IDEAS home Printed from https://ideas.repec.org/a/wly/apecpp/v48y2026i3p745-761.html

Farm or Fortune? The Role of Heirs' Intentions and Tax Policies in Farmland Succession Planning

Author

Listed:
  • Alan Hinds

Abstract

Farm succession receives increasingly more national attention due to rising land prices and changes in tax policies. I provide a systematic evaluation of changes in capital gains and estate taxation policies influencing farmland owners' optimal selling behavior. The policy analysis provides two novel contributions: first, allowing heirs to keep or sell the farm upon inheritance, and second, analyzing four realistic policy scenarios including the proposed American Families Plan (2021) and adopted One Big Beautiful Bill Act. The results show that heirs' intentions to keep the farm exacerbate the “lock in” effect across policy scenarios, contributing to reduced farmland sales.

Suggested Citation

  • Alan Hinds, 2026. "Farm or Fortune? The Role of Heirs' Intentions and Tax Policies in Farmland Succession Planning," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 48(3), pages 745-761, July.
    • Handle: RePEc:wly:apecpp:v:48:y:2026:i:3:p:745-761
    DOI: 10.1002/aepp.70061
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/aepp.70061
    Download Restriction: no
    File URL: https://libkey.io/10.1002/aepp.70061?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
    ---><---

    References listed on IDEAS

    as
    1. Daniele, Bertolozzi-Caredio, 2024. "The farm succession effect on farmers’ management choices," Land Use Policy, Elsevier, vol. 137(C).
    2. Martin Feldstein, 1983. "Inflation, Portfolio Choice, and Prices of Land and Corporate Stock," NBER Chapters, in: Inflation, Tax Rules, and Capital Formation, pages 229-242, National Bureau of Economic Research, Inc.
    3. Auerbach, Alan J., 1989. "Capital Gains Taxation and Tax Reform," National Tax Journal, National Tax Association, vol. 42(3), pages 391-401, September.
    4. Pietola, Kyosti & Myyra, Sami & Pouta, Eija, 2009. "Fiscal and trade distorting effects of capital gains tax on land sales - empirical evidence from agricultural land market in Finland," Discussion Papers 50040, MTT Agrifood Research Finland.
    5. David A. Hennessy, 1999. "The Taxpayer Relief Act, Estate Planning, and Resource Mobility in U.S. Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 534-543.
    6. Auerbach, Alan J., 1989. "Capital Gains Taxation and Tax Reform," National Tax Journal, National Tax Association;National Tax Journal, vol. 42(3), pages 391-401, September.
    7. J. DeBoer-Lowenberg & Michael Boehlje, 1986. "The Impact of Farmland Price Changes on Farm Size and Financial Structure," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(4), pages 838-848.
    8. Hennessy, David A., 1999. "Taxpayer Relief Act, Estate Planning, and the Mobility of Resources in U.S. Agriculture, The," Staff General Research Papers Archive 1704, Iowa State University, Department of Economics.
    9. Timothy G. Baker & Edward H. Ketchabaw & Calum Greig Turvey, 1991. "An Income Capitalization Model for Land Value with Provisions for Ordinary Income and Long-term Capital Gains Taxation," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 39(1), pages 69-82, March.
    Full references (including those not matched with items on IDEAS)

