IDEAS home Printed from https://ideas.repec.org/a/wly/apecpp/v42y2020i4p739-758.html
   My bibliography  Save this article

Property Tax Incidence on Cropland Cash Rent

Author

Listed:
  • Robert Dinterman
  • Ani L Katchova

Abstract

We estimate the property tax incidence on rented cropland, defined as the extent to which landowners can increase cash rental rates to shift the tax burden of property tax to renters. Using Ohio's Current Agricultural Use Value (CAUV) Program, we are able to avoid issues where the market value of farmland determines the property tax as CAUV assesses farmland in Ohio based on a use‐value formula with historical and state‐wide prices, yields, and costs of corn, soybeans, and wheat. Our results indicate that cash rental rates in Ohio from 2008 through 2017 increased between $0.31 to $0.40 for each additional dollar of property tax levied on cropland in the short run. Further specifications taking into account lagged effects of property tax indicates a higher incidence of $0.61 higher cash rent for each additional dollar of property tax, although this is dispersed over a 3‐year time period.

Suggested Citation

  • Robert Dinterman & Ani L Katchova, 2020. "Property Tax Incidence on Cropland Cash Rent," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(4), pages 739-758, December.
    • Handle: RePEc:wly:apecpp:v:42:y:2020:i:4:p:739-758
    DOI: 10.1093/aepp/ppz004
    as

