10 ms·

Is this for philosophical reasons about taxes and government? Or is it just a big chunk of money they're trying to save?

gonzoflip 9y ago
I think both, but is it really saving money if you personally are unable to buy food after a bad season?
- rtx 9y ago
  Governments need to subsidies farming even more. In India farmers generally don't have to pay income taxes.
- RamenJunkie_ 9y ago
  If it's philosophical then it doesn't matter, it's just short sighted. They just see it as "The government taking my money" vs "at least I own this semi, even if it's useless it's mine"
- ambicapter 9y ago
  What? They're unable to buy food after a bad season because of their stupid tax avoidance schemes, not in spite of it.
pc86 9y ago
I think if anything it can be traced to a fundamental misunderstanding about how fractions work (and less glibly, basic personal finance). Choosing to spend $150,000 on things you objectively do not need in order to not have to write a $30,000 check to the IRS and put $120,000 in the bank for next year is not a rational decision for all but the most extreme anti-government/anti-tax ideologies. It's the very definition of cutting off your nose to spite your face.
- ravingraven 9y ago
  I agree with you that such a strategy is not optimal but it is not quite how you describe it to be. In the mind of the farmer: * $150,000 tractor: something that has value (not easy to calculate, but a $150k tractor has a value above zero, even if not brand new) and utility. * $30,000 to the IRS: money that I will never see again. Literally thrown away money. Option number 1 is very tempting.
  - gonzoflip 9y ago
    I think one of the issues is the farmers are conflating their incorporated farm's assets with their own.
  - DannyB2 9y ago
    I wonder how they see taxes as thrown away? Yes, government is inefficient. And corrupt. But you do need roads. And bridges. And law enforcement. And even military protection, even if it seems far away and remote from your farm.
    - clay_to_n 9y ago
      But those things were all there back when this hypothetical farmer wasn't making any money. Tragedy of the commons, perhaps.
    - Cuuugi 9y ago
      One common feeling (i am from a farming community in Canada) is that tax revenue tends to get siphoned to urban areas. Politicians focus on bigger voting blocks, while rural communities (in their mind) pay for those promises.
      - scarmig 9y ago
        I'm sure that is a common feeling. And it probably varies from jurisdiction to jurisdiction. But in the USA, just as coastal areas subsidize inland areas, typically urban areas within a state subsidize the rural areas. Definitely true of California counties, and I'd be very surprised if this wasn't true of any particular state.
- dionidium 9y ago
  I think it's a failure at root to understand how marginal tax rates work. There is an honest-to-god, widespread folk mythology about how you can actually earn less by earning more, because you'll pay a higher tax rate. You can hear this opinion expressed by people of all intelligence levels and in all professions, from fry cooks to engineers. This, in my experience, drives a lot of insane opinions about taxes.
  - pc86 9y ago
    I still remember a HS teacher insisting that because she got a raise she took less money home. A friend of mine was the son of a CPA and all but called her a liar in the middle of class.
    - dionidium 9y ago
      Sadly, this is a conversation I've had several times.
    - godshatter 9y ago
      I was one of those people who didn't understand it enough to think that an increase once you got to a new bracket applied to all your income. In that situation, it's logical to be careful not to move to the next tax bracket accidentally. It wasn't until later that I understood that the bracket applies only to the amount of your income that is above the bracket amount. I think it's a common assumption to make if you don't research it more carefully.
      - LoonyBalloony 9y ago
        This myth is probably fed by employers who don't want to give raises as well. "Well if I give you a raise, you won't get more money! Get back to work!"
    - madengr 9y ago
      In my case it was true, because I became ineligible for overtime.
  - 9y ago
- maehwasu 9y ago
  Most white collar professionals don't have obvious things they could invest money in that would quickly improve their bottom line. Farmers have that option constantly, so their situation is qualitatively different in a way that the white collar professionals in this thread clearly have trouble understanding.
  - LockeWatts 9y ago
    Except that in the situation described, this wasn't "I am reinvesting in my business to turn a higher profit in the future" but rather a case of "I am buying something that will not improve my bottom line in order to avoid paying taxes."
- DamnYuppie 9y ago
  They aren't buying things they don't need. They are buying newer equipment to replace older equipment. Could they wait another 2-5 years on some of those purchases, maybe, but they aren't being irrational given the current system and incentives.
gozur88 9y ago
Not many people will deliberately throw away money just to avoid taxes that would have been cheaper. Farmers aren't stupid. They're doing what makes them the most money in the long run.

