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The Effects Of Changes In The Tax Structure On Agricultural Asset Replacement

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  • Smith, Vincent H.

Abstract

This paper uses a deterministic asset replacement model to examine the implications of the 1986 Tax Reform Act (TRA) for replacement investment in U.S. agriculture. The optimal replacement age for an asset is shown to be inversely related to the size of investment tax credits and the present value of depreciation allowances but generally directly related to marginal tax rate. Simulation results indicate that the net effects of the TRA vary across assets. Replacement ages for assets with relatively long depreciation lives (e.g., farm structures) tend to fall. Those for assets with relatively short depreciation lives rise (e.g., tractors).

Suggested Citation

  • 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(01), July.
  • Handle: RePEc:ags:sojoae:29906
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    Cited by:

    1. Kingwell, Ross S., 1996. "On-Farm Factors Influencing Investment In Crop Sowing Machinery," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 40(03), December.
    2. Stutzman, Sarah A., 2016. "U.S. Farm Capital Investment 1996-2013: Differences by Farm Size and Operator Primary Occupation," Dissertations-Doctoral 235179, AgEcon Search.

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    Keywords

    Agricultural and Food Policy;

    Statistics

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