Masters Theses

Date of Award

6-1979

Degree Type

Thesis

Degree Name

Master of Science

Major

Agricultural Economics

Major Professor

Thomas H. Klindt

Committee Members

Darrell Mundy, Charles Sappington

Abstract

Farmland property taxes have risen dramatically in recent years, resulting in higher fixed costs for farmers. Moreover, these higher taxes have resulted from the assessment of farmland at market values which often reflect the sale values associated with isolated parcels of farmland for nonfarm uses. Consequently, beginning with Maryland in 1956, 42 states, including Tennessee, have enacted a form of property tax relief known as "use value assessment" (see Appendix A). Generally speaking, use value assessment provides that farmland can be assessed at farm value rather than at market value, for the purpose of reducing its tax liability. Often this device has been incorporated into farmland preservation laws which encourage preservation by enticing the landowner with property tax relief. The purpose of this study is to examine the extent of the utilization of the Tennessee use value assessment law in the East Tennessee Development District. It will devote particular attention to the economic impact on local government finances on the counties within the district. In addition, the study examines the characteristics of farmland owners with use value assessment and those without, in Jefferson, Knox and Sevier counties, to determine if there are discernible differences between them. Particular emphasis is placed on ascertaining the characteristics of the typical farmland owner participating in use value assessment in the District as of July 1978. Data were obtained for the overall examination of the utilization of use value assessment through personal interviews with each of the 16 county tax assessors in the District. Of particular importance was the number of farmland parcels assessed at use value, their alternative market values, the amount of the subsequent reduction in property value, and the amount of tax savings. From these data, the economic impact on the local government finances and the resulting tax savings derived by farmland owners was calculated and analyzed. A stratified random sample of farmland owners with use value assessment and those without was obtained from the county property tax rolls of Jefferson, Knox and Sevier counties. From this, a sample population was formed for the examination of the characteristics of farmland owners with use value assessment and those without. Results indicated the extent of the utilization of use value assessment was limited to a few counties and ranged from 1 in Anderson, Cocke and Roane counties to 1,544 in Sevier County. Moreover, tax savings amounted to a total of $292,923, resulting in a 4.2 percent tax reduction in the combined agricultural tax liability of the District. In comparison, the tax reduction in Sevier County was 23.4 percent in agricultural tax liability. For those farmland owners with use value assessment, the average age was 50 years and the average gross farm income was $8,600. The average number of acres owned by a farmer with full ownership of his land was 103.2 acres. The acreage owned by farmers in partnership, on the average, was 168.7 acres. For those farmland owners without use value assessment, the average age was 54 years and the average gross farm income was $7,000. The average number of acres owned by a farmer with full ownership of his land was 89.1 acres. The acreage owned by farmers in partnership, on the average, was 91.3 acres. Of all farmland owners in the District, approximately 32 percent were full-time farmers while approximately 68 percent were part-time farmers. Approximately 53 percent of all farmland owners had a husband and wife type of farm organization, approximately 34 percent had an individual type and approximately 13 percent had a partnership type. The results further show the higher the level of education the more likely a farmland owner would be to participate in use value assessment. In addition, it was observed when a countywide reappraisal of land occurs, participation in use value assessment increases substantially as a result.

Download
Files over 3MB may be slow to open. For best results, right-click and select "save as..."

Share

COinS