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Published August 19, 2013, 10:40 AM

Machinery repair tax hurts farmers

During a news conference on July 8, Minnesota Gov. Mark Dayton said dumping the new tax on farm machinery repair would be his first priority, if the economy allows.

By: Tom Haag, Agweek

During a news conference on July 8, Minnesota Gov. Mark Dayton said dumping the new tax on farm machinery repair would be his first priority, if the economy allows.

Minnesota’s corn farmers thank the governor for recognizing the impact of this tax and hope this will top his agenda when the legislature reconvenes in February. Actually, the gratitude would extend beyond just farmers.

Imposing an additional tax of nearly 7 percent on farmers is not only bad for agriculture, it hurts all of Minnesota’s economy — especially rural communities.

Unfortunately, the tax was implemented on July 1 and farmers are stuck paying it until the legislature repeals it. Meanwhile, it’s important that farmers and rural Minnesotans continue reminding the governor and local legislators why this tax is bad policy, and why it needs to go away during the next session.

Cuts into bottom line

Minnesota’s corn farmers understand the economic and budget challenges faced by Dayton and the legislature. Sometimes, leaders need to make difficult decisions and unpopular legislation gets passed into law.

This proposal, however, was passed in the last moments of session, with little time for proper debate or consideration of its effect on farmers.

Asking farmers to pay almost 7 percent more for machinery repairs not only makes little economic sense, it’s also unfair.

Farmers sell the food, feed, fuel and fiber they grow in a national market, which includes states that lack such a large tax on machinery repair and maintenance. Unlike a nonfarming business, farmers are not able to pass the cost of this new tax onto customers.

Instead, the tax eats straight into a farmer’s bottom line and leaves farm families with less money to spend at other local businesses in their community.

It’s even worse if you’re a small or beginning farmer who cannot purchase new, expensive machinery and instead rely on maintaining and repairing older equipment.

Fixing modern machinery also isn’t cheap. Labor costs can run into the thousands of dollars and this tax adds even more to the bill. Deciding to skip certain maintenance might save a farmer a few bucks short term, but problems such as worn chains and idlers or poorly maintained seed meters could end up costing a lot in the long run.

If just one seed out of 12 doesn’t emerge, it might mean a loss of more than $12,000 on 500 acres of corn.

Leaders should take action

It was encouraging to hear Dayton acknowledge that the farm machinery tax is at least on the table for repeal. Now it’s time for Minnesota’s farmers and rural businesses to remind the governor and the legislature to take action and get rid of it come February.

The Minneapolis Star Tribune editorial board was right when it called for the repair tax to be repealed in a June 3 editorial titled “Minnesota must repair a tax mistake.” Helping Minnesota’s economy get back on track and create jobs is a challenging task. Unfairly taxing farmers and rural Minnesotans isn’t the way to get the job done.

Editor’s note: Haag, is Minnesota Corn Growers Association president and farms near Eden Valley, Minn.

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