In June, Gov. Josh Stein signed the NC Farm Act into law. It passed by a landslide — 110 to 2 in the House, 48 to 0 in the Senate — the kind of agreement Republicans and Democrats in Raleigh almost never reach these days. One of the things the bill did was extend a tax credit that rewards farm families for keeping their land in farming instead of selling it off.
During this time of great financial insecurity and vulnerability for those who produce our food, the economic relief yielded by this smart, bipartisan policy will help empower our state’s family farms to hold onto their pride and joy — their fields — for years to come.
It would be a shame if Congress undermined this rare stroke of bipartisan progress in Raleigh. Yet, that is exactly what
could happen if lawmakers move forward with proposals to implement a national wealth tax.
Wealth inequality is a real problem in our country. And, unfortunately, that inequality shows up in how people pay taxes. It’s simply not right that, due to tax loopholes, some teachers and firefighters pay a higher tax rate than wealthy people. We need to find ways to ensure that wealthy individuals pay their fair share. We need to find ways to close loopholes. And we need to provide the IRS more resources so it can enforce current tax law.
But a wealth tax is the wrong way to solve this problem, and it would undo what North Carolina's legislature just accomplished on a bipartisan basis.
Wealth taxes don’t tax income. They tax held assets, like stock portfolios, property, and yes, land. Some of North Carolina’s family farms could be affected by a wealth tax simply because the vast majority of their held assets include land, equipment, and other things that are needed in the daily operation of a farm.
These family farms are not sitting on piles of cash. Their wealth is the land itself, plus the equipment, timber and livestock it takes to work it — land that in some cases has appreciated over several generations. A family farm can be worth millions on paper while the people who own it are stretched thin funding retirement, covering medical expenses, and providing for their families. They are land rich and cash poor, which is very different from being wealthy in a way that shows up in a checking account.
Wealth taxes don't account for that nuance. They tax the value of the asset whether or not the owner has the cash on hand to pay it, and whether or not that asset has ever been sold. For a family farm or timber operation, that can mean borrowing against the land, selling off acreage, or delaying the equipment and land improvements that keep an operation viable, all to cover a tax bill on wealth nobody has actually realized. The same problem hits family-owned manufacturers, construction firms, and other closely held businesses that make up so much of North Carolina's economy outside the big metro areas.
I don't think anyone promoting these bills wants to put family farms out of business. But good intentions don't turn bad tax policy into good tax policy. If the goal is making sure wealthy people and profitable corporations pay what they owe, the better path is to do a better job enforcing the tax code we already have and closing the loopholes that let real income go untaxed — not writing an entirely new, untested tax law that has to place a subjective value on land, timber and machinery every year.
North Carolina can ask more of the truly wealthy without adopting a policy that risks harming the family farms and forestland that built this state. Before this idea travels any further, I'd invite its champions to spend a day with one of our Piedmont farm families or a Western Carolina tree farmer and see for themselves what “land rich, cash poor” actually looks like, and how their policies affect people in our state.
Heath Shuler, a Democrat, represented Asheville and Western North Carolina in the United States Congress.
This article originally appeared on Asheville Citizen Times: Opinion: North Carolina’s farm families are hurting — don’t tax them more
