in marketing strategies. 

IRS definition of what qualifies as a farm

According to the United States Internal Revenue Service, a business qualifies as a farm if it is actively cultivating, operating or managing land for profit. A farm includes livestock, dairy, poultry, fish, vegetables and fruit.

Individuals or businesses that meet the definition of farming may be able to deduct certain farm-related expenses or losses as part of their annual tax filing.

The IRS does, however, make a solid distinction between a production farm and a so-called hobby farm in which an individual grows and sells small amounts of produce or other crops or livestock in addition to their regular employment off the farm. While the income generated from these hobby farm sales must be declared when filing taxes, if it does not represent your primary source of income, you do not qualify as a farm according to the IRS.

How do I get a farm exemption in Alabama?

Can a certificate of exemption be issued to a farmer?
No, the department does not issue certificate of exemptions to farmers. However, there is an exemption form for certain agricultural purposes found in Section 40-23-4.3, Code of Alabama 1975. A taxpayer may print the form and fill it out; and give it to the vendor. Most farming products are not exempt from sales and use taxes but are taxed at the lower farming rate.

What qualifies as a farm in Oklahoma?

Section 710:65-13-15 – “Agricultural production” defined; taxable and exempt transactions
(a)Definitions. For the purposes of this Section:
(1)”Agricultural production” and “production of agricultural products” is limited to what would ordinarily be considered a farming or ranching operation undertaken for profit. The term refers to the raising of food crops or livestock for sale. Included within the meaning of “agricultural production” and “production of agricultural products” are ranches, orchards, and dairies. Also included is any feedlot operation, whether or not the land upon which a feedlot operation is located is used to grow crops to feed the livestock in the feedlot and regardless of whether or not the livestock fed are owned by persons conducting the feedlot.
(2)”Farmers” means persons engaged in agricultural production or production of agricultural products.
(3)”Farming” or “ranching” means the production, harvesting or processing of agricultural products.
(4)”Livestock” means cattle, horses, sheep, goats, asses, mules, swine and also chickens, turkeys, and other domesticated fowl. It also includes American bison, emus, ostriches and llamas.
(b)Examples of persons engaged in farming, ranching or agricultural production. Besides the persons defined as farmers and ranchers above, the law recognizes persons engaged in the following types of activities, whose aim is the making of a profit, to also be engaged in farming, ranching or agricultural production:
(1) Wholesale divisions of nurseries are considered to be farmers and the planting, growing, cultivation and harvesting of shrubs, flowers, trees and other plants for sale in the wholesale division of a nursery operation are defined to be farming operations.
(2) Persons who plant, cultivate, and harvest sod for commercial sale are also considered to be farmers.
(c)Examples of persons who are not engaged in farming, ranching, or agricultural production. The following activities do not qualify as farming, ranching, or agricultural production:
(1) Operation of commercial greenhouses;
(2) Operation of plant nurseries, except their wholesale divisions;
(3) Catfish raising;
(4) Ownership of livestock solely for one’s own use for pleasure riding, trail riding, performance riding, participation in horse shows, or racing; and,
(5) The raising of cats, dogs, other fur-bearing animals not included in the definition of livestock, or non-domesticated fowl.
(d)Sales of feed, fertilizers, biologicals, and pharmaceuticals. The statute provides an exemption from sales tax for sales of certain items, such as feed, fertilizer, pharmaceuticals, biologicals, seeds, plants, and pesticides, when sold to a person regularly engaged in farming or ranching, for profit, and the items are to be used and in fact are used in agricultural production. Sales of agricultural fertilizer, pharmaceuticals and biologicals sold to a person engaged in the business of applying such materials on a contract or custom basis are specifically exempted from sales and use tax.
