Most of my family, on both grandparent sides, are farmers. North West England, mixed dairy and arable. (I'm not. I'm an economist). The farm assets are very substantial, in capital value, but the income or rate of return is very low, so the farms provide a good level of "middle class" income, but not beyond that.
If inheritance tax had to be paid on the full capital values, this would mean finding a very large cash sum on succession, requiring significant liquidation of assets. In other words, the family business model would not work. So the issue really is the extent to which the new rules will hit this type of "working farmer".
One could argue that such liquidation is somehow desirable, I suppose, and too bad for the farmers. Rationalization a good thing, and why should farmers be exempt. Corporatize it. It's a point of view, but that attitude is one that, not surprisingly, would not find much favour with the farming community, and cuts across the whole "stewardship" approach to land management that you (one would hope) have with land staying within a family for generations.
I think my analysis is that your family might not have this problem, because the value of the land will fall. But that this will have similar effects on the long term viability of family farming business. Like you say, this might be something that we want to happen for other reasons, but I think a lot of people are trying to have it too quickly saying "this won't affect the small farmers what are you on about", rather than trying to defend the tradeoffs that are actually being made.
This is also the same self-reinforcing dynamic behind nimbyism, and why usually nimbys are also niybye too (not in your back yard either.) If I have purchased an expensive home, then I don't want the housing crisis to be solved by making my home cheaper; and if I needed a mortgage to buy my property, expensive homes aren't just something I want but something I need.
Actually I wonder if the more prosaic explanation to 'what is with everyone?' is that there is a slightly larger volume of change than before (Covid especially was a lot of change first one way then back again), combined with the fact that people are on average a bit older, and older people are *much* worse at tolerating any kind of change whatsoever.
To keep on with the broad theme of this blog, it's another cognitive imposition.
I don't imagine farming has gotten much easier in the neoliberal era and especially since the pandemic (nothing else has) and now you're throwing something else for Johnny Farmer to think about. Something big enough that it likely challenges most or all of the economic assumptions that undergird his business so he can't even react to it with the automatic reflexes he's developed to contend with, say, drought.
Somebody once told me very long ago that there are two public policies that always pass without the need for justification: taxpayer support for the arts and agriculture. It was very long ago, and Reagan and Thatcher put paid to supporting the arts. But agriculture always remains.
The Reagan era though was a bad era for family farmers in the US. The number of family held farms plummeted. There were "farm aid" concerts and fundraisers to try and help farmers keep the farms in the family. They weren't very successful. Farms were bought and consolidated by large corporations and the entire structure of agriculture changed.
The government did still subsidize agriculture, but the subsidies went to corporate farms.
Farmers are quite annoyed because it's not just ALF which was raided in the budget. BPS (payment per acre) will be phased out more quickly and ELMS (public cash for public goods) will be smaller and phased in more slowly (largely because DEFRA doesn't work) and the ongoing dislike of trade deals with Australia and NZ which allows lower health standard meat to compete with British products. Which are then sold by duplicitous Supermarkets as British.
Is there a law , Goodhart style, along the lines of: ‘The genuine subjects of a legitimate tax shelter (in this case actual farmers) will inevitably end up as the human shield for wealthy tax dodgers”?
If there isn’t, I’m claiming it as ‘Evan-Cook’s Law’. You read it here first.
The taxation of land has got to be one of the longest running economic policy debates in British history. The English Civil War and Glorious Revolution tells you not to mess with the landed gentry. Ricardo's rent-analysis and the figure of the rentier is central to classical British economics. Lloyd George's People's Budget sets the debate for the twentieth century (land taxes for social welfare), and Keynes wanted the euthanize the (now financial) rentier.
Another thing to consider is the value of the land as an asset for farmers to borrow against. I have friends who run the oldest farm in the county - probably four and a half minutes old by English standards, but old by US standards. They were asked by a local conservation group if they'd like to place their farmland under a conservation easement. They didn't consider it for long. Land under a conservation easement can't be used as loan collateral. In the US, farmers often have to borrow against the value of their land to afford the next year's planting. Thomas Jefferson used to bitch about it, so it isn't recent.
During the Great Depression in the 1930s, a lot of good farmland was taken out of production because it had been used as collateral and when the farm failed the land was seized by the bank. Farms on marginal land that was too crappy to be used as collateral were more likely to stay in operation. It's probably different in other countries, but finance and farmers go way back like Cain and Abel.
Most of my family, on both grandparent sides, are farmers. North West England, mixed dairy and arable. (I'm not. I'm an economist). The farm assets are very substantial, in capital value, but the income or rate of return is very low, so the farms provide a good level of "middle class" income, but not beyond that.
