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A zero sum game

Taxes and tax policies are complex. The laws and regulations that implement federal, state and local taxes in Ohio derive from multiple sources and each one of the taxing authorities have their own interests to serve. And because tax codes are statutory and infrequently revised as a whole, their complexity is increased by the fact that various sections of the tax codes have been created at different times by different legislatures.

In addition to the complexities of the construction and administration of these various tax laws, there is the complexity of the rationale that goes into the policy arguments that undergird the code itself.

Some of these policy reasons are carefully argued from economic theory, while others seem to have developed by custom and inertia. For agriculture land, all state tax laws use some variation of the use-value tax assessment.

Use-value assessment determines the tax based on the value of the product being produced from the land. In Ohio, some farmers have seen their taxes increase dramatically in the last few years as their goods became more valuable. If agriculture commodity prices continue to fall, their tax bills will likewise decline.

However, some economists argue this is a flawed policy, as it rewards farmers by offering them lower property tax and punishes all the rest of taxpayers within the state, as they have to make up the shortfall caused by the lower tax revenue generated by agricultural land.

This is why tax policy decisions are so political, as there is no perfect tax plan, there are only tax policies that are ideal for certain individuals or businesses.

Source:, "Farm Follies," John E. Anderson and Seth H. Giertz, August 24, 2015

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