(e)Sales to persons other than farmers or ranchers. Sales of tangible personal property are subject to the sales or use tax under this rule, if the sales are to persons other than a farmer or rancher, regularly engaged in business for profit, or if the sales are made to a farmer or rancher, but the property is used or consumed for a purpose other than the production of agricultural products for sale.
(f)Sales for personal use. Sales to a farmer or rancher of fuel, clothing, and all other tangible personal property for personal living or human consumption or use are taxable. Sales of tangible personal property are taxable when the property is used in producing food or other products for personal consumption and not for sale. Similarly, sales of seed, fertilizer, equipment, etc. to anyone for use on homes, gardens, lawns, parks and golf courses or for use by landscape gardeners are taxable.
(g)Farm machinery. Sales of farm machinery used directly on a farm or ranch in the production of agricultural products are exempt. Such machinery is also exempt if sold to a custom harvester, baler, producer or planter performing service on a farm or a ranch.
(1)”Farm machinery” includes:
(A) Expendable supplies, such as baling wire, and binders twine, hand tools, and implements such as fence stretchers, picks, posthole diggers, scoops and shovels;
(B) Lubricants for farm machinery;
(C) Repair or replacement parts for machinery used directly on a farm or ranch in production of agricultural products;
(D) Fencepost, cattle guards, gates and chutes;
(E) Buildings and structures which are essentially an item of equipment or machinery for agricultural production if the structure is specifically designed for such use and the structure cannot be economically used for any other purpose, for example: an automated laying house or farrowing house.
(2)”Farm machinery” does not include any motor vehicle licensed for highway use.
(h)Exemption limited to use in agricultural production. The fact that an item is purchased for use on a farm or ranch, or that a piece of equipment is convenient, does not necessarily make the purchase exempt from sales tax. The items purchased must be directly used on the purchaser’s farm or ranch in the production of agricultural products. “To be directly used by the purchaser on a farm or ranch in the production of food or agricultural products” requires that the property in question must have a direct effect on the article being produced.
(i)Examples of taxable items. The following is a partial list of taxable items:
(1) Water supply systems for personal use.
(2) Repair parts for all motor vehicles (licensed with a farm tag or any other tag).
(3) Household appliances.
(4) Garden and lawn equipment.
(5) Personal apparel.
(6) Pets and their supplies.
(7) All equipment, supplies and tools to maintain personal home and/or vehicle/ equipment storage buildings.
(8) Electricity for non-agricultural use.
(9) LPG storage tanks for fuels used for domestic purposes.
(10) Livestock, not including horses, but including cattle, mules or other domestic or draft animals except those sold for resale to a person who holds a valid sales tax permit or those sold by the producer by private treaty or at a special livestock sale.
(11) All computers and software, except that which is to be used directly on a farm or ranch in the production, cultivation, planting, sowing, harvesting, processing, spraying, preservation or irrigation of any livestock, poultry, agricultural or dairy products produced from such lands.
(12) Home and or office furnishings and supplies.
(13) Groceries and purchases of meals and beverages at restaurants.
(j)Examples of items not commonly exempt, except when used in agricultural production. The following items are taxable, unless used directly in agricultural production:
(1) Liquefied petroleum gas (LPG).
(2) Communication radios.
(3) Building materials, including:
(A) Roofing cement.
(B) Lumber.
(C) Electrical wiring.
(D) Nails, staples, and other fasteners.
(k)Examples of exempt items. The following items are exempt if used directly in agricultural production, or as otherwise stated:
(1) Electric fence insulators.
(2) Electric fence chargers.
(3) Cattle electric water warmer & tank.
(4) Cattle water tank.
(5) Cattle squeeze chute.
(6) Welding machines and associated equipment, including the lease or rental of both the equipment and the cylinders used to store the gases used in welding. Welding rod, oxygen, acetylene are exempt, providing welding machine with which they are used is qualified for the exemption.
