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The Potential Impact of Tax Reform on Farm Businesses and Rural Households

Author

Listed:
  • Williamson, James M.
  • Durst, Ron L.
  • Farrigan, Tracey L.

Abstract

Several proposals calling for fundamental reform of the Federal income tax system have been put forth, including a report by the co-chairs of the National Commission on Fiscal Responsibility. The primary elements of reform—eliminating tax preferences, restructuring capital gains and dividend tax rates, lowering rates on individual income, and reducing the number of tax brackets—could have a signifi cant impact on the after-tax income and well-being of both farm businesses and rural households. This report uses published and special tabulation data obtained from the Internal Revenue Service, farm-level data from USDA’s Agricultural Resource Management Survey, and data from the American Housing Survey to examine the current tax situation for farm households and to evaluate the importance of various Federal income tax policies. For farm households, the effect of reform will primarily depend upon changes to existing treatment of investment and business income, including several important business deductions. In contrast, changes to existing individual tax credits, especially refundable tax credits, will likely be of greater signifi cance to nonfarm rural households.

Suggested Citation

  • Williamson, James M. & Durst, Ron L. & Farrigan, Tracey L., 2013. "The Potential Impact of Tax Reform on Farm Businesses and Rural Households," Economic Information Bulletin 145318, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uersib:145318
    DOI: 10.22004/ag.econ.145318
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    References listed on IDEAS

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    1. Thomas Piketty & Emmanuel Saez, 2007. "How Progressive is the U.S. Federal Tax System? A Historical and International Perspective," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 3-24, Winter.
    2. Bruce D. Meyer & Dan T. Rosenbaum, 2001. "Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(3), pages 1063-1114.
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    5. Stacy Dickert & Scott Houser & John Karl Scholz, 1995. "The Earned Income Tax Credit and Transfer Programs: A Study of Labor Market and Program Participation," NBER Chapters, in: Tax Policy and the Economy, Volume 9, pages 1-50, National Bureau of Economic Research, Inc.
    6. Robert K. Triest, 1990. "The Effect of Income Taxation on Labor Supply in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 25(3), pages 491-516.
    7. Eissa, Nada & Hoynes, Hilary Williamson, 2004. "Taxes and the labor market participation of married couples: the earned income tax credit," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1931-1958, August.
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    9. Mishra, Ashok K. & El-Osta, Hisham S. & Morehart, Mitchell J. & Johnson, James D. & Hopkins, Jeffrey W., 2002. "Income, Wealth, And The Economic Well-Being Of Farm Households," Agricultural Economic Reports 33967, United States Department of Agriculture, Economic Research Service.
    10. Durst, Ron & Farrigan, Tracey, 2011. "Federal Tax Policies and Low-Income Rural Households," Economic Information Bulletin 291946, United States Department of Agriculture, Economic Research Service.
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    Cited by:

    1. Beckman, Jayson & Gopinath, Munisamy & Tsigas, Marinos, 2017. "Production and Trade Impacts of Tax Reform," 2018 Allied Social Sciences Association (ASSA) Annual Meeting, January 5-7, 2018, Philadelphia, Pennsylvania 266295, Agricultural and Applied Economics Association.
    2. Jason Brown & John Pender & Jeremy G. Weber, 2013. "Rural wealth creation and emerging energy industries: lease and royalty payments to farm households and businesses," Research Working Paper RWP 13-07, Federal Reserve Bank of Kansas City.
    3. Weber, Jeremy G. & Wall, Conor & Brown, Jason P. & Hertz, Tom, 2013. "Crop Prices, Agricultural Revenues, and the Local Economy of the U.S. Heartland," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150404, Agricultural and Applied Economics Association.
    4. Jeremy G. Weber & Conor Wall & Jason Brown & Tom Hertz, 2015. "Crop Prices, Agricultural Revenues, and the Rural Economy," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 37(3), pages 459-476.
    5. repec:fip:fedkrw:rwp2013-07 is not listed on IDEAS

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    Agricultural Finance; Public Economics;

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