New taxes will hurt bottom lineLAMOURE, N.D. — There is an old saying that bad things seem to happen in bunches. This certainly is true about the proposed cap-and-trade — or energy tax — and the value-added — or national — sales tax. These proposed sales taxes will have a dramatically negative affect on farming.
By: Kelly Shockman,
LAMOURE, N.D. — There is an old saying that bad things seem to happen in bunches. This certainly is true about the proposed cap-and-trade — or energy tax — and the value-added — or national — sales tax. These proposed sales taxes will have a dramatically negative affect on farming.
The cap-and-trade tax is a proposed tax on all forms of energy — such as coal, gas or oil — for the purpose of reducing the so-called greenhouse gas carbon dioxide.
The air we breathe along with plants and animals is composed mostly of carbon and oxygen. People and animals use the oxygen and exhale the carbon. Plants use the carbon and exhale oxygen. What a wonderful symbiotic relationship.
The CO2 in the air we breathe has been declared by the Environmental Protection Agency to be a “hazardous” greenhouse gas that needs to be regulated by a government agency and taxed to protect the environment.
A buyers market
One estimate I have seen of the cost of this energy tax on the average small business was as high as $1,700 per year. Always remember: the production, processing, transportation retailing and preparation of food is our most important daily effort — and to feed 310 million American people three meals a day requires prodigious amounts of energy. A shortage of food can overthrow the strongest government and stop the mightiest armies.
The proposed value-added tax probably would be the most damaging to farmers. This would be like a national sales tax. Think of paying the VAT in the same way you pay your local and state sales tax. The VAT could be 1 percent or 2 percent of the gross dollar value of everything at every point of sale, each transaction.
Since farming takes huge amounts of fuel, fertilizer, machinery, repairs, electricity and involves humungous transportation costs for both inputs and outputs, all farmers should recognize the devastating affects these added costs would have on their bottom line.
The real problem or danger here is farmers are the low people on the economic totem pole. Most all businesses will treat added tax costs as part of the cost of doing business and pass that extra cost onto the next level — the buyer.
We farmers have no method or marketing system to allow us to pass our costs on to the buyer of our commodities. The old marketing system we now use is owned and controlled by the buyers, and it is not very often these market prices are high enough for farmers to recover their production costs. We have very little power to affect the cost of our production inputs or the prices we receive for our production.
Stuck with costs
In the past few years, farm prices greatly have improved. But who is to say farm prices will not drop below our cost of production, as they always have done in the past? When that happens, we farmers will be stuck with the added costs from the markets. How long do you think farm commodity prices will stay at these present, profitable levels?
I do not think most farmers are aware of the serious, adverse affects the cap-and-trade and VAT schemes could have on their farming operations. To make matters worse, farmers still are badly divided and do not speak with a united voice in the political arena, where those far-reaching laws will be decided. We farmers need to be aware of these important proposed bills and get involved to protect our own best interests.
If you don’t think this is a serious threat to all farmers’ financial well being, consider the dangerous level of our national debt. You can bet your farm that the political parties will be looking for tax dollars to keep our nation’s economic ship afloat. It appears there will not be an increase in income tax rates for at least two years, This means pressure will build to get more tax dollars from other sources like the EPA, cap-and-trade and VAT that would minimize a political backlash since the leadership in those groups does not have to stand the test of a vote of the people.
Editor’s Note: Shockman is a farmer in LaMoure, N.D.