The Family Farm Needs Tax Relief
An outcry against the Trump-era tariffs and their effects on farmers has been dominating some aspects of the daily news cycle. Mainstream media sources seem determined to find a problem with a tariff regime that is largely working. For those of you who did not read NRN’s primer on dealing with tariffs, I can explain it quite easily: If you buy American, you will not pay extra for tariffs.
Tariffs are taxes imposed on foreign goods as a price for accessing our markets. Government does this is to increase the cost of incoming foreign goods so that customers will buy domestic products. For one thing, when you hear any talking head on TV say, “Trump’s tariffs are causing Americans to pay more for Chinese goods…,” remember that is the point. Just like “sin tax” is designed to keep consumers from engaging in vice, tariffs are meant to encourage people to purchase domestic products rather than buy cheaper Chinese goods.
The stock market is the secondary scare tactic that the media is using to turn ordinary citizens against the tariff program. For generations, Americans (and most people in the world) have been convinced that stocks are a good investment.
The millage tax confiscates money from farmers and gives it to liberal teachers’ unions.
The Stock Market is Like a Casino
The stock market is a gamble, however; your investment could go up or down. Just like blackjack, if you are good at processing the numbers, you can handicap your play to make money on the margins. However, one mistake results in the house (which in this case is Wall Street) collecting all your meager earnings.
Yes, there have also been success stories on Wall Street. To be fair, the news similarly covers the handful of people each year who win millions on the lottery rather than the millions of people who lose day after day chasing Lotto.
Trump’s tariffs have hurt many corporations on the Dow; that is difficult to argue. There are, however, hundreds of thousands of American companies not on the Dow that are bringing in money hand over fist because of the growing economy. When the mainstream media tries to pin 401(k) losses on the president because he is doing what is best for the country, not Wall Street, it is like letting the dealer shuffle the deck at will whenever when you are counting cards. Remember, too, that most talking heads are heavily invested in Dow companies.
American farming is the third area where the media is creating a commotion over tariffs. Some farmers, mainly those who switched over to soy as the Chinese markets opened up, are feeling the pressure of the new tariffs because China is retaliating against the United States for leveling the playing field.
By and large, farmers are doing business as normal; it is the middlemen who are raising prices and lowering payments rather than the government. When we look at the negative effects on agriculture, there is a much more oppressive government action than tariffs that are crippling farmers, namely the millage tax.
An Antiquated Tax Structure
The millage tax is the property tax which is used to fund state educational systems. Most states keep the mill rate and its enforcement mechanisms so complex and hard to understand to make it easier to manipulate the system. The basic gist is that the more land you own, the higher your tax rate.
This made more sense 50 years ago, when farmers raised kids like they did crops. Farmers had more children so they were forced to pay higher school taxes. However, as the population of the United States moved into the cities, family farms now bear the brunt of the tax regime with fewer and fewer children being born in rural America. This system unfairly punishes farmers (and others who live in rural areas) while giving a windfall to landlords and multi-family homes in cities.
Education is important. The current US educational system was state of the art in the 1950s, but is quickly falling behind the rest of the world. Funding, timing, and accessibility are the key reasons. If we are willing to acknowledge the writing on the wall, the millage tax confiscates money from farmers (largely conservative) and gives it to the teachers’ unions (largely liberal).
An Alternative to the Millage Tax
Eliminating the millage tax and changing to a population-based tax would correct most, if not all, of these problems:
1) Funding: You can only get so much money out of farmers; they have a finite amount of land, and they can only raise so much food on that land to sell. This means that raising taxes on farmers to increase school funding only causes farms to close (or sell to multinational conglomerates that do not pay taxes).
Basing taxation on the population rather than acreage is a much more effective way to deal with this issue. This would shift the burden to landlord and slumlords who rent to multiple families living on one property. This is not a punitive shift; it is using the same logic that the 1950s property taxes used. Back then, farm households were larger, and farmers payed more in tax. Now that we have more people living in apartments and tenements, the landlords and the slumlords should bear the burden. This nearly moves the country to a use tax, which is the most just of any form of levy.
2) Timing: We can thank the farming industry for the K-12 school day. Farmers needed kids to work through the late spring and the early fall. This meant that the school systems ran from mid-September to April. While the many holidays have caused the school system to creep deeper into May (sometimes June) and earlier in September (sometimes August), we still have a system where students abandon their learning momentum throughout the summer.
If we restructured the school system to be year-round, with one week off each month, students would have both a regular break and be able to continue their education throughout the year. Since most high-ranking countries (i.e., Japan, China, Australia, South Korea, etc.) follow a year-round pattern, the US should learn from these other models.
The week-long break each month would help students deal with the “education fatigue” that is driving many teens to chronic sleep deprivation or perhaps suicide. It would allow parents to schedule for a week of supervision for their children at a time rather than over three months. Since farming is not the main industry of the United States, there is no reason to maintain the current system where students (and teachers) have three months off in the summer.
3) Accessibility: If you have been watching the Democrat debates, access to high-quality schooling has been a big issue. Kamala Harris even misinformed the nation that she was in the second class of integrated students at her school. That aside, this system is based on archaic mentalities that students need to go to a physical location to learn.
Cyber schools and digital charter schools have built upon the technology that has allowed millions of students to go to college without leaving their home. Online education allows students to have access to top-level teachers from anywhere in the country.
Most schools in the country are well equipped to deal with average children. This means that the best students and the students who need the most help often slip through the cracks. When schools adjust their budgets to deal with these groups, they begin to neglect the mainstream students, which, in turn, causes the students to act out.
Democrats generally refuse to consider expanding funding for charter schools (physical or online) and digital education because both weaken the all-powerful teachers union. Democrats argue that online institutions have lower quality, but this is about as true as Kamala Harris’ busing story.
Reform the Property-Tax System
Once again, population-based taxation would take the burden off of municipalities that would like to offer more school-choice options to parents.
Overall, we all know we have a broken system. The property tax regime is stupid; no one should be taxed to keep what they already own. Until we can break away from this system, however, we need something to move us in the right direction.
If the millage tax was shifted from how much land you own to how many people live on the land you own, it would take the pressure off of farmers. Instead, it would shift it to landlords, slumlords, and corporations.
Big money will resist this shift. Why? Because it is good for the American people, not just the select few who have been gaming a corrupt system for years.
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Dr. Christopher Smithmyer is a writer for NRN, the Vice President of International Affairs at Brav Online Conflict Management, and an Adjunct Professor of MBA Business at Doane University. He is also part of the founding team at BlackWalletLTD, one of the leaders in stable coin 2.0 ecosystem maintenance. Dr. Smithmyer’s focus is international business and finance, along with reviews of board games, weapons platforms, and survival items.