(7) Sprays for control of flies & lice, insect repellent.
(8) Pinkeye patches, livestock wormers.
(9) Disinfectants (alcohol, iodine).
(10) Breeding supplies (includes semen, biostate sales & liquid nitrogen for storage).
(11) Drugs for disease or bacteria control such as penicillin, milk fever medicines, mastitis treatment.
(12) Supplies for administering drugs to farm animals for production (syringes, needles).
(13) Vaccines for preventive disease.
(14) Bottles, nipples & mixing containers for feeding calves.
(15) Farm tractors.
(16) Combines.
(17) Hay balers, mowers, rakes & loaders.
(18) Cultivators.
(19) Harrows, disks, planters, drills.
(20) Windmills (except for domestic use).
(21) Spray machines.
(22) Mechanical brush cutters, ensilage cutters.
(23) Grain grinders.
(24) Electric milking machines & separators.
(25) Standby generators (except those for domestic use).
(26) Silo unloaders, silage distributor.
(27) Augers-power take off.
(28) Bale loaders.
(29) Crust busters.
(30) Diamond packers
(31) Rotary hoes.
(32) Bulk milk tanks & pipeline milkers.
(33) Power take off post hole diggers.
(34) Motor chain saw (to clear land).
(35) Repair parts for farm equipment (includes tires, batteries, oil filters, belts, air filters & other parts).
(36) Diesel & special fuels (for agricultural use).
(37) Antifreeze (for agricultural use).
(38) Oil & grease (for agricultural use).
(39) Stock tanks.
(40) Grain storage bins.
(41) Stock trailers.
(42) Wire fencing.
(43) Fence posts.
(44) Air conditioner (for agricultural use).
(45) Feed racks.
(46) Bulk feed bins & associated equipment.
(47) Silo loading chutes.
(48) Farm wagons, farm plows, truck unloaders.
(49) Fertilizer spreading equipment.
(50) All farm animals for production.
(51) Containers used to package farm products for sale.
(52) Cattle chutes.
(53) Hay wire or twine, hay hooks.
(54) Ear tags, neck tags for cattle.
(55) Seeds, plants.
(56) Fertilizers.
(57) Insecticides.
(58) Packaging materials, such as sacks, wrappers, and crates, for use in packing, shipping or delivering of agricultural products. This exemption shall not apply to any packaging material which can be used more than once or which is ordinarily known as a returnable container, except those specifically noted under 68 O.S. § 1359(3), 68 O.S. § 1359(4), and 68 O.S. § 1359(14) .
(59)”Returnable cartons, crates, pallets, and containers used to transport mushroom products from a farm for resale to the consumer or processor.” [ See: 68 O.S. § 1359(14) ]
(60) Salt blocks (for agricultural use).
(61) Irrigation equipment (for agricultural use).
(l)Examples not exhaustive. Activities and items enumerated in this Section as examples and illustrations are not intended to be exclusive or exhaustive.
(m)Purchases of taxable personal property or services by a contractor. Purchases of taxable personal property or services by a contractor, as defined by 68 O.S. § 1352, are taxable to the contractor. A contractor who performs improvements to real property for a farmer may not purchase the tangible personal property or services to perform the contract exempt from sales tax under the exemption provided by statute to a farmer. However, sales of materials, supplies, and equipment may be made exempt from sales tax to any person who has contracted to construct facilities which are or will be used directly in the production of any livestock. For purposes of this subsection, “used directly in the production of any livestock” includes facilities used in the production and storage of feed for livestock owned by the permit holder. To receive the exemption, the contractor must follow the applicable requirements of Section 710:65-13-17.
(n)The exemption as it pertains to horses, ranching, and ranches.
(1) The exemption is allowed only to those persons breeding or raising horses for marketing.
(2) The exemption is not extended to persons who own horses for personal use or who are solely engaged in activities such as boarding horses, giving riding lessons, or providing horses for recreational riding.
(o)The exemption as it extends to feed and similar products for livestock, including horses. The holder of an agricultural exemption permit may purchase generally recognized animal feeds, stock tonics, water purifying products, stock sprays, disinfectants, and other such agricultural supplies subject to the following limitations:
(1) The purchaser must obtain an Agricultural Permit; and
(2) The purchaser must follow the applicable requirements of Section 710:65-13-17.

