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


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


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(02), December.
  • Handle: RePEc:ags:sojoae:30089

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    References listed on IDEAS

    1. 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(01), July.
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    Agricultural and Food Policy;


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