    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. Hinds, Alan & Miller, Noah & Shew, Aaron, 2026. "Community Property, Taxes, and Estate Planning: How Marital Property Regimes Affect Farmland Markets and the Lock-in Effect," 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri 404338, Agricultural and Applied Economics Association.
    2. B. James Deaton & Chad Lawley, 2022. "A survey of literature examining farmland prices: A Canadian focus," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 70(2), pages 95-121, June.
    3. Benjamin C. Ayers & Craig E. Lefanowicz & John R. Robinson, 2007. "Capital Gains Taxes and Acquisition Activity: Evidence of the Lock†in Effect," Contemporary Accounting Research, John Wiley & Sons, vol. 24(2), pages 315-344, June.
    4. McGee, M. Kevin, 1998. "Capital Gains Taxation and New Firm Investment," National Tax Journal, National Tax Association, vol. 51(n. 4), pages 653-73, December.
    5. Jeff Larrimore & Richard V. Burkhauser & Gerald Auten & Philip Armour, 2016. "Recent Trends in U.S. Top Income Shares in Tax Record Data Using More Comprehensive Measures of Income Including Accrued Capital Gains," NBER Working Papers 23007, National Bureau of Economic Research, Inc.
    6. Melville McMillan, 2021. "Should Canada’s Capital Gains Taxes be Increased or Reformed?," Working Papers 2021-06, University of Alberta, Department of Economics.
    7. Hendershott, Patric H. & Toder, Eric J. & Won, Yunhi, 1991. "Effects of Capital Gains Taxes on Revenue and Economic Efficiency," National Tax Journal, National Tax Association;National Tax Journal, vol. 44(1), pages 21-40, March.
    8. Philip Armour & Richard V. Burkhauser & Jeff Larrimore, 2013. "Levels and Trends in United States Income and Its Distribution A Crosswalk from Market Income Towards a Comprehensive Haig-Simons Income Approach," NBER Working Papers 19110, National Bureau of Economic Research, Inc.
    9. Laure Latruffe & Chantal Le Mouël, 2009. "Capitalization Of Government Support In Agricultural Land Prices: What Do We Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 23(4), pages 659-691, September.
    10. Sureth, Caren & Voß, Armin, 2005. "Investitionsbereitschaft und zeitliche Indifferenz bei Realinvestitionen unter Unsicherheit und Steuern," arqus Discussion Papers in Quantitative Tax Research 2, arqus - Arbeitskreis Quantitative Steuerlehre.
    11. Philip Armour & Richard V. Burkhauser & Jeff Larrimore, 2014. "Levels and Trends in U.S. Income and its Distribution: A Crosswalk from Market Income towards a Comprehensive Haig‐Simons Income Approach," Southern Economic Journal, John Wiley & Sons, vol. 81(2), pages 271-293, October.
    12. Annika Hegemann & Angela Kunoth & Kristina Rupp & Caren Sureth-Sloane, 2017. "Hold or sell? How capital gains taxation affects holding decisions," Review of Managerial Science, Springer, vol. 11(3), pages 571-603, July.
    13. Jacob, Martin, 2011. "Tax Regimes and Capital Gains Realizations," Working Paper Series, Center for Fiscal Studies 2011:9, Uppsala University, Department of Economics.
    14. Ay, Jean-Sauveur & Latruffe, Laure, "undated". "The Empirical Content of the Present Value Model: A survey of the instrumental uses of farmland prices," Working papers 157112, Factor Markets, Centre for European Policy Studies.
    15. Hendershott, Patric H. & Toder, Eric J. & Won, Yunhi, 1991. "Effects of Capital Gains Taxes on Revenue and Economic Efficiency," National Tax Journal, National Tax Association, vol. 44(1), pages 21-40, March.
    16. John Diamond, 2005. "Dynamic Effects of Extending the 2001 and 2003 Income Tax Cuts," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(2), pages 165-192, March.
    17. Viard, Alan D., 2000. "Dynamic asset pricing effects and incidence of realization-based capital gains taxes," Journal of Monetary Economics, Elsevier, vol. 46(2), pages 465-488, October.
    18. McGee, M. Kevin, 1998. "Capital Gains Taxation and New Firm Investment," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(4), pages 653-673, December.
    19. Auerbach, Alan J., 1996. "Measuring the Impact of Tax Reform," National Tax Journal, National Tax Association;National Tax Journal, vol. 49(4), pages 665-673, December.
    20. Patric H. Hendershott & Eric Toder & Yunhi Won, 1990. "Revenue and Welfare Implications for a Capital Gains Tax Cut," NBER Working Papers 3386, National Bureau of Economic Research, Inc.

    More about this item

    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:wly:apecpp:v:48:y:2026:i:3:p:745-761. 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: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2040-5804 .

    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.