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Farm Machinery Investment And The Tax Reform Act Of 1986

Author

Listed:
  • LeBlanc, Michael
  • Hrubovcak, James
  • Durst, Ron L.
  • Conway, Roger K.

Abstract

The Tax Reform Act of 1986 significantly changed incentives for investing. This analysis specifically examines how changes in marginal tax rates, depreciation schedules, and the investment tax credit altered the cost of capital and net investment in agriculture. A stochastic coefficients econometric methodology is used to estimate an investment function which is then used to simulate the effects of tax reform. Estimates indicated that relative to prior law, the Tax Reform Act will reduce the capital stock of farm machinery and equipment by nearly $4 billion.

Suggested Citation

  • LeBlanc, Michael & Hrubovcak, James & Durst, Ron L. & Conway, Roger K., 1992. "Farm Machinery Investment And The Tax Reform Act Of 1986," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(01), pages 1-14, July.
    • Handle: RePEc:ags:jlaare:30743
    DOI: 10.22004/ag.econ.30743
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    References listed on IDEAS

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    Cited by:

    1. Hadrich, Joleen C. & Larsen, Ryan A. & Olson, Frayne E., 2012. "Incentives for Machinery Investment," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124897, Agricultural and Applied Economics Association.
    2. repec:fip:fedkrw:rwp2013-07 is not listed on IDEAS
    3. McDonald, Tia M. & Lacy, Katherine, 2025. "Tax policy and farm organization," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 361142, Agricultural and Applied Economics Association.
    4. Siraj G. Bawa & James M. Williamson, 2020. "Distributional Impacts of the Tax Cuts and Jobs Act Using Farm Household Microdata," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(4), pages 835-855, December.
    5. 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.

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