California not only leads the United States in agricultural production but also has the dubious distinction of having one of the highest sales tax rates on agricultural machinery in the nation, according to a UC Davis agricultural economist. Of the 45 U.S. states that collect sales tax, 33 states totally exempt new agricultural machinery from sales tax, notes Hoy Carman, a professor of agricultural and resource economics. And of the remaining 12 states that do tax agricultural machinery sales, eight states do so at reduced rates with six of those eight reducing rates by 50 percent or more. Furthermore, California is the only state that levies sales tax on the gross amount of the equipment sales price, even when a farmer is trading in an old piece of machinery on the purchase. "This 'double taxation' cost California farmers almost $2.25 million in sales taxes during 1999," said Carman. Total exemption of California agricultural machinery and parts from sales and use taxes would have saved California farmers an estimated $64 million in 1999, he reported. "One of the effects of the high tax rates is that California farmers and ranchers purchase a significant amount of agricultural machinery from sellers in other states for use in California," Carman said. He suggests that bringing California tax policies on agricultural machinery in line with other states would increase the competitive strength of the state's farmers and boost sales by California agricultural machinery dealers.