Taxing Farmers and Ranchers

Among the myriad of tax increases proposed by the Democrats this year is a bill to add sales tax to pesticide purchases and medicine purchases for livestock.

When this bill passes, and it will pass, Colorado will be one of only six states to charge farmers and ranchers sales tax for the inputs they use to produce food.

What’s interesting is that the law will create an incentive to purchase your pesticides and medicine online or from an out of state retailer. Yes, I know that Colorado residents are supposed to pay use tax in place of the sales tax when they do that, but the reality is that most people won’t. At least they won’t until they think the chance of being audited is high. Trust me; I know these guys and they don’t like paying taxes.

Taxes on production inputs do not exist in any other industry in Colorado, but now agriculture will face that type of tax. And ag is an industry that can’t pass costs on; we compete in a world market and are price takers. We accept the price offered by the buyer, and when competing farms located in Kansas and Nebraska don’t have the same costs it makes Colorado farmers less competitive and gives them an incentive to not pay these taxes.

So what does this new tax mean in human terms? Well, if you are a full time farmer this bill will likely take $2000 to $6000 out of your pocket.

That’s a lot of money.