Comparison of Tax Burden on Farms in Selected US States

Abstract

This paper deals with the comparison of the tax burden of selected US States within the framework of two taxes ‑ income tax and sales tax. When drawing up this issue, the authors were led by the idea that there may be significant differences among particular states, so they chose as the objective to identify fiscally attractive areas. The quantification research of tax burden on model farms in 12 US states – Corn Belt was carried out in order to meet the objective. To the three groups of taxpayers (single, married and head of household) were applied federal and state taxation on natural persons income, social security and health insurance contributions, and sales tax. The cross‑sectional analysis is focused on 2012. The results of the comparative analysis led to the identification of fiscally attractive areas of agribusiness (South and North Dakota ‑ regardless of the taxpayer status, Ohio) and to the confirmation of the assumption that there are significant differences between the states surveyed – particularly as regards the sales tax where a deviation of tax liability from the lowest tax burden of 74.99% was identified.

Keywords

• agriculture
• U.S. tax system
• income tax
• self employment tax
• sales tax