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Estimating The Effects Of Tax Reform On Farm Sole Proprietorships

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  • Rossi, Clifford V.

Abstract

The effects of the Tax Reform Act of 1986 on farm sole proprietorships are examined in a tax accounting simulation model of over 15,000 farm tax returns. Tax liability for sole proprietorships is estimated to decline by 4.5 percent under tax reform. All farm types with the exception of the dairy sector experience net tax reductions under the new tax law. Taxpayers with high levels of farm business receipts will likely pay more in taxes under fully implemented tax reform. In general, lower marginal tax rates and generous expensing provisions will offset the repeal of the investment tax credit and capital gains preference. Taxpayers with high off-farm incomes receive little benefit from the new law.

Suggested Citation

  • Rossi, Clifford V., 1988. "Estimating The Effects Of Tax Reform On Farm Sole Proprietorships," Staff Reports 278124, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerssr:278124
    DOI: 10.22004/ag.econ.278124
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    File URL: https://ageconsearch.umn.edu/record/278124/files/ers-report-373.pdf
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    References listed on IDEAS

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    1. Michael Boehlje & Hoy Carman, 1982. "Tax Policy: Implications for Producers and the Agricultural Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(5), pages 1030-1038.
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