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Tax Policies and the Financially Constrained Farm Household
Author(s) -
Chambers Robert G.,
Lopez Ramon E.
Publication year - 1987
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1242287
Subject(s) - economics , expansive , short run , consumption (sociology) , profit (economics) , consumption tax , production (economics) , capital (architecture) , labour economics , gross income , income tax , capital income , state income tax , monetary economics , microeconomics , tax reform , international taxation , public economics , social science , materials science , compressive strength , archaeology , sociology , composite material , history
Abstract This article analyzes the implications of income, profit, and consumption taxes on the economic decisions of financially constrained farm households within a dynamic intertemporal framework. The most important results are that replacing a profits tax with a consumption tax would lead to increases in on‐farm work, farm income, and farm production in the short run. Capital accumulation would be enhanced leading to similar effects in the long run. If an income tax is replaced with a consumption tax, similar expansive effects would occur in the intermediate and long run, but in the short run there would be no effect on farm production.