September 28, 2016 · OPINION
When it comes to taxes, livestock don’t call 911
File Photo/Lawrence Emerson
Based on tax revenue versus expenses, Fauquier should encourage agriculture and business development, the writer says.
By Thomas H. Valk, M.D.
Fauquier County is prized by many of its residents for its heritage of agricultural businesses, open spaces and rural nature. These aspects represent important quality of life features for many county citizens.
However, questions concerning the fairness of the agricultural “land use” tax rates, versus those paid by businesses or county citizens living in residential developments, have been raised by some.
In order to ascertain whether a tax rate is “fair” or not, however, it is necessary to look at the difference between the tax dollars generated versus the dollars in county services required for each type of development. If a type of development raises more taxes than county services required, it is certainly paying its “fair share” and then some. On the other hand, if a type of development requires more in services than it pays in taxes, that would not appear to be “fair,” nor would that type of development be something we should desire within the county.
Fortunately, such data has been calculated on a regular basis, most recently for Fauquier in 2015 by Terance J. Rephann of the Weldon Cooper Center for Public Service at the University of Virginia.
> Report at bottom of letter
Called the Cost of Community Services (COCS) metric, this recent measurement shows that for every dollar in taxes residential property generates it consumes $1.17 in services – a deficit of 17 cents.
Commercial properties on the other hand, only consume 26 cents for every dollar of taxes they generate — a 74-cent surplus.
Likewise, agricultural land only consumes 22 cents for every dollar of taxes it generates — an even greater, 78-cent surplus.
From these metrics, it seems clear that more residential development will result in higher tax rates, as the dollars received in taxes will always be exceeded by the cost of the services required. Both agricultural and commercial land uses, however, return more in taxes than they require in services. These latter two types of development would appear to be paying more than their “fair” share in taxes.
Intuitively, at least with regards to agricultural land use, these results make sense. After all, when was the last time someone’s livestock called 911 or asked for more classroom space and teachers?
And, of course, it should be noted that many agricultural landowners live in houses within the property that is in farm use. Those houses and the immediately surrounding land are taxed at full residential rates, even though many of these residents pay for their own water and sewer (wells and septic fields), rather than rely upon county services.
Two conclusions stand out from the COCS data:
• Most agricultural and business properties do indeed pay a fair share of county taxes and actually contribute more to the county coffers than they take out in services.
• Residential property, on the other hand, requires more in services than the tax dollars it generates.
For the future of Fauquier, then, we should be pursuing both agricultural and business development and should be wary of residential development. It is worth adding that as our rural nature is a prominent feature of our quality of life, it would seem reasonable to encourage small business development within the designated service areas.
The writer serves as chairman of the Fauquier Taxpayers Association.
fauquierstudy1029_0 by Fauquier Now on Scribd
Silii · October 12, 2016 at 11:20 am
Hmmm. Thinking about local sourcing and many of our local restaurants. Those cattle who don't call 911 and the locally grown produce are sourced to local restaurants and food stores.I just bet there are some taxes involved in those transactions, not the least of which are the sales taxes paid by the farmer per feed, veterinary products, labor, etc. And, surprisingly, people who live in the rural houses also pay sales and meal taxes when they eat out at local restaurants and they pay sales taxes when they shop locally; sales and meal taxes aren,t just levied on people living in subdivisions or living in town. Farms the winners? Just ask some local farmers about their wealth derived from farming.
Jim Griffin · October 12, 2016 at 7:56 am
The American Farmland Trust is a Rockefeller-founded advocacy organization that uses a divisive tactic in pursuit of its special interests: It starts from the premise that it should divide other land interests and pit them against one another, commercial and residential, leaving farms the winner.
Flawed methodology from the start, in other words. I suggest a proper analysis combines residential and commercial because residences generate through labor and spending the revenues and profits of the commercial businesses. I'll go further: Many local farms depend upon local labor and farmer's markets, too, just as all commercial interests need workers and customers.
An opposite headline might read: Livestock don't pay meals taxes and don't patronize local businesses.
Every dime generated by commercial business comes from the labor and spend of people who live in residences. When you combine these two, residence and commercial, you find they more than pay for themselves, run no deficit.
You cannot pay for government without both commercial and residential land use in healthy balance. Indeed, business will not locate where there aren't enough workers or customers.
These studies based on the AFT methodology and astro-turfed by the Weldon Cooper Center do the public a disservice, dividing their interests to conquer them on behalf of agribusiness. It has no proper place in Fauquier County's policy-making.
Silii · October 12, 2016 at 7:09 am
THis is a difficult and on-going issue in Fauquier County. Other costs to taxpayers weren't mentioned, such as time lost in traffic, cost of road improvements, need for more police, and the negative impact on rural life in Fauquier County. btw, disclaimer: I support the rural life. I suggest, then, that Donald Trump be consulted regarding the tax issue because he has declared himself the most knowledgeable of the tax code and, indeed, he has managed to avoid federal income taxes for upwards of 18 years. Perhaps his tax avoidance loophole model could be reworked to apply Fauquier County's property tax structure and all of us would be exempt from property taxes! We could then survive on the state and local tax revenue that comes into Fauquier County. Bear in mind the important statement in the comments below: houses and other structures rural residents live in and use, including paved driveways, are taxed at full property tax rates. The taxes they pay on the "acreage" and ag businesses is in addition to the meals taxes, sales taxes, etc. they also pay. Operating and maintaining a farm business does not come cost free.
Demosthenes · October 3, 2016 at 7:19 pm
"When it comes to taxes, livestock don't call 911."
We could probably also say:
"When it comes to taxes, the wealthy can avoid them if they put a couple of cows out to pasture."
I'm not against taxes, and I'm not against paying my fair share. I'm also ok with lowering tax rates on those who truly depend on their farms for their income. We should have a system, though, that recognizes the difference between those who farm for a living and those who make a living elsewhere but farm enough on the side to lower the tax rates on their large estates.
Griff - good point about the need for residents in a county to support the businesses that appear to pay more than their share of taxes.
Jim Griffin · October 2, 2016 at 7:54 pm
Another key flaw upon further review of the study's methodology: It attributes commercial revenue to the business itself and not to the residents who work, shop and patronize these businesses, generating important sales tax, meals tax, and the business taxes generated by the residential occupants' commercial behavior. Without residences, there would be less workers for the farms and businesses and less shoppers and purchasers of goods and services.
This study was bought and paid to represent a point of view. It does not reflect the real world, where costs and benefits are intertwined and not so conveniently categorized.
Jim Griffin · October 2, 2016 at 7:25 pm
Unfortunately, the writer assumes relative tax rates remain static in reaching his conclusion that we should be "wary of residential development."
Here's a modest proposal: Tax each according to their relative use, but for Heaven's sake don't take the word of the Rockefeller-founded American Farmland Trust, another DC-astroturf organization on a rent-seeking mission.
A sober assessment would see the limitations in the study's methodology, which ignores the externalities of the benefits of the services provided, e.g., the value for education for farm communities, health care, human services and more.
Enough politicking for central planning and tax money for government to play in what should be an open, free market in real property.
BJ · September 30, 2016 at 3:20 pm
Thank you for this information Dr. Valk. I have my doubts that the developers include this information when pitching their proposals to the BOS.
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