RE:Capital gains increased taxes WILL hit farmers HARD,,,,,,,,,
HARD? Red deer????
Using your numbers....
2013 average 1.75 section farm value...4,175,360
1974 average 1.75 section farm value.....155, 750
Capital gain over 40 years.....................4,020,610***
Less one-time no tax on 1.25 million.....2,770,610
That is the net capital gain
I won't even bother/spend the time doing the 50% and then 66% for the inclusion rate...
I'll just do the whole thing at 66%..........1,828,602
And then I won't bother running that amount through the different tax brackets...I'll just use the maximum marginal tax rate of 33% for income above 246,752
33% of 1,828,602 is the tax owing..........603, 438
On Farmer Joe's capital gain of just over 4 Million dollars***
He ends up paying 603,438 in federal tax......or 15%......that's FIFTEEN PERCENT of 4 Million.
Employment income is taxed at 17.7% (on amounts up to 246,752)
What do you think the taxes on capital gains should be????
When all the dust settles and the taxes are paid..... Farmer Joe will have 3,417,172 sitting in his bank account. I would not call anybody with 3.5 million in cash AFTER paying his taxes....poor or even average. Would you?
The problem with capital gains taxes is they are due when the asset is SOLD and people get "sticker shock" when they have to write the check. It is a tax that is "deferred" to a later date.
Farmer Joe made an initial investment of 155k and it turns out he made a capital gain of 100k EVERY YEAR...for FORTY YEARS!!!
That farming gig is a pretty darn good investment, eh?
It's no wonder guys like Gates and Turner are buying farmland!!!