Hostname: page-component-cd9895bd7-8ctnn Total loading time: 0 Render date: 2024-12-29T12:40:22.770Z Has data issue: false hasContentIssue false
  • English
  • Français

The Effects of Changes in the Tax Structure on Agricultural Asset Replacement

Published online by Cambridge University Press:  09 September 2016

Vincent H. Smith
Vincent H. Smith*
Affiliation:
Montana State University
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper uses a deterministic asset replacement model to examine the implications of the 1986 Tax Reform Act (TRA) for replacement investment in U.S. agriculture. The optimal replacement age for an asset is shown to be inversely related to the size of investment tax credits and the present value of depreciation allowances but generally directly related to marginal tax rate. Simulation results indicate that the net effects of the TRA vary across assets. Replacement ages for assets with relatively long depreciation lives (e.g., farm structures) tend to fall. Those for assets with relatively short depreciation lives rise (e.g., tractors).

Keywords

agricultureinvestmentreplacementtaxes
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 22 , Issue 1 , July 1990 , pp. 113 - 122
Copyright
Copyright © Southern Agricultural Economics Association 1990

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Bartholomew, R.B. “Inflation and Farm Tractor Replacement in the U.S.: Comment.” Am. J. Agr. Econ., 62(1980):830–831.Google Scholar
Bates, J.M. Rayner, A.J., and Custance, P.R.. “Inflation and Farm Tractor Replacement in the U.S.: A Simulation Model.” Am. J. Agr. Econ., 61(1979):355–358.Google Scholar
Bates, J. M. and Rayner, A.J.. “Inflation and Farm Tractor Replacement in the U.S.: A Simulation Model: Reply.” Am. J. Agr. Econ., 56(1980):832–833.Google Scholar
Chisholm, A.H. “Effects of Tax Depreciation Policy and Investment Incentives on Optimal Replacement Decisions.” Am. J. Agr. Econ., 56(1974):776–783.Google Scholar
Durst, R. “The New Tax Law and Its Effects on Farmers.” USDA Ag Outlook, November, 1986.Google Scholar
Kay, R.D. and Rister, E.. “Effects of Tax Depreciation Policy and Investment Incentives on Optimal Equipment Replacement Decisions: Comment.” Am. J. Agr. Econ., 58(1976):355–358.Google Scholar
Lynne, G.D. “Machinery Replacement, Multiple Optima and the 1986 Tax Reform Act.” So. J. Agr. Econ., 20(1988):179–188.Google Scholar
Perrin, R.K. “Asset Replacement Principles.” Am. J. Agr. Econ., 54(1972):60–67.CrossRefGoogle Scholar
Reid, D. W. and Bradford, G.L.. “On Optimal Replacement of Farm Tractors.” Am. J. Agr. Econ., 65(1983):326–331.Google Scholar
Trapp, J.N. “Investment and Disinvestment Principles with Nonconstant Prices and Varying Firm Size Applied to Beef-Breeding Herds.” Am. J. Agr. Econ., 68(1986):692–703.Google Scholar
U.S. Department of Agriculture. Agricultural Statistics. Washington, various issues.Google Scholar
U.S. Department of Commerce, Bureau of the Census. 1982 Census of Agriculture. Washington, 1985.Google Scholar