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| If you are in a lower federal income tax bracket, self-employment tax also is there to take a chunk. So, it is fairly easy for farmers to end up in 30-40% tax brackets overall. For many farmers, a good place to invest their money to earn 8% is to pay off loans. Or, other alternatives are farm land, with an expected return of 9%+. So, for most, 8% is not an inappropriate "cost of money" rate.
Finally, if one truly does not pay taxes, due either to low income or rapid growth and even high income, then tax incentives don't do anything for you.
Terry Kastens, ag economics, Kansas State University | |
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"Long run" and the life of an operation
