Area farmers worry about added tax bracket
ST. PAUL – A group of Fairmont-area farmers spent the day at the State Capitol on Tuesday, addressing agricultural issues with lawmakers in honor of National Ag Day.
Near the top of the farmers’ agenda is Gov. Mark Dayton’s fourth-tier tax bracket plan. It would impose a 9.85 percent tax on incomes over $250,000 for married filing joint or $150,000 for single filers.
The effect on agriculture comes if one-time sale items are included in an individual’s taxable income. A sale on taxable farm machinery, for example, could push producers over the fourth-tier precipice, landing them in the highest tax bracket.
“The new tax bracket will have a big impact on taxes,” said Chris Radatz, director with the Minnesota Farm Bureau. “[Farmers] would probably fall into that fourth tier and end up paying nearly 10 percent.”
Les Anderson, president of Martin County Farm Bureau, said farmers may not make huge sales every year, but often enough to make a difference.
“With the cost of machinery getting the way it is, it is pretty often,” Anderson said. “Probably not every year, but it isn’t the way it used to be when you could trade in a tractor for $8,000.”
Used equipment can fetch hundreds of thousands of dollars – easily more than the income requirements for the higher tax rate.
Minnesota Farm Bureau president Kevin Paap said it affects many farm couple’s retirement plans.
“Farmers typically view their farm as their retirement instead of a 401k, for example,” he said. “They invest in farm buildings, knowing they will get the investment back when they sell at retirement. This could really affect those folks when they go to sell.”
Martin County’s delegation met with local legislators – Rep. Bob Gunther and Sen. Julie Rosen, both of Fairmont – as well was with metro lawmakers. Gunther told the delegation that only 116 residents of Martin County currently qualify for the fourth-tier bracket, but one-time sales will increase the number.
Another issue the agriculture community was ready to argue Tuesday was recently dropped from Dayton’s budget plan – a proposal to extend sales tax to additional goods and give $500 to each homeowner in Minnesota.