Understanding the intricacies of federal and state tax law often comes with a chance to reduce tax burdens, sometimes by a substantial amount. While individuals and even businesses can’t be expected to keep up with ever-changing laws, it is important to understand some of the more important issues regarding your niche. For Texas farmers, something of importance is a loophole in state agricultural law.
The law says that owners of ranches owe a property tax that is based on the production of the land rather than the value of the land. A ranch worth $10 million in land and property value that only produces $50,000 in crops in one year will see a significant reduction in property taxes based on the lower number, for example. One specialist says the law provides a major economic boost in agricultural areas.
Speculation is that one company is trying to take advantage of the loophole by hiring a farmer. The company, SpaceX, was created by the person behind both Tesla and PayPal. SpaceX makes rockets but recently placed an employment ad seeking to hire a farmer for in-house operations.
One speculation is that the company is trying to work toward farming in space. Others believe the company, which is located on a tract of land in Texas, may want to do a bit of farming on the land in order to reduce property tax burdens.
When seeking loopholes or reductions in taxes, assistance in understanding complex tax law can help individuals and businesses avoid overstepping into illegal territory. Using a loophole is not illegal, but seeking to not pay taxes at any cost may result in illegal activity.
Source: The Oregonian, “Farming in space or tax breaks? A Texas company wants someone interested in either” Molly Harbarger, Dec. 04, 2014