Richard Lindgren is Emeritus Professor of Business at Graceland University in Lamoni, Iowa, now retired in Gulf Coast Florida. He blogs at godplaysdice.com.
When economists talk about rent-seeking, they are usually not referring to literal payments to temporarily use someone else’s physical property. Except in Iowa:
“[Iowa Governor Kim] Reynolds proposes that retired farmers no longer be taxed on cash rent for their farmland…”
More about how economists define rent-seeking differently from Iowa farmers in a moment, but here is the key point — This is not about the retired farming couple who earns $20,000 in cash rent on their paid-for farmland on top of their Social Security income. Income taxes are among the least of worries for this couple. They are likely paying nothing or very little in either federal or state income tax. And in rural Iowa today, these folks likely have many more pressing needs that could be met by an effective state government, but they won’t be.
Instead, this is all about the retired farmers who would receive $100,000 or more in cash rent, either to avoid passing the land on to younger farmers or as part of a complex tax scheme involving their children’s inheritance.
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