Hughes' Views: Taking another look at property tax argument, Supreme Court decision
I have been attending several county fairs and community celebrations throughout the district recently and during those trips I have had the opportunity to visit with a wide range of individuals.
Almost universally, property tax is the topic of discussion. I have spent many hours thinking about this problem and have yet to come up with a viable solution. I have a solution, but it is the viable part that is the challenge.
This week I would like to discuss that solution, as well as touch on a recent Supreme Court decision.
Many people not within agriculture look at farmers as being rich because they own land. In Nebraska, about half of the land is owned by those working the land and the other half is owned by people not engaged in farming and ranching.
To everyone who owns land, it is an asset regardless of whether or not you bought it, or whether it was given to you. It is part of your net worth and part of the nest egg that is your retirement. If you purchased stocks, bonds or have CDs in a bank, or if you inherited some stocks, bonds, or CDs in a bank, they are your assets as well.
The real question is why we double tax one set of assets and not the other. Both produce income and we pay income tax on the amount of income earned in that year. Both can increase in value and we pay capital gains tax on that increase when we sell the asset. So why must agricultural real estate owners pay an additional tax every year on that income-producing asset and other income producing assets do not?
I am fully aware the argument over taxing intangibles (stocks and bonds). That has been debated before, but is it time to take another look at it?
I am sure several of my colleagues in the legislature have never heard this argument. I think it is worth having again since the disparity of taxation is so great at this time and I do not see that changing any time soon.
Lastly, I wish to address the issue of requiring NRDs to sell land it owns but keeping the ability to pump the underlying water for the streamflow augmentation projects. The opinion of the Nebraska Supreme Court is, the matter is settled.
The high court has ruled the Rock Creek Project, which was developed and is being operated by the Upper Republican NRD, serves a public purpose. According to the high court, “The right to use the groundwater does not float in a vacuum of abstraction but exists only in reference to and results from ownership of the overlying land.”
This statement from the court covers both the Rock Creek and NCORPE Projects. The fact is neither Rock Creek nor NCORPE has pumped any water since May 2017 and it is possible neither will have to operate this coming fall and winter. This shows the NRDs have had the vision and determination to solve the state of Nebraska’s problem locally while keeping the local economies intact and our communities thriving.