Machinery repair tax hurts farmers, rural Minnesota

By Tom Hagg, Guest Columnist

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 July 1, and farmers are stuck paying it until the Legislature repeals it. Meantime, 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.

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. However, this proposal was passed in the last moments of session, with little time for proper debate or consideration of its impact 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 non-farming 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 and this tax adds even more to the bill. Deciding to skip certain maintenance might save a farmer a few bucks in the short term, but things like 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 over $12,000 on 500 acres of corn.

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 Dayton and the Legislature to take action and get rid of it.

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.

Tom Haag is president of the Minnesota Corn Growers Association.

  • Tom Mortenson

    While it now appears that the special Minnesota Legislative session that will take place on Sept. 9 will be looking at repealing the new sales tax on farm equipment repair and to provide matching funds for storm aid from the Federal Emergency Management Agency, two issues that warrant Legislative action. I believe that providing matching funds is the right course of action and will be passed by overwhelming numbers in favor.
    However, I strongly recommend that you contact your local officials to ensure that they use this opportunity to repeal the controvesial tax on farm equipment repairs. Please contact your local state legislators and consider having your County Board, City, Town or Tribal Council support this effort by passing resolutions to reaffirm our faith in our farmers and their families.
    As the former County Administrator of Becker County, Minnesota I can attest that when citizens express their views, elected officals listen. Take this opportunity to be heard.

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