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Analysis of Federal Tax Policy Coursework

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Updated: Jun 13th, 2022

Small businesses have certainly started to play an important role in the growth and development of a lot of economies in the world today, and they are becoming increasing popular. The reasons for this are not particularly hard to discern. Growing firms provide significant benefits to regions, with job generation, knowledge spillovers, economic multipliers, innovation drivers and cluster developments. The exact processes of growth and an analysis of the development and transitions from small to high growth rates and size development have generated limited study from an initial review of literature. The birth of new firms and their subsequent growth or failure has captivated the interest of researchers especially during the past decade and a half.

The central theme dominating this segment of research focuses on the question effects of federal tax policy on small businesses like my business organization that is involved in small-scale farming.

Individuals and organizations tend to change their behaviors in response to changes in federal tax policies. The policy on economic incentives to businesses affects my organization in a number of ways. Tax policies come along with various economic incentives that are precipitating factors for involvement in a number of activities and investments. According to Page (1983), Implications of Federal tax policies of significance to farmers are particularly notable in tax burdens, land prices and the ownership of capital assets, the cost of capital relative to labor, the size and organizational structure of farms, management and husbandry practices, and product supplies and prices”.

In addition the above, there are the tax burdens. The federal tax policies of various farm tax provisions have the profound effect on small farms and business organizations that trade in farm out puts. The special agricultural tax preferences have significantly reduced the tax burdens on farm income. This has led to increased earnings in my organization which recorded profound increase in its income by 30% for last quarter. “Where the business case shows gains or net cash inflows, taxes operate to lower overall gains because operating income and capital gains are normally taxed; If the total income tax rate is, say 30%, a $100 operating gain becomes a $70 net gain after taxes” (Pechman, 1987).

A lot of changes in our levels of income are expected to be realized after an analysis of the CBO’s budget. This is because, tax policy incentives to farmers and farm input have been further enhanced to assist the small farming business units record high income turn over. Furthermore, policies in regard to new tax provisions that include income averages, an improved level of self employed insurance remittances, increased levels of capital expensing, and low tax rates on gains accrued from capital on the new budget by CBO is envisaged to slow down rates of our the organization’s progress. Budgetary Effects of the American Workers, State, and Business Relief Act of 2010; Senate Amendment 3336, as introduced by Senator Baucus as a substitute for H.R. 4213 has had direct impact on farming businesses.

The federal tax structure and budget may affect by organization in number of ways. According to this budget, the department of transportation received – $72.5billion + $48.1billion from the recovery act, this amount is expected to impact positively within my organization. Agriculturally based, my organization depends on transport to effectively deliver its produce to the consumers at exact times. This is in view of the fact that this amount is expected to be spent by the department of transport for improvement of safety and reduction of congestion.

In addition to this, the federal government has appropriated $5 billion for the improvement of the railway system. These will stir growth within the export industry and make heavy cargo movement faster and cheaper.

The department of agriculture received – $26billion + $6.9billion from recovery act that is aimed supporting the small farmers and the rural residents involved in small farming acidities. These funds are aimed at the expansion of broad band within the rural areas, the development of rural energy that has hampered the fast development of this critical sector of our economy. Lastly, this amount is expected to be used in the provision of strong support for child hood education. The most notable impact to my organization will be increased national supply of home-grown renewable fuels with a budget of $250,000,000 this year’s federal budget.

Lastly, the department of commerce that received a federal budget of $13.8billion+$7.9billion from recovery act will be involved in the development of weather satellite and climate centers. The roles of technological innovation in economic development and entrepreneurship are heavily stressed within this budget. This budget allocation is therefore expected to positively impact on my organization.

In conclusion, the impact of federal tax policy and the federal budget run widely and affect a range of activities undertaken by small scale businesses. It is therefore true that my organization is expected benefit from a wide range of government’s incentives and budget allocations.

References

Page, B.I. (1983). Who gets what from government? University of California Press.

Pechman, J.A. (1987). Federal tax policy. Washington. Brookings Institution Press.

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IvyPanda. 2022. "Analysis of Federal Tax Policy." June 13, 2022. https://ivypanda.com/essays/analysis-of-federal-tax-policy/.

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