America's Dumbest Tax Loophole: The Florida Rent-a-Cow Scam

Each year, big time developers in the sunshine state save millions in property taxes by, yes, renting cattle



State tax codes have a way of accumulating junk -- quirky breaks and carve-outs that grow increasingly odd as they linger on the books, like tacky old legislative souvenirs. In Alabama, you can still deduct $1,000 for building a radioactive fallout shelter. In Arkansas, blind combat veterans may buy a new car every two years tax free. In Hawaii, residents can claim a $3,000 deduction for taking care of "exceptional trees" on their property -- as long as an expert deems them "exceptional."

Often, these exemptions become the pet cause of some vocal interest group, making them near impossible to dislodge. Louisiana recently instituted an annual "second amendment weekend tax holiday," which lets shoppers buy guns, knives, blinds, and other hunting gear sans sales tax each September. You can be sure that one will be around as long as there are deer to shoot in Cajun country.

Some junk in the tax code, though, isn't merely odd. During a visit to Florida this month, I became acquainted with the state's own notoriously strange loophole which, unlike the basically benign examples above, costs untold millions of dollars every year. 


"Oh look, there they are!" my mother said, swerving the car a bit as she pointed to the side of the road. "The rent-a-cows!"

And indeed, there they were, a tiny herd of cattle -- maybe a half-dozen of them, from what I could see -- marooned in a wide, fenced-in field of grass off the highway, like the last, cud-chewing remnants of a long-vanished family farm. Perhaps they would've seemed less out of place if we weren't just a few minutes away from Medical City, the University of Central Florida's sprawling new campus of hospitals and teaching facilities that's becoming a magnet for Orlando-area developers. Its gleaming new VA hospital loomed ahead. 

My mother had been talking about the rent-a-cows since she had begun house-hunting in the area a couple of months before. It was a tax thing, she explained one day. You could rent a cow, put it in your yard, and get a property tax break. I took the story with a grain of salt. Zoe had spent the last four decades of her life living in New York City before moving to Florida for a job at UCF's medical school. I assumed something had just gotten lost in translation. 

No. Sadly, my mother was basically right.


It's known as Florida's greenbelt law. The statute is meant to preserve farmland by taxing it at special, low rate. But some of the act's biggest beneficiaries are deep-pocketed developers, who often take advantage of it by literally renting cows. 

"It's kind of symbolic of a lot of the problems we see with the tax code today," Carl Davis, a senior analyst with Citizens for Tax Justice, told me, "of how needlessly polluted and complicated and loophole ridden it is."

The greenbelt law dates back to 1959, a time when Florida's swamps and orange groves were first giving way to suburban strip malls and sub divisions. As former state senator Steven Geller said to me, it was a troubled time for farmers. Land was assessed and taxed based on its most profitable potential use, and for the most part, that meant real estate. Because citrus trees didn't offer the same returns as new condos, many farmers were forced to either sell their property or risk being priced out. The greenbelt law offered a solution by dropping rates for agricultural land. 

Other states have passed similar laws that work as intended. The problem with Florida's, Geller said, is its vague wording. To qualify for the exemption, property owners are required to use their land for "bona fide" agricultural purposes. But what does "bona fide" mean? That's far from clear. Aided by lax court rulings, developers have seized on that ambiguity by leasing out their land to cattle ranchers while they prepare to build, often shaving hundreds of thousands of dollars off their tax bills. 

What does it take to qualify for the exemption? Often just a few underfed animals roaming around a mud patch. Property owners must submit a form to the government and provide evidence that they are engaged in "good-faith commercial agriculture." They don't have to generate an income from their operations. Many have been allowed to claim the exemption even after rezoning their land for non-agricultural purposes. Others have received the break after starting construction. In its unsparing, 2005 investigation of the greenbelt law, reporters from the Miami Herald visited so-called farmland where they encountered cows eating trash in grassless fields and dead animals decomposing in the dirt. Here are couple of their descriptions:  

  • Developer Armando Codina and his partners pay ranchers to keep cows on their land in northwest Miami-Dade County so they can get agricultural tax breaks while building industrial warehouses. One so-called pasture is a soggy wasteland littered with downed trees. Months before Codina requested farmland tax breaks, he asked Miami-Dade to declare the entire site an environmentally contaminated "brownfield." 2004 property tax savings: $250,273. 
  • Cows wander amid concrete pads and utility boxes on 49 acres in Southwest Ranches, where developer Richard Bell plans to build homes priced at $1.5 million and up.... The rancher reported 16 cows last year. 2004 property tax savings: $140,168.

Other beneficiaries of the law have included Walt Disney World ($1.5 million in savings), as well as U.S. Senator Bill Nelson ($43,000 in savings), who keeps about six cows on 55 acres of land near the Indian River, courtesy of a cattle ranching operation that leases the property for free. Like Nelson, some developers simply offer their land to ranchers for no charge. Others, as the Herald noted, actually pay the ranchers -- hence the loophole's nickname, "rent-a-cow." 

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Jordan Weissmann is a senior associate editor at The Atlantic.

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