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Dairy Cow Replacement Decisions under Alternative Tax Codes
Author(s) -
Schnitkey Gary D.,
Arbaugh Dale
Publication year - 1989
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.1093/aepp/11.2.203
Subject(s) - agricultural science , business , tax credit , economics , agricultural economics , public economics , biology
Optimal planned replacement lactations (OPRLs) for dairy cows are determined under scenarios representing (1) a no tax situation, (2) the 1986 tax code, (3) the 1987 tax code when heifer raising costs are expensed and (4) the 1987 tax code when heifer raising costs are capitalized. Under each tax scenario, OPRLs are found when replacement heifers are raised and when replacement heifers are purchased. Taxes have impacts on OPRLs, particularly when replacement heifers are raised. When replacements are raised, results indicate that farmers selecting the capitalizing option should voluntarily replace cows later than farmers selecting the expensing option.