March 31, 2011 12:48PM # Are Farm Subsidies Progressive? By [Sallie James](https://www.cato.org/people/sallie-james) --- SHARE An economist in the Department of Agricultural and Consumer Economics at the Univeristy of Illinois posted an interesting entry on the FarmDocDaily blog yesterday, claiming that [farm subsidies flowing to the biggest farms is a sign of progressivity](http://www.farmdocdaily.illinois.edu/2011/03/progressive_farm_subsidies.html). His reasoning goes something like this: because a progressive tax system is one in which the rich pay a higher proportion of their income in taxes than do the poor, and because a subsidy is essentially a negative tax, then a progressive subsidy system is one in which subsidies would flow more to farms where the subsidy is a higher proportion of their sales or assets. And, according to Mr. Kirwan, that’s what we see: subsidies make up 10 percent of sales for small farms and only 4 percent of sales for large farms. So far, so progressive. But here’s the problem as I see it. Mr Kirwan takes a pretty narrow view of what progressive means (when I hear that term, by the way, I reach for my revolver, but we’ll let it slide for now). The question isn’t whether the subsidies are being distributed “progressively” among farmers — although [the fact they are not ](http://www.washingtonpost.com/wp-dyn/content/article/2006/12/20/AR2006122001591.html)is, I think, one of the valid critiques of U.S. farm policy. The real question we should be asking ourselves is *how subsidies are distributed among society,* a society that Mr Kirwan claims to speak for when he says that the current income tax structure is “how we as a society have decided to measure the “fairness” of the tax system.” Farmers are [wealthier](http://www.ers.usda.gov/Briefing/WellBeing/farmnetworth.htm) (second graph from the bottom) and [earn higher incomes](http://www.ers.usda.gov/Briefing/WellBeing/farmhouseincome.htm) (fourth graph from the bottom) than the average U.S. household. Their [average debt-to-asset ratio is about 12 percent](http://http://www.ers.usda.gov/briefing/farmincome/wealth.htm) (third graph from the bottom), very low relative to the [average U.S. household](http://www.frbsf.org/publications/economics/letter/2011/el2011-02.pdf). Those should be the relevant data for any progressivity test. And all of this ignores the main critique of farm subsidies: that they are an example of special interest politics at its worst. I’ve yet to hear of a convincing argument as to why farmers deserve taxpayer- and consumer-funded special treatment compared with other small (or large, for that matter) businesses. ##### Related Tags [Tax and Budget Policy](https://www.cato.org/tax-budget-policy), [Trade Policy](https://www.cato.org/trade-policy), [Herbert A. Stiefel Center for Trade Policy Studies](https://www.cato.org/herbert-stiefel-center-trade-policy-studies), [Department of Agriculture](https://www.cato.org/department-agriculture), [Downsizing Government](https://www.cato.org/downsizing-government) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).