If inheritance tax had to be paid on the full capital values, this would mean finding a very large cash sum on succession, requiring significant liquidation of assets. In other words, the family business model would not work. So the issue really is the extent to which the new rules will hit this type of "working farmer".
One could argue that such liquidation is somehow desirable, I suppose, and too bad for the farmers. Rationalization a good thing, and why should farmers be exempt. Corporatize it. It's a point of view, but that attitude is one that, not surprisingly, would not find much favour with the farming community, and cuts across the whole "stewardship" approach to land management that you (one would hope) have with land staying within a family for generations.
I think my analysis is that your family might not have this problem, because the value of the land will fall. But that this will have similar effects on the long term viability of family farming business. Like you say, this might be something that we want to happen for other reasons, but I think a lot of people are trying to have it too quickly saying "this won't affect the small farmers what are you on about", rather than trying to defend the tradeoffs that are actually being made.
This is also the same self-reinforcing dynamic behind nimbyism, and why usually nimbys are also niybye too (not in your back yard either.) If I have purchased an expensive home, then I don't want the housing crisis to be solved by making my home cheaper; and if I needed a mortgage to buy my property, expensive homes aren't just something I want but something I need.
I said on bluesky the other day that the real meaning of NIMBY is "everyone's a Coasean until they get punched in the face".
As you say, change is usually unpopular, especially if it is sudden, even if it is long-term beneficial.
Actually I wonder if the more prosaic explanation to 'what is with everyone?' is that there is a slightly larger volume of change than before (Covid especially was a lot of change first one way then back again), combined with the fact that people are on average a bit older, and older people are *much* worse at tolerating any kind of change whatsoever.
To keep on with the broad theme of this blog, it's another cognitive imposition.
I don't imagine farming has gotten much easier in the neoliberal era and especially since the pandemic (nothing else has) and now you're throwing something else for Johnny Farmer to think about. Something big enough that it likely challenges most or all of the economic assumptions that undergird his business so he can't even react to it with the automatic reflexes he's developed to contend with, say, drought.
On today this morning someone claimed they had a farm worth £18m that only generated £15k of annual net income. So it's clearly not really worth £18m!
Somebody once told me very long ago that there are two public policies that always pass without the need for justification: taxpayer support for the arts and agriculture. It was very long ago, and Reagan and Thatcher put paid to supporting the arts. But agriculture always remains.
The Reagan era though was a bad era for family farmers in the US. The number of family held farms plummeted. There were "farm aid" concerts and fundraisers to try and help farmers keep the farms in the family. They weren't very successful. Farms were bought and consolidated by large corporations and the entire structure of agriculture changed.
The government did still subsidize agriculture, but the subsidies went to corporate farms.
Farmers are quite annoyed because it's not just ALF which was raided in the budget. BPS (payment per acre) will be phased out more quickly and ELMS (public cash for public goods) will be smaller and phased in more slowly (largely because DEFRA doesn't work) and the ongoing dislike of trade deals with Australia and NZ which allows lower health standard meat to compete with British products. Which are then sold by duplicitous Supermarkets as British.
Is there a law , Goodhart style, along the lines of: ‘The genuine subjects of a legitimate tax shelter (in this case actual farmers) will inevitably end up as the human shield for wealthy tax dodgers”?
If there isn’t, I’m claiming it as ‘Evan-Cook’s Law’. You read it here first.
The taxation of land has got to be one of the longest running economic policy debates in British history. The English Civil War and Glorious Revolution tells you not to mess with the landed gentry. Ricardo's rent-analysis and the figure of the rentier is central to classical British economics. Lloyd George's People's Budget sets the debate for the twentieth century (land taxes for social welfare), and Keynes wanted the euthanize the (now financial) rentier.
Plus ca change.
Fun additional fact. Bill Gates is the largest owner of agricultural land in the US. Some 250,000 in seventeen states.
Maybe he knows something everyone investing in silicon valley (rather than green valley!) doesn't.
Another thing to consider is the value of the land as an asset for farmers to borrow against. I have friends who run the oldest farm in the county - probably four and a half minutes old by English standards, but old by US standards. They were asked by a local conservation group if they'd like to place their farmland under a conservation easement. They didn't consider it for long. Land under a conservation easement can't be used as loan collateral. In the US, farmers often have to borrow against the value of their land to afford the next year's planting. Thomas Jefferson used to bitch about it, so it isn't recent.
During the Great Depression in the 1930s, a lot of good farmland was taken out of production because it had been used as collateral and when the farm failed the land was seized by the bank. Farms on marginal land that was too crappy to be used as collateral were more likely to stay in operation. It's probably different in other countries, but finance and farmers go way back like Cain and Abel.