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Senior Advisor

Capital purchases and depreciation

Take a look at the charts in this Illinois study.  It acknowledges that favorable depreciation laws support capital purchases, but points out that no matter if the laws are there or not, capital purchases track gross farm returns very closely.  So, does this mean that tax write-offs have only served to keep capitalization from decreasing rather than holding steady?

http://www.farmdocdaily.illinois.edu/2012/01/farm_capital_investments.html 

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Advisor

Re: Capital purchases and depreciation

That's a good question.  I suspect that capital investment in basic agriculture would have been less than it is. 

 

On the other hand, what would the price of equipment have been if these laws were not enacted?  Rather than investing 370K in a combine, would it be 250K?

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