Farm Records and Taxes
While President Bush continues to call for a general tax cut,
there have been few if any specifics concerning what form such
a tax cut might take. The effective date of any tax cut is undecided.
An across-the-board rate cut could be accomplished in several
ways. However, the form of the tax cut could benefit some taxpayers
more than others. For example, the personal exemption or standard
deduction could be increased. This would result in a larger tax
cut, percentage wise, for lower income taxpayers. The actual tax
rates could be lowered, but tax benefits would depend on specific
reductions in each tax bracket. A new tax bracket between the
15 percent bracket and the 28 percent bracket would benefit many
middle income tax payers. A change in depreciation rules could
benefit many businesses, including farming. With the financial
condition of the so-called social security trust fund, it seems
unlikely that any tax cut would involve social security taxes.
Even with the support of Alan Greenspan, a tax cut may not materialize
at all. The so-called budget surplus is based on long range projections.
The weakening economy may wipe out any surplus before any tax
cut is passed. Those involved in agriculture are all too familiar
with long range projections.
Regardless of specifics, a farmer will need accurate and up-to-date
records to make the best use of any tax rate reduction. Whether
records are kept in a spiral notebook, a farm record book such
as U of Is Farm Record Book, or some type of computer
program, it will be important to know "the current state
of farm income" to take advantage of any tax reduction Washington
passes. If record keeping has been neglected during the winter
months, there is no time like the present to get caught up.