Effects of Reducing the Income Cap on Eligibility for Farm Program Payments
By Ron L. Durst
Economic Information Bulletin No. (EIB-27) 22 pp,
September 2007
The current $2.5-million income cap on eligibility for farm program payments affects
only a small number of farm program payment recipients each year. A reduction in the
cap to $200,000 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 $807 million in payments were received in 2004 by farm operators organized as
proprietors, partnerships, and corporations with incomes exceeding $200,000. However,
not all of these payments would be affected by a $200,000 income cap on eligibility for
payments due to differences in IRS and ARMS data and changes by producers in how
they manage their incomes and expenses. The study also found that farm income averaged
$271,749 and net worth averaged over $1.86 million for farm households with AGI
estimated to be over $200,000 based on the ARMS data.
Keywords: farm program payments, adjusted gross income, farm typology, tax data,
AGI cap, farm households, Agricultural Resource Management Survey, farm operator households, ARMS data, ERS, USDA
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Updated date: September 4, 2007
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