IDEAS home Printed from https://ideas.repec.org/p/ags/aaea25/361142.html

Tax policy and farm organization

Author

Listed:
  • McDonald, Tia M.
  • Lacy, Katherine

Abstract

The Tax Cuts and Jobs Act (TCJA) introduced substantial changes to the tax code, affecting farm households’ organizational choices. This study examines farm responses to the TCJA along both the extensive and intensive margins, focusing on reorganization decisions and labor expense adjustments. Using a logit regression, we analyze the likelihood of organizational structure selection for tax purposes in response to the TCJA and the provisions of the Qualified Business Income Deduction (QBID). We find an increased likelihood of organizing as an S corporation after the TCJA took effect. Furthermore, using a fuzzy regression discontinuity design, we demonstrate a significant increase in wage expenses in response to QBID income limits.

Suggested Citation

  • 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.
    • Handle: RePEc:ags:aaea25:361142
    DOI: 10.22004/ag.econ.361142
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/361142/files/77517_77524_105300_Tia_McDonald_Death_Taxes.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.361142?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. 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.
    2. Goodman, Lucas & Lim, Katherine & Sacerdote, Bruce & Whitten, Andrew, 2025. "How do business owners respond to a tax cut? Examining the 199A deduction for pass-through firms," Journal of Public Economics, Elsevier, vol. 242(C).
    3. James E. Long, 1990. "Farming the Tax Code: The Impact of High Marginal Tax Rates on Agricultural Tax Shelters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(1), pages 1-12.
    4. Charles W. Eginton, 1980. "Impacts of Federal Tax Policies on Potential Growth in Size of Typical Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(5), pages 929-939.
    5. McDonald, Tia M. & Durst, Ron, 2024. "An Analysis of the Effect of Sunsetting Tax Provisions for Family Farm Households," Economic Research Report 340569, United States Department of Agriculture, Economic Research Service.
    6. James M Williamson & Sarah Stutzman, 2016. "Tax policy and farm capital investment: Section 179 expensing and bonus depreciation," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 76(2), pages 246-269, July.
    7. James M Williamson & Sarah Stutzman, 2016. "Tax policy and farm capital investment: Section 179 expensing and bonus depreciation," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 76(2), pages 246-269, July.
    8. 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.
    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. Tia M. McDonald & Katherine Lacy, 2026. "Tax Policy and Farm Organization," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 48(3), pages 780-796, July.
    2. Giri, Anil & Spalding, Ashley & Subedi, Dipak, 2026. "Market Participation and Sales Intensity in U.S. Local Food Systems: Evidence from the 2022 ARMS," 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri 404311, Agricultural and Applied Economics Association.
    3. 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.
    4. Cloyne, James & Kurt, Ezgi & Surico, Paolo, 2025. "Who gains from corporate tax cuts?," Journal of Monetary Economics, Elsevier, vol. 149(C).
    5. Jeremy G. Weber & Nigel Key, 2014. "Do Wealth Gains from Land Appreciation Cause Farmers to Expand Acreage or Buy Land?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1334-1348.
    6. Weber, Jeremy G. & Key, Nigel D., 2013. "Does proprietor wealth influence small business decisions? Land appreciation and farm business borrowing, land ownership, and output," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150408, Agricultural and Applied Economics Association.
    7. Featherstone, Allen M., 1990. "Optimal Capital Structure as Business Risk Changes," 1990 Quantifying Long Run Agricultural Risks and Evaluating Farmer Responses to Risk Meeting, January 28-31, 1990, Sanibel Island, Florida 271544, Regional Research Projects > S-232: Quantifying Long Run Agricultural Risks and Evaluating Farmer Responses to Risk.
    8. Czyżewski, Bazyli & Trojanek, Radosław, 2016. "Drivers of agricultural land prices in terms of different functions of rural areas in Poland," Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej 249742, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    9. Dustin L. Swonder & Damián Vergara, 2025. "A Sufficient Statistics Approach to Optimal Corporate Taxes," NBER Working Papers 34517, National Bureau of Economic Research, Inc.
    10. Kim, C.S. & McElroy, Robert G. & Mishra, Ashok K. & Hallahan, Charles B., 2002. "Biased Biased Technological Progress In The U.S. Farm Sector: A Structural Perspective," 2002 Annual Meeting, July 28-31, 2002, Long Beach, California 36526, Western Agricultural Economics Association.
    11. Christine L. Dobridge & Joanne W. Hsu & Mike Zabek, 2024. "Personal Tax Changes and Financial Well-being: Evidence from the Tax Cuts and Jobs Act," Finance and Economics Discussion Series 2024-029, Board of Governors of the Federal Reserve System (U.S.).
    12. 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.
    13. repec:fip:fedkrw:rwp2013-07 is not listed on IDEAS
    14. Smith, Joyotee & Cadavid, JoseVicente & Rincon, Alvaro & Vera, Raul, 1997. "Land speculation and intensification at the frontier: a seeming paradox in the Colombian savanna," Agricultural Systems, Elsevier, vol. 54(4), pages 501-520, August.
    15. Dharmapala, Dhammika, 1999. "Comparing tax expenditures and direct subsidies: the role of legislative committee structure," Journal of Public Economics, Elsevier, vol. 72(3), pages 421-454, June.
    16. Erickson, Kenneth W. & Moss, Charles B. & Mishra, Ashok K., 2002. "The Measurement Of Inequality In Canadian And U.S. Agricultural Income By Components Of Net Value Added," 2002 Annual meeting, July 28-31, Long Beach, CA 19866, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. 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.
    18. 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.
    19. Bawa, Siraj G., "undated". "Good intentions bad outcomes: the effects of investment subsidies on agricultural productivity," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258485, Agricultural and Applied Economics Association.
    20. Featherstone, Allen M. & Ifft, Jennifer & Yeager, Elizabeth A. & Hinkle, Bailey, 2022. "Section 179 and Bonus Depreciation Effect on Machinery Investment," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322480, Agricultural and Applied Economics Association.
    21. Weber, Jeremy G. & Wall, Conor & Brown, Jason P. & Hertz, Tom, 2013. "Crop Prices, Agricultural Revenues, and the Local Economy of the U.S. Heartland," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150404, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    ;

    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:aaea25:361142. 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/aaeaaea.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.