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Iowa Land Prices
Mr. President, now I would turn to one other point. If anybody is waiting to speak, it is a little shorter than what I just stated.
I want to make it a priority--or I do make it a priority to keep in touch with my Iowa constituents, 2.3 million of them. I listen to their thoughts and concerns. Now, that could be on my 99-county tour meetings that I hold every year for 41 years in a row now that I have been a Senator for Iowa, or it could be during the match-up of Iowa State versus my alma mater, Northern Iowa football. In either case, I meet with Iowans where they are and listen to what is on their mind.
During this past State work period, I had multiple conversations with farmers about what is on their minds. At the UNI-Iowa State game, I had a conversation with a friend but also a fellow farmer, Ron Heck. He farms near Perry, IA, where he talked to me at this football game about concerns about President Biden's tax plan.
Ron followed up with an email to me, which I want to share with my colleagues on the floor since this is a theme that I have consistently heard across the State.
At the end of my speech, Mr. President, I ask unanimous consent that this email be printed in the Record.
I am going to refer to parts of that email, but I think you ought to hear it directly from Ron Heck, so that will be at the end. Just read it.
Here is my summation of it. Ron started the email by saying:
Iowa farmers have a problem with exploding land prices, coupled with Biden's increasing death and transfer taxes.
But to quote further:
A . . . tax at death or transfer can't be paid back by younger working farm families. Young Iowa farmers would become feudal servants to banks and landlords from outside the state.
There are many cliches and articles written about this. I have seen some that don't seem to grasp the problem.
For those who didn't grasp the problem that these taxes might cause, Ron highlighted some key statistics on the lack of available Iowa farmland. You understand, God only made so much farmland.
Quoting again:
. . . in Iowa, from the third quarter of 2020 through the second quarter of 2021, CARD [the Center for Agricultural Rural Development] at ISU [Iowa State University] says 181,046 acres of Iowa farmland has been ``available on the market.'' Out of about 30 million crop acres, this is 0.6% in a year. Everyone knows that it might be 100 years before any one parcel is available again, so ``you need to buy it now'' is always said by the auctioneer. A Des Moines Register article on June 28, 2018, by Donelle Eller says that only
``7% of Iowa farmland (owners) intend to sell to a non-family member.''
Ron made this point to show that public auction prices are high because of the scarcity of available farmland for sale. These prices should not be used for family tax-transfer valuations for taxation. But, of course, they would be under some of these ideas coming out of the White House.
Ron continued with facts on the price of this farmland:
Outsiders believe the value is there, but in fact, farm families don't want to sell, so the auction price goes up.
Ron said that, in August, there were 40 Iowa farmland auctions, with most of the sales between $10,000 to $16,000 an acre.
Assuming a ``taxable'' gain of $10,000 per acre, Biden's taxes could be $4,400 per acre.
Ron told me that, ``At a minimum, this would be a $200 per acre cash rent for 22 years to the U.S. Government, all payable in advance.''
He added: ``This is `confiscation, not taxation.' ''
Ron said: `` . . . since the $4,400 must be paid for in after tax dollars, it would actually take double this amount to pay it back. Interest charges could make the payback period more than 50 years, just to pay the U.S. taxes.''
Ron finished his email by saying:
It doesn't take much outside money to raise havoc with Iowa farmland auctions, and therefore estate or transfer taxes will ultimately destroy Iowa's farm culture.
Ron, thanks for taking time to write to me so I can tell your story to my colleagues in the U.S. Senate. It is my job to respond to comments and do something about it.
I want to urge my colleagues to join together and oppose changes that will impact family farmers and small businesses, generally. Most importantly, of those families which we were just told in Ron's statistics, 93 percent of the farmers want to pass it on to the next generation. That might be true of small businesses as well.
These Iowa farmers, just like farmers around the country, feed and fuel our country and the world. Only 2 percent of the people in this country provide food for the other 98 percent. Ensuring that the next generation of farmers are able to keep the land in their family is in our national interest.
