US tax on dairy output backed by federal court

A federal appeals court ruled the federal government may put a tax on milk production to encourage dairy farmers to reduce production and offset a portion of the $2.3 billion price-support program.

The decision Monday by the Fourth Circuit Court of Appeals rebuffed attempts by the State of South Carolina and groups representing about 35 percent of the nation's dairy farmers to eliminate the 50-cent fee on each hundred pounds of milk produced. The tax was expected to produce monthly savings averaging about $ 60 million in the price-support program, in which the government buys surplus milk from farmers who produce more than they can sell.