    Download full text from publisher

    File URL: https://doi.org/10.1093/aepp/ppz004
    Download Restriction: no
    File URL: https://libkey.io/10.1093/aepp/ppz004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Barry K. Goodwin & Ashok K. Mishra & François Ortalo-Magné, 2011. "The Buck Stops Where? The Distribution of Agricultural Subsidies," NBER Chapters, in: The Intended and Unintended Effects of US Agricultural and Biotechnology Policies, pages 15-50, National Bureau of Economic Research, Inc.
    2. Nicholas D. Paulson & Gary D. Schnitkey, 2013. "Farmland rental markets: trends in contract type, rates, and risk," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 73(1), pages 32-44, May.
    3. Wendong Zhang & Alejandro Plastina & Wendiam Sawadgo, 2018. "Iowa Farmland Ownership and Tenure Survey 1982-2017: A Thirty-five Year Perspective," Center for Agricultural and Rural Development (CARD) Publications 18-wp580, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    4. Barrett E. Kirwan & Michael J. Roberts, 2016. "Who Really Benefits from Agricultural Subsidies? Evidence from Field-level Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(4), pages 1095-1113.
    5. Wendong Zhang & Cynthia J. Nickerson, 2015. "Housing Market Bust and Farmland Values: Identifying the Changing Influence of Proximity to Urban Centers," Land Economics, University of Wisconsin Press, vol. 91(4), pages 605-626.
    6. Hendricks, Nathan P. & Janzen, Joseph P. & Dhuyvetter, Kevin C., 2012. "Subsidy Incidence and Inertia in Farmland Rental Markets: Estimates from a Dynamic Panel," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(3), pages 1-18.
    7. Ani L. Katchova & Mary Clare Ahearn, 2016. "Dynamics of Farmland Ownership and Leasing: Implications for Young and Beginning Farmers," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(2), pages 334-350.
    8. Katchova, Ani L. & Sherrick, Bruce J. & Barry, Peter J., 2002. "The Effects Of Risk On Farmland Values And Returns," 2002 Annual meeting, July 28-31, Long Beach, CA 19660, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Michael J. Roberts & Barrett Kirwan & Jeffrey Hopkins, 2003. "The Incidence of Government Program Payments on Agricultural Land Rents: The Challenges of Identification," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(3), pages 762-769.
    10. Wendong Zhang & Alejandro Plastina & Wendiam Sawadgo, 2018. "Iowa Farmland Ownership and Tenure Survey 1982–2017: A Thirty-five Year Perspective," Center for Agricultural and Rural Development (CARD) Publications 18-wp580, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    11. Barrett E. Kirwan, 2009. "The Incidence of U.S. Agricultural Subsidies on Farmland Rental Rates," Journal of Political Economy, University of Chicago Press, vol. 117(1), pages 138-164, February.
    12. Douglas W. Allen & Allison Borchers, 2016. "Conservation Practices and the Growth of US Cash Rent Leases," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(2), pages 491-509, June.
    13. John E. Anderson & Howard C. Bunch, 1989. "Agricultural Property Tax Relief: Tax Credits, Tax Rates, and Land Values," Land Economics, University of Wisconsin Press, vol. 65(1), pages 13-22.
    14. Charles B. Moss, 1997. "Returns, Interest Rates, and Inflation: How They Explain Changes in Farmland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1311-1318.
    15. E. C. Pasour, 1975. "The Capitalization of Real Property Taxes Levied on Farm Real Estate," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(4), pages 539-548.
    16. David L. Chicoine & Steven T. Sonka & Robert D. Doty, 1982. "The Effects of Farm Property Tax Relief Programs on Farm Financial Conditions," Land Economics, University of Wisconsin Press, vol. 58(4), pages 516-523.
    17. Ashok Mishra & Christine Wilson & Robert Williams, 2009. "Factors affecting financial performance of new and beginning farmers," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 69(2), pages 160-179, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bigelow, Daniel P. & Kuethe, Todd, 2023. "The impact of preferential farmland taxation on local public finances," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    2. Shangfa Hou & Jiaying Wang & Degui Zhu, 2022. "Has the Newly Imposed Property Tax Controlled Housing Prices? An Analysis of China’s 2009–2020 Interprovincial Panel Data," Sustainability, MDPI, vol. 14(22), pages 1-18, November.
    3. Lin, Wensheng & Huang, Jikun, 2021. "Impacts of agricultural incentive policies on land rental prices: New evidence from China," Food Policy, Elsevier, vol. 104(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Katchova, Ani L. & Dinterman, R., 2018. "Taxation Incidence on Rented Agricultural Land: An Evaluation of Ohio's Current Agricultural Use Value Program," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277266, International Association of Agricultural Economists.
    2. Burns, Christopher & Key, Nigel & Tulman, Sarah & Borchers, Allison & Weber, Jeremy, 2018. "Farmland Values, Land Ownership, and Returns to Farmland, 2000-2016," Economic Research Report 276249, United States Department of Agriculture, Economic Research Service.
    3. Baldoni, Edoardo & Ciaian, Pavel, 2023. "The capitalization of CAP subsidies into land prices in the EU," Land Use Policy, Elsevier, vol. 134(C).
    4. Pavel Ciaian & Edoardo Baldoni & d'Artis Kancs & Dušan Drabik, 2021. "The Capitalization of Agricultural Subsidies into Land Prices," Annual Review of Resource Economics, Annual Reviews, vol. 13(1), pages 17-38, October.
    5. repec:zbw:inwedp:652016 is not listed on IDEAS
    6. Hennig Solveigh & Breustedt Gunnar, 2018. "The Incidence of Agricultural Subsidies on Rental Rates for Grassland," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 238(2), pages 125-156, April.
    7. Lin, Wensheng & Huang, Jikun, 2021. "Impacts of agricultural incentive policies on land rental prices: New evidence from China," Food Policy, Elsevier, vol. 104(C).
    8. Yu, Jisang & Villoria, Nelson B. & Hendricks, Nathan P., 2022. "The incidence of foreign market tariffs on farmland rental rates," Food Policy, Elsevier, vol. 112(C).
    9. Marten Graubner, 2018. "Lost in space? The effect of direct payments on land rental prices," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 45(2), pages 143-171.
    10. Barrett E. Kirwan & Michael J. Roberts, 2016. "Who Really Benefits from Agricultural Subsidies? Evidence from Field-level Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(4), pages 1095-1113.
    11. Feichtinger, Paul & Salhofer, Klaus, 2016. "Decoupled Single Farm Payments of the CAP and Land Rental Prices," Discussion Papers DP-65-2016, University of Natural Resources and Life Sciences, Vienna, Department of Economics and Social Sciences, Institute for Sustainable Economic Development.
    12. Stephen O'Neill & Kevin Hanrahan, 2016. "The capitalization of coupled and decoupled CAP payments into land rental rates," Agricultural Economics, International Association of Agricultural Economists, vol. 47(3), pages 285-294, May.
    13. Wensheng Lin & Rongyuan Chen, 2021. "The Capitalization Effect and Its Consequence of Agricultural Support Policies—Based on the Evidence of 800 Villages in China," Sustainability, MDPI, vol. 13(14), pages 1-13, July.
    14. Paul Feichtinger & Klaus Salhofer, 2016. "Decoupled Single Farm Payments of the CAP and Land Rental Prices," Working Papers 652016, University of Natural Resources and Life Sciences, Vienna, Department of Economics and Social Sciences, Institute for Sustainable Economic Development.
    15. Haan, Peter & Simmler, Martin, 2018. "Wind electricity subsidies — A windfall for landowners? Evidence from a feed-in tariff in Germany," Journal of Public Economics, Elsevier, vol. 159(C), pages 16-32.
    16. Callahan, Scott & Ifft, Jennifer & Michaud, Clayton P., 2022. "The impact of countercyclical farm programs on agricultural land values," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322579, Agricultural and Applied Economics Association.
    17. Boussios, David & Castillo, Marcelo J. & Brewer, Brady E., 2018. "Impact of Counter-Cyclical Payments on Cash Rental Rates," 2018 Annual Meeting, August 5-7, Washington, D.C. 274116, Agricultural and Applied Economics Association.
    18. Robbins, Michael W. & White, T. Kirk, 2014. "Direct Payments, Cash Rents, Land Values, and the Effects of Imputation in U.S. Farm-level Data," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 43(3), pages 1-20, December.
    19. Jaclyn D. Kropp & Ani L. Katchova, 2011. "The effects of direct payments on liquidity and repayment capacity of beginning farmers," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 71(3), pages 347-365, November.
    20. Kuethe, Todd H. & Paulson, Nick, 2014. "Crop Insurance Use and Land Rental Agreements," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170528, Agricultural and Applied Economics Association.
    21. Abby Kelly & Kalyn T. Coatney & Xiaofei Li & Keith H. Coble, 2020. "Subsidy Incidence in the Presence of Bertrand Suppliers of Complementary Inputs: A U.S. Agricultural Example," Journal of Industry, Competition and Trade, Springer, vol. 20(3), pages 479-501, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:apecpp:v:42:y:2020:i:4:p:739-758. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2040-5804 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.