Our goal today is to present basic information on the major taxes of interest to U.S. agriculture. In my remarks, I will identify these taxes, particularly estate and capital gains taxes, and indicate their importance to U.S. agricultural producers. I will also discuss the implications for U.S. agricultural producers of the Administration's FY 1998 budget proposals affecting the capital gains tax and estate tax. U.S. Farmers Farmers like other taxpayers are subject to a variety of taxes at all levels of government. At the Federal level, these taxes include the Federal income and self-employment taxes as well as Federal estate and gift taxes.
Federal taxes account for about two-thirds of the total taxes paid by farm sole proprietors.
Of these, the Federal income tax is the most important. Farm partnerships and corporations undoubtedly paid substantial Federal income and payroll taxes as well. However, insufficient information exists to provide a reliable estimate of these taxes. Federal estate and gift taxes in comparison to the Federal income and self-employment taxes are relatively small. However, as will be discussed later, this does not mean that Federal estate and gift tax policies are of little importance to the farming community.