What qualifies as a farm in CT?

FARM & FOREST ACT

Farm & Forest Exemption

The State of Connecticut’s General Statutes (12-107a) states that it is in the public interest to encourage the preservation of farm land, forest land, and open space land in order to maintain a readily available source of food and farm products close to the metropolitan areas of the state, to conserve the states natural resources, and to provide for the welfare and happiness of the inhabitants of the state and that it is in the public interest to prevent the forced conversion of farm land, forest land, and open space to more intensive uses as the result of economic pressures caused by the assessment thereof for purposes of property taxation at values incompatible with their preservation as such farm land, forest land and open space. In 1963, the Public Act 490 was enacted to allow assessment on farm, forest, or open space land to be based on its current use rather than market value.

Farm Applicants

Pursuant to Connecticut General Statutes 12-107b Subdivision (1) The term “farm land” means any tract or tracts of land, including woodland and wasteland, constituting a farm unit.

Farm applicants will be evaluated on the following criteria. Applicants are encouraged to submit documentation which addresses the evaluation criteria listed below. The assessor may request additional information depending upon the review of an application.

  • Acreage under application
  • Extent to which the tracts comprising the land are contiguous
  • Gross income
  • Nature and value of equipment being used
  • Portion of land in actual farming use
  • Productivity of the land
  • Other:
    • Advertisement, signage
    • Checking account
    • Employment
    • Farm related buildings sufficient to support operation
    • Identified markets for product
    • Income tax – Form F (gross farming revenues and expenses)
    • Leases
    • Membership in farming organizations
    • Permits (zoning, ground water, etc.)
    • Sales
    • Trade name
    • Zoning requirements (approvals for use)

Forest Applicants

Pursuant to Connecticut General Statutes 12-107b Subdivision (2) forest land is defined as “any tract or tracts of land aggregating twenty five acres or more in area bearing tree growth that conforms to the forest stocking, distribution and condition standards established by the State Forester. It must consist of one tract of land of twenty five or more contiguous acres, which may be in contiguous municipalities; two or more tracts of land in which no single component tract of land shall consist of less than 10 acres, or any tract of land which is contiguous to a tract owned by the same owner and has been classified as forest land pursuant to this section.”

Steps for Obtaining Classification

An application to the assessor for classification of land as forest of farm must be completed and returned to our office. In addition to the application, please include the following as it pertains to you:

  • Farmers
    Along with your application (PDF), there must be a sketch of the farm and the number of acres in each land classification and their location.
  • Forest Applicants
    Along with your application (PDF), there must be a certified forester’s report. For a list of certified foresters please contact the Department of Environmental Protection by calling 860-424-3630.

Deadlines

Applications are accepted from September 1 to October 31. Filing deadlines during a revaluation year are extended through December 30 by state law.

Minimum acreage for farm tax nc

Farmers in North Carolina, like everyone else, pay many different types of taxes. In some cases, farmers can benefit from laws that allow them to reduce certain taxes. This document will provide an overview of some of those benefits. Note that this is neither a comprehensive treatment of applicable laws, regulations and policies, nor is it a complete list of potential benefits. This article is intended as a starting point, and farmers are urged to seek assistance and advice from a tax professional or other expert on these matters. Also note that this information is believed to be current on the date of publication, but laws and regulations are subject to change. PROPERTY TAXES Through a program called Present Use Valuation, farmers have the potential to reduce their annual property tax bill. This program assigns property values to qualifying farmland based on its value as agricultural land, as opposed to more lucrative uses such as development. Thus the amount of property taxes, which is based on the assigned value of the land, is reduced (or more accurately, a portion of the tax bill is deferred, and becomes payable if or when the property is withdrawn from the program or becomes ineligible). To qualify, parcels must be at least a certain number of acres (5 acres if used for horticulture, 10 acres if used for crops or livestock, 20 acres if used for forestry). There is also an annual income requirement of $1,000 (waived for forestland). Forestland must be managed according to a plan that addresses specific items and is written by a qualified individual. Other criteria also apply, such as periodic audits, and (with some exceptions) a four year waiting period to enroll a parcel after purchase. While this benefit is available across the state of North Carolina, it is implemented by the tax office in each county. Thus there may be minor variations in implementation from county to county. For complete details, read this guide. The application form is available from the county tax administration office. SALES TAX ON PURCHASES OF FARM SUPPLIES AND EQUIPMENT Farmers who qualify are exempt from paying sales tax on certain farm supplies and equipment. To qualify, farmers must have an average annual gross income of $10,000 from farming operations for the three preceding years. Those who are new to farming may apply for “conditional” status, but there are extensive recordkeeping and reporting requirements, plus penalties for failure to meet those requirements. This program is administered by the North Carolina Department of Revenue. An application form can be downloaded from their website. TAX DEDUCTIONS (I.E. REDUCING TAXABLE INCOME) As with almost any business venture, farmers may deduct certain farm related expenses from their taxable income on their federal tax return. This might include expenses such as seed, fertilizer, insurance, equipment, supplies and more. As a reminder, a deduction from taxable income may reduce the amount of income tax that has to be paid, but it’s not a dollar for dollar reduction. Here’s an overly simplified example: Farmer Jane and her spouse had an income of $50,000 for 2020, for which they would pay $5,608 in taxes if they file a joint return. However, she bought $1,000 worth of fence posts and barbed wire, which qualifies as a deductible expense. That brings their income down to $49,000, for which they would have to pay $5,488 in taxes. The bottom line is that deducting the $1,000 farm expense saved them $120 in federal income taxes. This may also save them money on State of North Carolina income taxes, since those are calculated using “adjusted gross income” from the federal form, from which farm-related expenses have already been deducted. Farmers use the federal tax form known as Schedule F to report deductible expenses, farm income and other farm related information. The corresponding instructions provide specifics regarding allowable deductions. OTHER TAX BENEFITS FOR FARMERS Off-road fuel use – North Carolina Farmers may qualify for a refund of the taxes paid on fuel used for tractors and other equipment that do not operate on public roadways. They may also have the option of purchasing “off-road diesel” on which such taxes are not charged. Note that specific provisions may come into play when a farmer who claims the tax refund ALSO claims fuel costs as a deduction against taxable income. Exempt from charging sales tax – Farmers do not have to charge sales tax when selling raw agricultural commodities they produce on their own farm. While this is not a direct financial benefit to farmers, it does perhaps simplify recordkeeping, transactions and reporting. Conservation easements – Farmers are widely known for their love of the land and their desire to leave a legacy. Conservation easements are a tool farmers can use to protect farmland for current and future generations. In a typical scenario, farmers sign a contract with a government agency or land trust pledging that the land will remain in farming or forestry, and never be converted to other uses (e.g. neighborhoods, shopping centers, industrial parks). Since removing the possibility of development may decrease the market value of the parcel, the corresponding loss in value can possibly be used as a tax deduction in the form of a charitable contribution. This is a complex and time-consuming process that is not widely available, but may be of interest in limited situations.

