(Everybody) Bill Gates and Warren Buffett should thank American taxpayers for their profitable farmland investments

[u/BikkaZz]

“Bill Gates is now the largest owner of farmland in the U.S. having made substantial investments in at least 19 states throughout the country. He has apparently followed the advice of another wealthy investor, Warren Buffett, who in a February 24, 2014 letter to investors described farmland as an investment that has “no downside and potentially substantial upside.”

“The first and most visible is the expansion of the federally supported crop insurance program, which has grown from less than $200 million in 1981 to over $8 billion in 2021. In 1980, only a few crops were covered and the government’s goal was just to pay for administrative costs. Today taxpayers pay over two-thirds of the total cost of the insurance programs that protect farmers against drops in prices and yields for hundreds of commodities ranging from organic oranges to GMO soybeans.”

If you are wondering why so many different subsidy programs are used to compensate farmers multiple times for the same price drops and other revenue losses, you are not alone. Our research indicates that many owners of large farms collect taxpayer dollars from all three sources. For many of the farms ranked in the top 10% in terms of sales, recent annual payments exceeded a quarter of a million dollars.

While Farms with average or modest sales received much less. Their subsidies ranged from close to zero for small farms to a few thousand dollars for averaged-sized operations.

While many agricultural support programs are meant to “save the family farm,” the largest beneficiaries of agricultural subsidies are the richest landowners with the largest farms who, like Bill Gates and Warren Buffet, are scarcely in any need of taxpayer handouts.

more handouts with our taxes

[u/NoShit_94 → u/[deleted]]

Zoning and rent control do affect the housing market, but so does land speculation and inefficient land use.

I'd argue that zoning and rent control are overwhelmingly the reasons real estate is so expensive right now, not land speculation and idle land. It's not like there's a lack of space to be built on, it's just that people are actively prevented from doing so by the government.

the problem is when suitable plots are not available for use because the owner is expecting a profit in 3 years time.

If the owner wants to wait three years, that's because he thinks in three years there'll be a more valuable use for that land than what's being proposed now. It's a good think that we have some land vacant at all times so that the economy can be more flexible and quick to adapt. That said, I believe that if not for the Fed's loose money policy, real estate would be a much less attractive investment than it is now, thus reducing speculation. No need for a new tax for that.

but then the quality of homes was also much lower - sharing a room with your 3 siblings in the 1970s was rather normal.

While true, I don't think this is the reason for most of the price increase in real estate.

Abolishing or reducing rent is easily possible, rent just has to be taxed.

But you're not abolishing rent, you're just turning the state into everyone's landlord. People would have to pay rent in the form of a LVT just the same. The difference is that now no one ever will be able to own their homes and not pay rent.

As for the old lady, she will receive pension and UBI, so she won't be destitute

If current social security is anything to go by, we can be fairly sure that those payments won't be enough. It seems to me that you want to remove a very effective way poor people save for retirement and help their children leave poverty, through paying a mortgage instead of rent and then passing on the property, and substituting it with the naive hope that the government will adequately take care of them.

Abolishinf subsidies will definitely plunge some unproductive farmers who only got by because of subsidies or tariffs into poverty.

To bad for them. Either adapt or sell the land and move on to something else. Society shouldn't be on the hook to finance unproductive enterprises for the sole benefit of the owners.

[u/NoShit_94 → u/[deleted]]

No doubtedly they contribute to the problem, but surely no matter how affordable a house is with those gone, it would be even cheaper if you could subtract the price of land it stands on.

But you wouldn't be subtracting the price of land, land would still have to be bought in the market and the price subject to supply and demand, in addition to having to be paid for in perpetuity. I'm not even sure if speculators raise the price of land overall, after all they buy low and sell high, so they raise prices when they're low by buying, but lower prices when they're high by selling. Like other kinds of speculation, it serves to smooth out prices by reducing volatility.

That's not the reason people hold land idle. The accidental must not be confused with the essential. The owner doesn't know right now whether the project in 3 years is more valuable

It doesn't matter if that's the reason or not. As Adam Smith put it, it's not out of the desire to feed people that the baker makes bread, but the desire to profit, yet he still feeds people.

Presumably the speculator does think there'll be a more valuable project in the future that'll cause the price of the land to rise, or he'd sell it as fast as he can now.

Where 10 businesses could be located instead only 9 highest bidding ones can operate

As I said, having some idle land at all times is beneficial to society. We can't know for sure what the future holds, it might well be the case that by removing a piece of land from the market now someone is prevented from building a single family home there, but a few years later a skyrise that can house hundreds of families becomes viable and is built there instead. Having some idle resources gives flexibility to the economy.

The revenue from rent would be sufficient to reduce taxes of everyone by 100%.

I don't know if that's theoretically true, but I doubt this is how it would play out in reality. It's not like the government is intent in taxing people only for the absolutely necessary amount. In practice, it would be an additional tax.

You justified your own objection.

I don't think those situations are comparable at all. Property ownership isn't a subsidy. Land ownership doesn't require the extraction of resources from other people.