If you want to preserve the family farm, then you can't let it be taken away by these Biden tax proposals. These tax-and-spend proposals will be bad for small business, for farmers, and for all Iowans.
Mr. President, at this point I ask unanimous consent that the entire email from Ron Heck be printed in the Record.
There being no objection, the material was ordered to be printed in the Record, as follows:
Jennifer, you and I have not met. I talked to Senator Grassley at the ISU/UNI football game last week. He asked me to send an email to you about our conversation. He will recognize my name.
Iowa farmers have a problem with exploding land prices, coupled with Biden's increasing death and transfer taxes. As the Senator said to me, the result is ``confiscation, not taxation''. A 44% tax at death or transfer can't be paid back by younger working farm families. Young Iowa farmers would become feudal servants to banks and landlords from outside of the state.
There are many cliches and articles written about this. I have seen some that don't seem to grasp the problem, and some that are pretty good. I'll do some math about Iowa grain farmers that might be helpful. I know the Senator doesn't need to be convinced that the proposed taxes are wrong. He might find some of this useful:
In the last year in Iowa, from the third quarter of 2020 through the second quarter of 2021, CARD at ISU says 181,046 acres of Iowa farmland has been ``available on the market''. Out of about 30 million crop acres, this is 0.6% in a year. Everyone knows that it might be a 100 years before any one parcel is available again, so ``you need to buy it now'' is always said by the auctioneer. A Des Moines Register article from June 28, 2018, by Donelle Eller says that only ``7% of Iowa farmland (owners) intend to sell to a non-family member''. POINT: Public auction prices are artificially high because of scarcity and should not be used for family tax transfer valuations for taxation. Outsiders believe the value is there, but in fact, farm families don't want to sell, so the auction price goes up.
Forty current Iowa auction prices from Aug 20 to Aug 27 were from $7400 to $22,600. The $22,600 included a wind turbine that was bring in about $400/acre in payments, so that one doesn't count. Still, most of them were $10,000 to
$16,000. Assuming a ``taxable'' gain of $10,000 per acre. Biden's taxes could be $4,400 per acre. At a minimum, this would be a $200 per acre cash rent for 22 years to the US government, all payable in advance. This is ``confiscation, not taxation''. Actually, since the $4,400 must be paid for in after tax dollars, it would actually take double this amount to pay it back. Interest charges could make the payback period more than 50 years, just to pay the US taxes.
Farmdoc from the University of Illinois has many articles showing the return to land and the farmer. They include crop and government revenue, and subtract all costs except rent and family living. The number is variable, but usually the landlord and tenant have about $300 to split as they choose. Iowa State has similar numbers, but Illinois has a better presentation.
So, if farmers can't pay these prices, doesn't this all work out with lower land prices? Nope. For one thing, there is a boom and bust in Iowa land prices about every 50 years
(1930, 1980, 2030?). Booms, or bubbles, are caused by a bad combination of money, credit, and attitude. What could be the problem now? Of course one is the cheap and easy credit. With 10 year T-bill rates around 1%, and everyone ``knows'' you can't lose money on farm land, a $240 cash rent on $16,000 land at first glance is a 1.5% return. Everyone ``knows'' that government programs guarantee that farmers will pay the rent (have you seen the movie ``The Big Short'' about the housing bust?).
What about an outside billionaire getting excited about carbon sequestration, or getting nervous about the stock market? The 181,046 auctioned Iowa acres last year if they were $14,000 per acre would have been $2.5 billion dollars. Bill Gates is now the largest farmland owner in the US. Back to my point: it doesn't take much outside money to raise havoc with Iowa farmland auctions, and therefore estate or transfer taxes, and ultimately destroy Iowa's farm culture.
Mr. GRASSLEY. I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Ms. ERNST. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
SOURCE: Congressional Record Vol. 167, No. 164
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