IDEAS home Printed from https://ideas.repec.org/a/ags/sojoae/30089.html
   My bibliography  Save this article

A Further Look At The Effect Of Federal Tax Laws On Optimal Machinery Replacement

Author

Listed:
  • Van Tassell, Larry W.
  • Nixon, Clair J.

Abstract

Self-employment taxes, "effective" marginal tax rates, and discounting schemes which allow for alternative purchase and disposal dates of machinery are incorporated into the traditional optimal replacement interval model. Empirical results indicate that these alterations decrease the optimal replacement intervals by up to three years from those obtained with traditional modeling assumptions. Inclusion of self-employment taxes decreases both the penalty attached to early replacement and the net present value (cost) of tractor ownership.

Suggested Citation

  • Van Tassell, Larry W. & Nixon, Clair J., 1989. "A Further Look At The Effect Of Federal Tax Laws On Optimal Machinery Replacement," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 21(2), pages 1-8, December.
  • Handle: RePEc:ags:sojoae:30089
    DOI: 10.22004/ag.econ.30089
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/30089/files/21020077.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.30089?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Oscar R. Burt, 1965. "Optimal Replacement under Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 47(2), pages 324-346.
    2. Weersink, Alfons & Stauber, Steve, 1988. "Optimal Replacement Interval And Depreciation Method For A Grain Combine," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 13(1), pages 1-11, July.
    3. R. K. Perrin, 1972. "Asset Replacement Principles," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(1), pages 60-67.
    4. Donald W. Reid & Garnett L. Bradford, 1983. "On Optimal Replacement of Farm Tractors," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 326-331.
    5. Ronald D. Kay & Edward Rister, 1976. "Effects of Tax Depreciation Policy and Investment Incentives on Optimal Equipment Replacement Decisions: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(2), pages 355-358.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Batterham, Robert L. & Fraser, K.I., 1995. "Capital Equipment Replacement Decisions," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 63(01), pages 1-8, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. McClelland, John W. & Wetzstein, Michael E. & Noles, Richard K., 1987. "Optimal Replacement Policies for Recyclable Assets," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 270113, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Lynne, Gary D., 1988. "Machinery Replacement, Multiple Optima, And The 1986 Tax Reform Act," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 20(1), pages 1-9, July.
    3. Smith, Vincent H., 1990. "The Effects Of Changes In The Tax Structure On Agricultural Asset Replacement," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 22(1), pages 1-9, July.
    4. Bradford, Garnett L. & Eidman, Vernon R. & Jensen, Harald R., 1978. "A Systems Model Of The Indirect Energy Expended In Farm Machinery Production And Use," Staff Papers 13285, University of Minnesota, Department of Applied Economics.
    5. Ivan Herranz-Matey & Luis Ruiz-Garcia, 2024. "Enhancing Predictive Accuracy in European Agricultural Tractor Residual Value Estimation: A Double Square Root Regression Reappraisal," Agriculture, MDPI, vol. 14(5), pages 1-19, April.
    6. Weiland, Brandon & Sesmero, Juan Pablo & Preckel, Paul & Wetzstein, Michael E., 2017. "Can Wood Pellets Save Coal?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258250, Agricultural and Applied Economics Association.
    7. Bentley, Ernest & Waters, James R. & Shumway, C. Richard, 1976. "Determining Optimal Replacement Age of Beef Cows in the Presence of Stochastic Elements," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 8(2), pages 13-18, December.
    8. Stutzman, Sarah & Weiland, Brandon & Preckel, Paul & Wetzstein, Michael, 2017. "Optimal replacement policies for an uncertain rejuvenated asset," International Journal of Production Economics, Elsevier, vol. 185(C), pages 21-33.
    9. Crane, Donald R. Jr. & Spreen, Thomas H., 1979. "A Conceptual Model Of The Stubble Replacement Decision For Florida Sugarcane Growers," 1979 Annual Meeting, July 29-August 1, Pullman, Washington 277828, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Reid, Donald W. & Skees, Jerry R., 1985. "Some Potential Effects of Changing From a Progressive to a Flat Income Tax Rate Structure," 1985 Annual Meeting, August 4-7, Ames, Iowa 278654, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Feuz, Dillion, 1991. "The Optimal Prebreeding Target Weight for Replacement Beef Heifers," WAEA/ WFEA Conference Archive (1929-1995) 321483, Western Agricultural Economics Association.
    12. Webber, C. A. & Graham, J. D. & MacGregor, R. J., 1988. "A Regional Analysis of Direct Government Assistance Programs in Canada and their Impacts on the Beef and Hogs Sectors," Working Papers 244071, Agriculture and Agri-Food Canada.
    13. Batterham, Robert L. & Fraser, K.I., 1995. "Capital Equipment Replacement Decisions," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 63(01), pages 1-8, April.
    14. Yates, C.M. & Rehman, T., 1998. "A linear programming formulation of the Markovian decision process approach to modelling the dairy replacement problem," Agricultural Systems, Elsevier, vol. 58(2), pages 185-201, October.
    15. Helmers, Glenn A. & Watts, Myles J. & Smith, Vincent H. & Atwood, Joseph, 1990. "The Impact Of Income Taxes On Resource Allocation And Structure Of Agriculture," 1990 Conference, January 6-9, Albuquerque, New Mexico 260181, Regional Research Committe NC-181: Determinants of Farm Size and Structure.
    16. VanTassell, Larry W. & Nixon, Clair J., 1988. "Machinery Replacement Decisions and the Tax Reform Act of 1986," 1988 Annual Meeting, August 1-3, Knoxville, Tennessee 270199, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. Unknown, 1998. "References/Literature Cited," Commodity Costs and Returns Estimation Handbook,, Iowa State University.
    18. Mathews, Kenneth H., Jr. & Short, Sara D., 2001. "The Beef Cow Replacement Decision," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 19(2), pages 1-21.
    19. Ivan Herranz-Matey & Luis Ruiz-Garcia, 2023. "A New Method and Model for the Estimation of Residual Value of Agricultural Tractors," Agriculture, MDPI, vol. 13(2), pages 1-20, February.
    20. Etherington, Dan M., 1977. "A Stochastic Model For The Optimal Replacement Of Rubber Trees," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(1), pages 1-19, April.

    More about this item

    Keywords

    Agricultural and Food Policy;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:sojoae:30089. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/saeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.