Property Tax Breaks for Farms in NC

$200 million. That’s the estimated property tax revenue North Carolina’s 100 counties defer each year under the state’s present-use value (“PUV”) property tax exclusion program for farms and other favored properties. And by “defer,” I really mean “lose,” because most of those deferred PUV taxes will never be collected.

The impact of PUV property on individual county budgets can be substantial. Consider Allegheny County, which in 2010-11 had a total taxable real property base of $1.6 billion. In that same fiscal year the county deferred taxes on $500 million of PUV property, meaning the deferred tax revenue amounted to nearly a third of the county’s entire real property tax revenue.

Although none took the same percentage hit as did Allegheny County, nearly twenty other North Carolina counties deferred PUV property value representing at least 10% of their total real property values in 2010. Coming in the midst of the dire economic climate and plummeting revenues from other taxes, a 10% reduction in county tax revenue from real property is no small matter. And don’t forget that North Carolina’s municipalities also lose tax revenue on PUV property.

In light of its financial effect on local governments, it seems fair to question whether the PUV program is worth the cost. Maybe not, says national property tax expert Professor Richard England in a recent recent article for the well regarded Lincoln Institute of Land Policy. Prof. England concludes that major PUV reform is needed across the country. Before analyzing whether Prof. England’s proposals are right for North Carolina, here is a quick primer on our state’s PUV program.

North Carolina’s PUV Program

Since 1973, North Carolina has provided property tax incentives through the PUV program to certain taxpayers who use their land for agriculture, horticulture, or timber production instead of development. Measured by dollars of property value avoiding taxation, the PUV program is now the second largest property tax break, exceeded only by the exemption for government property.

Property owned by a qualifying owner and used for a qualifying purpose that satisfies the applicable minimum size (e.g., 10 acres for farmland) and revenue (generally $1,000/year) requirements is valued for tax purposes at its present use rather than at its higher true market value were it sold for development. The local property taxes on the difference between the property’s present-use value and its market value are deferred.

If the owner of PUV property stops using it for a qualifying purpose or sells it to a developer, then the most recent three years of deferred taxes are subject to “rollback,” meaning they are immediately due and payable. Deferred taxes that are more than three years old disappear, never to be collected. Property can remain in the PUV program indefinitely, meaning local governments can lose decades of deferred taxes from a single piece of farmland.

The PUV program is no doubt the most complicated area of North Carolina property tax law. Readers seeking a more complete picture of the program can read the authorizing statutes (GS 105-277.2, -277.3, and –277.4) or dive into the N.C. Department of Revenue’s 200-page PUV guide.

