research
Effects of Reducing the Income Cap on Eligibility for Farm Program Payments
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Abstract
The current 2.5âmillionincomecaponeligibilityforfarmprogrampaymentsaffectsonlyasmallnumberoffarmprogrampaymentrecipientseachyear.Areductioninthecapto200,000 would affect a larger number of farm households but still only a small share of recipients. Based on IRS tax data for 2004, about 1.2 percent of all farm sole proprietors and about 2 percent of crop share landlords would be potentially subject to the proposed lower adjusted gross income (AGI) cap. ARMS survey data suggest a similar share of farm sole proprietors (1.1 percent) could be affected. When partnerships and farm corporations are included, about 1.5 percent of all farm operator households could be affected because a larger share of farm partnerships (2.5 percent) and farm corporations (9.7 percent) could be subject to the proposed cap. ARMS data indicate that 807millioninpaymentswerereceivedin2004byfarmoperatorsorganizedasproprietors,partnerships,andcorporationswithincomesexceeding200,000. However, not all of these payments would be affected by a 200,000incomecaponeligibilityforpaymentsduetodifferencesinIRSandARMSdataandchangesbyproducersinhowtheymanagetheirincomesandexpenses.Thestudyalsofoundthatfarmincomeaveraged271,749 and net worth averaged over 1.86millionforfarmhouseholdswithAGIestimatedtobeover200,000 based on the ARMS data.farm program payments, adjusted gross income, farm typology, tax data, AGI cap, farm households, Agricultural Resource Management Survey, Farm Management,