It’s safe to say that most Americans wouldn’t categorize tax season as a “special time of year.”
So why, then, is Farm Credit joyously announcing it as such?
The answer is simple: the FCS doesn’t pay taxes like the rest of us.
Instead of taking careful stock of its finances like most Americans in the days and weeks leading up to the April 15 filing deadline, Farm Credit has been busy this year finding ways to celebrate. This is according to an advertising campaign by Southwest Georgia Farm Credit in which the publicly-backed lender virtually admits to having more cash than it can possibly handle by depicting money literally growing on a tree. On its website, the association portrays money sprouting from the ground.
For some context, Farm Credit in 2013 paid taxes at a rate of just 4.55 percent — a rate lower than 80 percent of Americans – despite $4.6 billion in subsidized profits. In 2014, Farm Credit similarly enjoyed a net profit of $4.7 billion while paying just 4.47 percent in combined federal, state and local taxes.
With exorbitant profits at hand and absent any responsibility to file its annual taxes at a rate comparable to other farm banks or individuals, Farm Credit has adopted a name for this time of year: patronage season. That’s right, Farm Credit takes its tax payer subsidies, lends to big telecom ($725 million to Verizon?), then turns around and doles out interest rebates to its constituents.
Its first bailout in 1987 cost taxpayers $4 billion. At the time, the System had total assets of $40 billion. Today, the System has grown substantially to more than $282 billion in assets – if it were to need another bailout, the cost to taxpayers would be much greater. This is a real concern given the state of Farm Credit’s lending portfolio, its clear loss of focus and the track record of government sponsored enterprise (GSE) counterparts Fannie Mae and Freddie Mac.
Just remember that while the average American may fret, scramble, worry – whatever it may be – over the implications of April 15 filing deadline, Farm Credit audaciously boasts of its subsidized profits, thanks to an astonishingly privileged tax responsibility.
Tax day is as good a time as any to remind Congress that Farm Credit needs immediate reform.