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A new bill could change how agricultural producers are taxed

A two track road cuts through a green hillside. A few trees and low hills can be seen in the distance and a blue sky with fluffy white clouds is above.
Land Report Editors
Land Report Editors

Agricultural producers in Wyoming can get a tax break on their land if they make at least $500 a year in gross revenue off of it, or if they rent the land they're using, $1,000. But a new bill amendment sponsored by the Joint Revenue Interim Committee hopes to increase that minimum amount to $5,000 a year.

Pennie Vance, the organizer for agriculture and local food issues with the Powder River Basin Resource Council (PRBRC), said this amendment is an attempt by lawmakers to keep people from cheating the system.

"Apparently, there are speculators who will buy a big chunk of land intending to carve it up into smaller subdivision type lots. But until they can do that, until the time is right, they're doing whatever they need to to get that good tax rate, because it is a huge difference," said Vance, "And so they're not really legitimate ag people."

She said another example of fraud would be when wealthy people buy a large ranch, but then do the bare minimum to keep it designated as agricultural land and get the associated tax break.

"And, of course, that would be an enormous loss in taxes, because those are some pretty good sized ranches, and they're almost always in an ideal place where the taxes are higher," said Vance. "But the bill doesn't seem to really affect those people at all. Because if you go from $500 to $5,000 and they're really all super wealthy already, well, they can add a few more cows or whatever. It's not going to hurt them, they'll be able to get the ag tax rate."

She added that the PRBRC is okay with the idea of stopping fraud, but they're worried the proposed increase will end up hurting smaller producers.

"Our worry is that we don't know if this will fix the problem of cheaters and fraud. And we don't know what that means, like, how many taxpayer dollars are we going to realize by doing this? Is it worth the potential of putting small businesses out of business, and particularly at a time when we're trying to diversify our economy?" Vance asked.

She said a smaller increase, like up to $1,000 might be okay, but that it would have to be studied for any effects after it was implemented.

But the Wyoming Farm Bureau Federation is a strong supporter of the amendment. Under their membership rules, a producer must make over $10,000 in gross annual income to be considered an agricultural producer. And according to Brett Moline, the Director of Governmental and Public Affairs for the federation, they would support an amendment up to that number, if it were brought up. He said that in order to be considered agriculture for tax purposes, you still have to meet requirements other than gross income.

"We have to remember that with this value, regardless of what it is, if it's $500 or $5,000, that's only one criterion to have it valued at the agricultural production rate. You have to be using it up to its capability," he said. "So if you have, for example, 1,000 acres that would be capable of running 30 cows, and you're only running two, you're not using it up to its capability. And so then you would be taxed at the market value rather than the agricultural value."

Moline said in some counties, you also must meet a minimum property size.

"We have to remember that here in Albany County to be considered agriculture, you have to have at least 35 acres. And houses, structures are based on market value, they're not based on the production value, and so you're just talking the land that's not associated with the house," he said. "And I don't know how many counties have that, but I know we have it here. The state gave the counties the authority to do that, and some of them have taken advantage of it."

So, Moline said, the proposed increase likely wouldn't affect too many small producers anyway, as they likely weren't getting the agricultural tax break anyway.

"I don't know how many of these real small enterprises, if property tax is a consideration. Are they doing it just to bring in some extra money? Are they making enough even right now to be bringing in $500?" he said.

The bill amendment, if passed, would take effect July 1, 2022.

Ivy started as a science news intern in the summer of 2019 and has been hooked on broadcast ever since. Her internship was supported by the Wyoming EPSCoR Summer Science Journalism Internship program. In the spring of 2020, she virtually graduated from the University of Wyoming with a B.S. in biology with minors in journalism and business. When she’s not writing for WPR, she enjoys baking, reading, playing with her dog, and caring for her many plants.
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