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Effects of Selected Tax Policies on Management and Growth of A Catfish Enterprise

Published online by Cambridge University Press:  05 September 2016

Henry Kinnucan ,
Oscar Cacho  and
Gregory D. Hanson
Henry Kinnucan
Affiliation:
Department of Agricultural Economics and Rural Sociology, Auburn University, Auburn, Alabama
Oscar Cacho
Affiliation:
Department of Agricultural Economics and Rural Sociology, Auburn University, Auburn, Alabama
Gregory D. Hanson
Affiliation:
Economic Indicators Branch, Economic Research Service, USDA
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Abstract

A multiperiod programming model was used to simulate the effects of lower marginal income tax rates, the soil and water conservation deduction, and the cash tax accounting option on firm growth for a “representative” farm operating in the Alabama Black Belt region. Results show the lowered marginal income tax rates associated with the Economic Recovery Tax Act (ERTA) of 1981 provide a positive growth stimulus to the modeled firm as measured by accumulated net worth over a 10-year planning horizon. The soil and water conservation deduction in general provides greater tax relief to the modeled firm than either the ERTA income tax rate changes or the cash tax accounting provision. Important complementary and substitute relationships were found to exist between marginal income tax rates and the various tax provisions studied, implying care must be exercised when attempting to evaluate the impact on farm firms of changes in tax policy.

Keywords

agricultural policycatfishsoil and water conservation deductiontax policy
Type
Submitted Articles
Information
Journal of Agricultural and Applied Economics , Volume 18 , Issue 2 , December 1986 , pp. 215 - 226
Copyright
Copyright © Southern Agricultural Economics Association 1986

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