Missouri farmers who own the best land for growing crops could pay higher taxes on their property under a tax commission decision approved Tuesday, and those with less desirable plots might get a tax cut.
The Missouri State Tax Commission set new "productive values" for agricultural land, which are determined by evaluating the potential earnings on the land through agriculture and are used for calculating property taxes.
Missouri's farms are divided into eight groups based on land quality, with the best farms in Grade 1 and the worst in Grade 8. The tax commission increased the value for farms in the four best categories which generally is cropland, lowered values for three lesser categories that include pastures and kept the worst category the same.
Changes in the land values are to take effect Jan. 1, 2011, unless lawmakers reject them. If the new values are rejected by the Legislature, then the existing values would remain in place.
The Missouri Farm Bureau, which urged the tax commission not to increase the value of agricultural land, said Tuesday that it would ask lawmakers to block the increases.
"Missouri farmers are carrying some of the highest debt load in the nation, and clearly they cannot be expected to shoulder a tax increase," said Farm Bureau President Charles Kruse.
The largest increase in productive value was for the best farms, which was raised from $985 per acre to $1,270. That covers properties with deep, ideal soils that are flat, easily worked and produce dependable crop yields.
The largest decrease was from $195 per acre to $147 for Grade 5 farms. Those are plots that can be moderately steep with serious drainage problems and where the soil is not suited for continuous cultivation.
But the effect on farmers' property taxes under the tax commission decision would vary. For example, the assessed property value for a farmer who owns 1 acre in the best category of land now would be $152.40. Under the current level, the assessed value of that land would be $118.20. On the flip side, 1 acre of land in the fifth category would have an assessed value of $17.64 instead of $23.40.
State Tax Commission Chairman Bruce Davis said the new productive values for farms were calculated by examining a 15-year cycle of farm income. That study was completed by an organization based at the University of Missouri-Columbia.
Agriculture Department Director Jon Hagler in November urged the three-member tax commission not to increase any land values and to cut it for pasture and timber land. In a letter to the commissioners, Hagler warned that increases could hamper the state's farmers and overall economy.
An Agriculture Department spokeswoman did not immediately respond to an e-mail requesting comment Tuesday on the commission's decision.