The Potential Impact of Tax Reform on Farm Businesses and Rural Households

32 Pages Posted: 6 Dec 2013

See all articles by James Williamson

James Williamson

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Ron Durst

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Tracey Farrigan

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Date Written: February 1, 2013

Abstract

Several proposals calling for fundamental reform of the Federal income tax system have been put forth, including a report by the co-chairs of the National Commission on Fiscal Responsibility. The primary elements of reform — eliminating tax preferences, restructuring capital gains and dividend tax rates, lowering rates on individual income, and reducing the number of tax brackets — could have a significant impact on the after-tax income and well-being of both farm businesses and rural households. This report uses published and special tabulation data obtained from the Internal Revenue Service, farm-level data from USDA’s Agricultural Resource Management Survey, and data from the American Housing Survey to examine the current tax situation for farm households and to evaluate the importance of various Federal income tax policies. For farm households, the effect of reform will primarily depend upon changes to existing treatment of investment and business income, including several important business deductions. In contrast, changes to existing individual tax credits, especially refundable tax credits, will likely be of greater significance to nonfarm rural households.

Keywords: farm households, tax reform, income tax, tax rates, Federal tax policy, farm losses, refundable credits, tax deductions, rural households, tax preferences

Suggested Citation

Williamson, James and Durst, Ron and Farrigan, Tracey, The Potential Impact of Tax Reform on Farm Businesses and Rural Households (February 1, 2013). USDA-ERS Economic Information Bulletin No. 107, Available at SSRN: https://ssrn.com/abstract=2266452 or http://dx.doi.org/10.2139/ssrn.2266452

James Williamson (Contact Author)

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
(202) 694-5539 (Phone)

Ron Durst

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States

Tracey Farrigan

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
(202) 694-5489 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
81
Abstract Views
500
Rank
559,363
PlumX Metrics