Proprietor income

Comments

2 comments

  • Avatar
    LAE6731
    I don't want to take over your thread, but I'm curious to know the answer to this as well. I was recently told that employment might show up for industries not present in a county due to proprietor residence in that county. I assume this means that the proprietor's income would also be included in their county of residence? This is worrisome for our particular analysis of agriculture since a portion of farms are owned by people living out of state, or in some cases, out of country. I'm of the understanding that IMPLAN relies on BEA REA data to adjust and control their employment and wage values. BEA's methodology release shows proprietor income to be reported as follows: [i]"The estimates of nonfarm proprietors’ income and the estimates for contributions for government social insurance by the self-employed are based on source data that are reported by place of filing, that is, the tax-filing address of the recipient. This address is often that of the proprietor’s residence; therefore, these data are treated as if they were reported by place of residence. The estimates of farm proprietors’ income are based on data that are reported by the principal place of production, which is usually the county in which the farm has most of its land and in which most of the work is performed. Because most farm proprietors live on, or near, their land, the place of production is treated as if it were the same as the place of residence." [/i] - http://www.bea.gov/regional/pdf/spi2014.pdf Is this how IMPLAN distributes proprietor income as well? According to place of residence for nonfarm proprietors and place of production for farm proprietors?
  • Avatar
    IMPLAN Support
    Hello, Let us know if we missed anything. Q:[i] Just to confirm, the proprietor income reflected in IMPLAN analysis results only reflects the proprietor income in the region being modeled, correct?[/i] A: Correct. -- Q: [i]I had a question regarding whether proprietor income would show up in the analysis result for a business located in the region that was owned by someone who actually lives outside the region. I realized I'm not 100% clear on that! I'm assuming it works the same for other property type income.[/i] A: By definition, proprietors earn money and live in the same place. IMPLAN obtains data on proprietor income from the Bureau of Economic Analysis (BEA), which in turn obtains most of those data from the Internal Revenue Service (IRS). IRS forms for proprietor income associate that income with the taxpayer’s address. So, at least in the data we have from BEA, proprietors don’t commute. Of course, in reality, a proprietor might do some work in County A, but live in County B. Our data will reflect that income as though it were earned in County B. Other property income (OPI/OPTI) in IMPLAN is also earned in the study area, but note that data on OPI are not measured as directly as proprietor income data. -- Q: [i]I don't want to take over your thread, but I'm curious to know the answer to this as well. I was recently told that employment might show up for industries not present in a county due to proprietor residence in that county. I assume this means that the proprietor's income would also be included in their county of residence? This is worrisome for our particular analysis of agriculture since a portion of farms are owned by people living out of state, or in some cases, out of country… Is this how IMPLAN distributes proprietor income as well? According to place of residence for nonfarm proprietors and place of production for farm proprietors?[/i] A: In general, your assumption “that the proprietor's income would also be included in their county of residence” is correct. Farms are a little more complex, though, and we recommend reading the attached document on farm sector data. In general, we do adhere to the BEA’s methodology for farm proprietor income and farm proprietor employment insofar as we use BEA’s data on farm-level proprietor and proprietor income estimates. But the BEA data are reported only at the “farm” level, so IMPLAN does additional work to allocate those data to its 14 farm sectors. Presumably, though, an out-of-country proprietor farm owner would employ people at the location of the farm to run the farm, and those employees would be counted in the same location as the farm. Also, note that corporately-held farms do not have proprietors. So, if a foreign corporation owns a farm in the U.S., related income and employment will, at least in theory, be associated with the location of the farm, since value-added in IMPLAN, the BEA benchmark, and BEA Regional Economic Accounts are reported on a place-of-work basis, or, a GDI basis rather than a GNI basis. Without knowing more about your analysis, though, we aren’t sure how to advise you regarding out-of-country farm owners. -- Please let us know if you have additional questions. IMPLAN Group Staff

Please sign in to leave a comment.