Abstract
Federal fiscal-monetary policy may have contributed to growth in size and declining numbers of farms by encouraging substitution of capital for labor. This paper reports implications of taxation policies for typical farm firms. To what extent have concessionary tax policies such as interest payment write-offs, depreciation allowance, and investment tax credit encouraged growth in size of family farms? To answer this and other questions relating farm firm growth to consumptionsavings rates and ownership patterns, a computer model was developed to simulate growth over a thirty-year horizon. Simulations for six typical commercial family farms provided data on rates of growth in discounted net worth and on changes in size, ownership patterns, and in realized taxation rates with and without selected federal income tax features.
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