Comparison to Other PUV Programs

According to Prof. England’s article, nearly every state in the nation offers some type of reduced property tax assessment to agricultural land. North Carolina’s PUV program appears to be one of the broadest in that it covers a variety of uses beyond farming, which is by far the most popular PUV-qualifying use across the country.

Just over half of the states apply a “rollback” penalty similar to North Carolina’s and require payment of several years of deferred taxes when a property leaves the PUV program. Another seven states levy a penalty based on a percentage of the property’s value when it stops being used for a qualifying purpose. But fifteen states have no type of payback penalty at all, meaning every penny of deferred PUV taxes become uncollectable immediately upon deferral.

Other states lack the minimum acreage and revenue requirements applied to North Carolina’s PUV properties, which has led to alleged abuse of PUV benefits by fake farmers. Case in point: a few Wisconsin taxpayers harvested weeds on their vacant residential lots and managed to obtained PUV assessments for their “agricultural” use of the properties.

Criticism of PUV Programs

Prof. England criticizes PUV programs in general for not providing sufficient incentives to keep land in agriculture, for failing to save smaller farms, and for shifting the tax burden to non-farm landowners. While I don’t disagree with his observations from a national perspective, I’m not sure they ring true in North Carolina.

First, North Carolina already applies one of the most punitive rollback penalties in existence for land that is removed from the PUV program. Few states, if any, offer a greater incentive to keep farming their land rather than selling it for development.

Second, small farms appear to be healthier in North Carolina than they are nationally. Prof. England cites national statistics that show a large decrease in the number of smaller farms and a huge increase in the share of national farm production attributable to very large farms. I don’t doubt that is true on a national level. But the trend the trend away from small farms is not nearly as strong in North Carolina as it has been elsewhere.

According to statistics from the U.S. Department of Agriculture, smaller farms are thriving (at least relatively) in North Carolina in terms of raw numbers. From 1997 to 2007, the total number of farms in North Carolina increased from 49,406 to 52,913. Nearly all of that increase is attributable to small farms. Farms between 10 and 50 acres jumped by 5,100 during that ten-year span, while farms greater than 500 acres decreased by 550.

I don’t mean to suggest that large farms are not gaining market share in North Carolina just as they are across the country. But I do think these statistics demonstrate that the small farm is far from extinct in our state. Be it our PUV program or an increasing emphasis on eating local, small farms are popping up all over the state in growing numbers.

Third, Prof. England’s criticizes PUV programs for their social cost of shifting local governments’ tax burdens away from farmers and toward homeowners and non-agricultural businesses. Without question, this is true of North Carolina’s PUV program.

Allegheny County, for example, could have dropped its 2010 property tax rate by 10 cents, or nearly 25%, for all property owners and still produced the same amount of property tax revenue had it not been forced to defer taxes on $500 million in PUV property.

But Prof. England’s analysis ignores the social benefits of PUV programs, namely more protection for farms, forests and conservation land. The real question is not whether the PUV program increases taxes on other taxpayers. It’s whether an increased property tax rate is worth increased open space.

Many Allegheny County taxpayers might conclude that a 25% increase in their tax rate is not worth the tradeoff. But statewide the tax rate increase caused by PUV property is far less. On average, county tax rates would drop only about 3 cents, or less than 5%, if the entire PUV program were eliminated and counties kept their revenues constant.

From a statewide perspective, a 3-cent increase in property taxes may well be worth preserving much of the state’s natural beauty. I think this is especially true for a PUV program that protects conservation land as well as farms, as does North Carolina’s. Unspoiled rural and mountain vistas might be worth even more per acre in terms of tourism than is farmland.

Potential PUV Reform in North Carolina?

Predicting what the General Assembly will do is never easy. That said, I think it is highly unlikely that the Honorables make major changes to the PUV provisions in the near future.

North Carolina’s PUV program already possesses many of the characteristics recommended by Prof. England: minimum acreage and revenue requirements, strong rollback provisions, and detailed guidance from the state Department of Revenue concerning the proper valuation of agricultural land.

More importantly, in recent years the General Assembly has demonstrated a desire to increase opportunities to avoid or defer local property taxes. New laws have expanded the PUV rules to cover working waterfronts and conservation land, added deferred tax programs for new housing inventory and low-income elderly homeowners, and excluded all farmland from involuntary municipal annexations. In the current political environment, it seems improbable that the state legislature would choose to limit a tax break as popular as North Carolina’s PUV program.

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