The Potential Impact of Tax Reform on Farm Businesses and Rural Households
AbstractSeveral 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.
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Bibliographic InfoPaper provided by United States Department of Agriculture, Economic Research Service in its series Economic Information Bulletin with number 145318.
Date of creation: Feb 2013
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farm households; tax reform; income tax; tax rates; Federal tax policy; farm losses; refundable credits; tax deductions; rural households; tax preferences; Agricultural Finance; Public Economics;
This paper has been announced in the following NEP Reports:
- NEP-ACC-2013-03-23 (Accounting & Auditing)
- NEP-AGR-2013-03-23 (Agricultural Economics)
- NEP-ALL-2013-03-23 (All new papers)
- NEP-PBE-2013-03-23 (Public Economics)
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