tax farming

Examples of tax farming in the following topics:

• Agricultural Initiatives and Recovery

  • The demand and resulting prosperity encouraged bigger farms to invest in the most recent technological advances.
  • The money for the subsidies were to be generated from tax imposed on companies that processed farm products.
  • However, in 1936, the Supreme Court declared the 1933 AAA unconstitutional (the tax levied on processors in order to pay subsidies and regulation of agriculture by the federal government were both deemed unconstitutional).
  • It revived the provisions of its predecessor but the financing was about to come from the federal government and not from a tax imposed on food processors.
  • It is estimated that REA increased the rate of farms with access to electricity from 10% to around 40%.

• Farm and Rural Programs

  • In the Act, a tax was imposed on processors of farm products, the proceeds to be paid to farmers who would reduce their area and crops.
  • The intent of the act was to increase the prices of certain farm products by decreasing the quantities produced.
  • The Court also held that the so-called tax was not a true tax, because the payments to farmers were coupled with unlawful and oppressive coercive contracts and the proceeds were earmarked for the benefit of farmers complying with the prescribed conditions.
  • Over the remaining years of the Great Depression, the once-common practice of sharecropping and tenant farming became exceedingly rare and vast amounts of tenant farmers were put out, without homes or means of income.
  • By the last half of the century sharecropping and tenant farming had become obsolete.

• Relief for the Unemployed

  • Roosevelt was keenly interested in farm issues and believed that true prosperity would not return until farming was prosperous.
  • The first 100 days of his presidency produced the Farm Security Act to raise farm incomes by raising the prices farmers received, which was achieved by reducing total farm output.
  • The act reflected the demands of leaders of major farm organizations and reflected debates among Roosevelt's farm advisers.
  • The AAA paid land owners subsidies for leaving some of their land idle, with funds provided by a new tax on food processing.
  • The Farm Tenancy Act was created, which in turn created the Farm Security Administration (FSA), replacing the Resettlement Administration.

• Other Approaches to Calculating GDP

  • Two adjustments must be made to get the GDP: Indirect taxes minus subsidies are added to get from factor cost to market prices.
  • GDP = compensation of employees + gross operating surplus + gross mixed income + taxes less subsidies on production and imports.
  • The difference between basic prices and final prices (those used in the expenditure calculation) is the total taxes and subsidies that the government has levied or paid on that production.
  • So, adding taxes less subsidies on production and imports converts GDP at factor cost (as noted, a net domestic product) to GDP.

• Government During the War

  • Following the secession of the Southern states, the absence of Southern Democrats in Congress allowed the Republican Congress in Washington to enact legislation that reshaped the nation's financial, tax, land, and higher-education systems.
  • Prior to secession, the South had resisted policies that would hurt the plantation economy, including tariffs to promote industry and land grants for family farms.
  • By taxing British imports, the Morrill Tariff provided an additional source of revenue and encouraged the establishment of domestic factories.
  • Railroads were also encouraged to sell tracts for family farms at low prices with extended credit.
  • The 1862 Homestead Act opened up public-domain lands for family farms at no cost.

• Early New England Society

  • Early New England Puritan society was characterized by yeoman farming communities and a growing merchant class.
  • The town meeting levied taxes, built roads, and elected officials who managed town affairs, and every male citizen had a voice in the town meeting.
  • Some farmers obtained land grants to create farms in undeveloped areas.
  • Some grew potatoes, which provided a high production rate that was an advantage for small farms.
  • A growing class of artisans, shopkeepers, and merchants provided services to the growing farming population.

• Corporate and Payroll Taxes

  • Many countries impose a corporate tax, also called corporation tax or company tax, on the income or capital of some types of legal entities.
  • The taxes may also be referred to as income tax or capital tax.
  • The effective tax rate is the average corporate tax rate on the company's income and this takes into consideration tax benefits included in a current tax year.
  • Corporations are also subject to a variety of other taxes including: property tax, payroll tax, excise tax, customs tax and value-added tax along with other common taxes, generally in the same manner as other taxpayers.
  • Deductions from an employee's wages are taxes that employers are required to withhold from employees' wages, also known as withholding tax, pay-as-you-earn tax (PAYE), or pay-as-you-go tax (PAYG).

• Comparing Marginal and Average Tax Rates

  • An average tax rate is the ratio of the total amount of taxes paid, T, to the total tax base, P, (taxable income or spending), expressed as a percentage.
  • Broadly, the marginal tax rate equals the change in taxes, divided by the change in tax base, expressed as a percentage.
  • A progressive tax is a tax in which the tax rate increases as the taxable base amount increases .
  • A regressive tax is a tax imposed in such a manner that the average tax rate decreases as the amount subject to taxation increases .
  • A proportional tax is a tax imposed so that the tax rate is fixed, with no change as the taxable base amount increases or decreases.

• Tax Rate

  • The tax rate is the amount of tax expressed as a percentage.
  • In a tax system, the tax rate describes the ratio at which a business or person is taxed .
  • An average tax rate is the ratio of the amount of taxes paid to the tax base (taxable income or spending).
  • To calculate the average tax rate on an income tax, divide the total tax liability by the taxable income.
  • A marginal tax rate is the tax rate that applies to the last dollar of the tax base (taxable income or spending) and is often applied to the change in one's tax obligation as income rises.

• Individual Taxes

  • In U.S. constitutional law, direct taxes refer to poll taxes and property taxes, which are based on simple existence or ownership.
  • These include income tax witholding, social security and medicare taxes, and unemployment taxes.
  • Sales tax is an indirect tax levied on the state level, including taxes on retail sale, lease and rental of goods, as well as some services.
  • Sales tax is calculated as the purchase price times the appropriate tax rate.
  • The estate tax is an excise tax levied on the right to pass property at death.