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

By Pam Lewison, Director, Project on Agriculture

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.”1 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.
A close look at farms and ranches in Washington state demonstrates that, in addition to the taxes farmers and ranchers already pay, adding more taxation would significantly increase the financial burden lawmakers impose on farm and ranch operations in our state. Higher taxes would potentially push them over the threshold of sustainability and into bankruptcy. As is often noted, farmers and ranchers are “price takers,” not “price makers” meaning any additional fiscal burden imposed by the state through more regulation or taxation cannot be made up by passing the cost onto consumers.

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