112 MASS. EXPERIMENT STATION BULLETIN 235 



year. This is especially true where real estate values are based upon con- 

 siderations other than productive capacity. The ratio of taxes to income evi- 

 dently will vary from farm to farm within each town, and from town to town 

 and from season to season. The following tables show the relation between 

 taxes paid and farm income. Farm income may be defined as that part of 

 the farm receipts remaining after paying all expenses connected with the 

 farm operations together with necessary allowances to cover depreciation of 

 farm buildings and equipment and unpaid family labor. It is not the same as 

 net profits as defined for the Federal income tax. Farm income figures are 

 not comparable with corporation income data discussed later because farm 

 income includes wages of the operator as well as any returns for management. 

 Corporation incomes are, of course, computed after deducting these items. 



The relation between farm income and taxes is useful in measuring differ- 

 ences between different farming areas, and in comparing the situation in the 

 same area over several years, as in Table 14. 



Table 13.— Relation of Taxes to Farm Income,a 1922-1923 



a Farm inconip includes returns to the operator for wages and management, and the 

 interest on his investment. 



It is the customary practice to include taxes as one item of farm expense 

 in computing farm income. However, for purposes of determining the rela- 

 tion between income and taxes, the income figures have been computed before 

 taxes were paid. On this basis taxes took 13 per cent of the farm income of 

 the 227 farms considered in 1922. The percentage varied from 8 per cent in 

 Granville to 19 per cent in Shelburne. In 1923, a better crop year, taxes 

 amounted to less than 10 per cent of the farm income, and the average for 

 the two years was about 11 per cent, which compares favorably with other 

 sections of the country. This comparison is shown liy Table 15. 

 The percentage of farm income going to taxes in Massachusetts in 1923 was 

 more than 5 per cent below the average for the United States and more than 

 3 per cent below the average for the North Atlantic states. Data for one 

 year are not conclusive, but serve to show existing differences at a given time. 

 In a different season the situation might be reversed. 



Table 14 shows the relation between farm income and taxes in three towns 

 for the years 1920-1923. The four-year average for all farms was 13.69 

 per cent of income going to taxes. There was considerable difference between 



