Yes, farmers pay taxes: A review of taxation imposed on Washington state farmers and ranchers

By PAM LEWISON  | 
POLICY NOTES
|
Jan 8, 2020

Key Findings

  1. Some critics claim Washington state farmers pay little or no taxes. That is not true.
  2. Farmers and ranchers pay the B&O tax.
  3. Farmers pay self-employment taxes and all state and federal payroll taxes.
  4. All farmers pay sales or use tax on equipment.  Washington is one of only two states to impose such a tax.     
  5. Like other wholesale industries, farmers do not pay retail sales tax on inputs, like feed, seed, fertilizer, equipment maintenance and parts, fuel, fencing, and similar items.
  6. Washington state farmers and ranchers pay an average of $403,410,000 in total property taxes statewide.
  7. In all, the estimated 2018 taxes paid by farmers and ranchers in Washington totaled $922,849,403.

Introduction

Agriculture is an intrinsic part of Washington state’s economy, providing its second largest driver of growth, income, and jobs.  Contrary to some claims, farmers provide a great deal of revenue for state and county governments through tax collection.

This study examines the claim that farmers and ranchers in our state “do not pay any taxes; none whatsoever.”  This study describes the various tax categories including Business and Occupation (B&O), property, retail sales, and self-employment and payroll taxes that farmers and ranchers pay.  As the economics of farming becomes more difficult, this study provides a better understanding of where our food dollars go and how farmers and ranchers maintain their livelihoods while contributing to the larger state economy.

To continue reading or to download the full policy brief, click the link below:

Download file Yes, farmers pay taxes FULL STUDY