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5 Replies
Advisor

Re: Poor old cockies

Farmers are a distant third on the list of beneficiaries of that.

 

First is landowners-excess capacity means higher rents.

 

Second is equipment manufacturers and dealers- they can greatly expand their margins because of artificial demand. And dealers can kick the problem of high priced used inventory a bit farther down the road.

 

It will depend on weather and other factors but the music is likely to stop soon anyway. A lot of farmers will catch up on their tax deferrals this year but won't need write-offs next year.

 

Probably a pretty good case study supporting conservative objections to government distortion in markets. But if you listen to most farmers they will tell you that they are sorely beset by the gubmint that they more than deserve anything they get. Even if it ultimately puts them out of business.

Honored Advisor

Re: Poor old cockies

That section 179 does no good, it delays taxes but you still have to pay them later with THEN becomes after tax dollars.  I know I`m done using section 179, the next few years I`ll be too busy paying off the crap that I`ve already bought with no extra money to buy enough to need section 179 rapid deductions. 

 

Section 179 just gooses the economy temporarily.  If you`re in a business that sells to farmers (John Deere and Morton Buildings) it`s a real bennefit and your lobbyists really go to bat for it.  But those of us that have used it may end up cussing it.

Senior Contributor

Re: Poor old cockies

What a profound statement!

 

Second is equipment manufacturers and dealers- they can greatly expand their margins because of artificial demand. And dealers can kick the problem of high priced used inventory a bit farther down the road.

 

That is what i have been trying to get across. The customers with dollars in their pockets create more jobs than any tax incentive the government might provide. In your case the tax incentive does improve the status for equipment dealers but paycheck enhancement improves the lot of all businesses throughout the country.

 

As far as BA's BS, he should spend the tax savings and nothing more. He shouldn't complicate his life by over spending the tax relief. BTW he should be paying taxes on dollars earned this year and the dollars earned next year. Like most american citizens do. Just because a 179 is available does not mean you have or ought to do it.  Year after year i qualify for the same tax exemptions he does but i choose not to build a grain bin, tile some land, or buys some new equipment. I don't need them but perhaps he doesn't either. That what he has will get the job done.

 

The point of this statement is that improved wages is a huge advantage to businesses thought they fail to recognize it. There is nothing more valuable to a business than customers with dollars in their pocket. More goods sold equals more profits and more taxes but the net is ore money in their pockets and thatis good for business, stockholders and consumers. 

Honored Advisor

Re: Poor old cockies

With me anyway here`s how I see it, if you NEED machinery and times are good, you better buy cause lean times are around the corner.  Look at me, I went on a buying spree, true enough, however I won`t have to buy machinery for another 5 or 10 years if need be, my repair cost through these lean times should be less. 

 

I supose if you ran your old junk through the last 5 good years and had a stash of cash that was already taxed, you theoretically  will go out next year and buy bargains...possibly?  ..but maybe not, if other farmers need good used machinery, they may have to bid it up on you too...10 years from now, I`ll tell you with certainty which philosophy was the best choice.  Basically us farmers are at the mercy of the markets and Washington DC...it`s our job to gather as many crumbs as we can when they are available. 

Senior Contributor

Re: Poor old cockies

Washington DC never bothered me. They sent me checks and guaranteed price supports. Certainly not detrimental to my operation. Taxes? well i paid them just like every profit maker in the US.

 

My old junk brought more than 300K in august of 2008. Most of with went into the purchase of another 90 acres. Which has doubled in price if not more. Custom hire costs less than farming it myself if you consider interest on the money depreciation and repairs on my modest little spread. Plus i am hardly physically able to do the work.

 

Management to accumulate earnings and assets is the ultimate goals. Not tax avoidance and that is where we differ. Too many people buy because they can not because they need something. Thus my neighbors 500 hp quadtrac is excessive on 700 acres. But uncle sam bought it for him with a sizable tax deduction. How many little farmers could use a  sizable deduction if they could scrape up the funds to buy something they need. Once more, the haves get a better deal than the have lesses.

 

What is amazing is that equipment is not depreciating normally but that may well change because of depressed markets. So your machinery investments may look good for the time being but that may be temporary as will the farm real estate boom.

 

It doesn't really matter the asset values because i don't intend to sell. My main concern is that it continues to throw off profits as an income source. That was the intent when we bought it. Income for ma and I and for the kids in the future. So far so good.