gonzoflip 9y ago

I think both, but is it really saving money if you personally are unable to buy food after a bad season?

rtx 9y ago
Governments need to subsidies farming even more. In India farmers generally don't have to pay income taxes.
RamenJunkie_ 9y ago
If it's philosophical then it doesn't matter, it's just short sighted. They just see it as "The government taking my money" vs "at least I own this semi, even if it's useless it's mine"
ambicapter 9y ago
What? They're unable to buy food after a bad season because of their stupid tax avoidance schemes, not in spite of it.

pc86 9y ago

I think if anything it can be traced to a fundamental misunderstanding about how fractions work (and less glibly, basic personal finance). Choosing to spend $150,000 on things you objectively do not need in order to not have to write a $30,000 check to the IRS and put $120,000 in the bank for next year is not a rational decision for all but the most extreme anti-government/anti-tax ideologies. It's the very definition of cutting off your nose to spite your face.

ravingraven 9y ago
I agree with you that such a strategy is not optimal but it is not quite how you describe it to be. In the mind of the farmer: * $150,000 tractor: something that has value (not easy to calculate, but a $150k tractor has a value above zero, even if not brand new) and utility. * $30,000 to the IRS: money that I will never see again. Literally thrown away money. Option number 1 is very tempting.
- gonzoflip 9y ago
  I think one of the issues is the farmers are conflating their incorporated farm's assets with their own.
- DannyB2 9y ago
  I wonder how they see taxes as thrown away? Yes, government is inefficient. And corrupt. But you do need roads. And bridges. And law enforcement. And even military protection, even if it seems far away and remote from your farm.
  - clay_to_n 9y ago
    But those things were all there back when this hypothetical farmer wasn't making any money. Tragedy of the commons, perhaps.
  - Cuuugi 9y ago
    One common feeling (i am from a farming community in Canada) is that tax revenue tends to get siphoned to urban areas. Politicians focus on bigger voting blocks, while rural communities (in their mind) pay for those promises.
    - scarmig 9y ago
      I'm sure that is a common feeling. And it probably varies from jurisdiction to jurisdiction. But in the USA, just as coastal areas subsidize inland areas, typically urban areas within a state subsidize the rural areas. Definitely true of California counties, and I'd be very surprised if this wasn't true of any particular state.
dionidium 9y ago
I think it's a failure at root to understand how marginal tax rates work. There is an honest-to-god, widespread folk mythology about how you can actually earn less by earning more, because you'll pay a higher tax rate. You can hear this opinion expressed by people of all intelligence levels and in all professions, from fry cooks to engineers. This, in my experience, drives a lot of insane opinions about taxes.
- pc86 9y ago
  I still remember a HS teacher insisting that because she got a raise she took less money home. A friend of mine was the son of a CPA and all but called her a liar in the middle of class.
  - dionidium 9y ago
    Sadly, this is a conversation I've had several times.
  - godshatter 9y ago
    I was one of those people who didn't understand it enough to think that an increase once you got to a new bracket applied to all your income. In that situation, it's logical to be careful not to move to the next tax bracket accidentally. It wasn't until later that I understood that the bracket applies only to the amount of your income that is above the bracket amount. I think it's a common assumption to make if you don't research it more carefully.
    - LoonyBalloony 9y ago
      This myth is probably fed by employers who don't want to give raises as well. "Well if I give you a raise, you won't get more money! Get back to work!"
  - madengr 9y ago
    In my case it was true, because I became ineligible for overtime.
- 9y ago
maehwasu 9y ago
Most white collar professionals don't have obvious things they could invest money in that would quickly improve their bottom line. Farmers have that option constantly, so their situation is qualitatively different in a way that the white collar professionals in this thread clearly have trouble understanding.
- LockeWatts 9y ago
  Except that in the situation described, this wasn't "I am reinvesting in my business to turn a higher profit in the future" but rather a case of "I am buying something that will not improve my bottom line in order to avoid paying taxes."
DamnYuppie 9y ago
They aren't buying things they don't need. They are buying newer equipment to replace older equipment. Could they wait another 2-5 years on some of those purchases, maybe, but they aren't being irrational given the current system and incentives.

gozur88 9y ago

Not many people will deliberately throw away money just to avoid taxes that would have been cheaper. Farmers aren't stupid. They're doing what makes them the most money in the long run.