Country music royalty including Billy Ray Cyrus and The Judd's are among a star studded list of of wealthy Tennesseans who are reportedly taking advantage of loopholes in their tax code in order to claim huge breaks on estates and undeveloped land.
The Agricultural, Forest, and Open Space Act of 1976, (commonly referred to as the “Greenbelt Law”) provides for the assessment of agriculture, forest, and open space lands for tax purposes based on present use value rather than on market value, according to Knox County Property Assessor's Office. And Tennessee's super-rich -- from country music stars to former corporate executives -- are reportedly using the law to get big tax breaks, according to an investigation by The Knoxville News Sentinel and The Commercial Appeal.
The 1976 law was meant to help farmers and though it's not being broken exactly, these wealthy residents are "simply bending it, shaping it, looking for a way to squeeze into its provisions," according to Chris Peck, editor of The Commercial Appeal.
Judd manages to save $18,000 a year in county property taxes on her 545-acre, $3.9 million estate in Williamson County , a discount of 81 percent, because she calls her land a timber reserve. Roger Mick, the retired CFO of Nashville-based Hospital Corp. of America, enjoys a 64 percent savings in city and county property taxes.
But Tennessee isn't the only place where the super-rich can take advantage of tax loopholes. Earlier this year, the IRS released a report that found that more 20,000 filers in 2009 with an adjusted gross income above $200,000 didn't owe any taxes that year. The percentage of affluent filers who owed no taxes was five times greater than in 2001. As David Callahan wrote, U.S. tax laws sometime seem to be designed to facilitate tax avoidance by the super wealthy.
Tax breaks that disproportionately benefit the super-rich have also become a hot-button issue on the campaign trail. Many have criticized Republican candidate Mitt Romney's relatively low tax rate. Much of Romney's income -- like that of many wealthy Americans -- comes from investments, which are taxed at a much lower rate than other forms of income.
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