A “Christmas Tree Tax”? No, Just Good Old Crony Capitalism

Apparently, the Federal Government believes it necessary to remind you that you can buy Christmas Trees.

The blogosphere is abuzz today in response to a Heritage Foundation blog post about a government program that imposes a tax on Christmas tree growers for the purpose of, well, promoting Christmas trees:

President Obama’s Agriculture Department today announced that it will impose a new 15-cent charge on all fresh Christmas trees—the Christmas Tree Tax—to support a new Federal program to improve the image and marketing of Christmas trees.

In the Federal Register of November 8, 2011, Acting Administrator of Agricultural Marketing David R. Shipman announced that the Secretary of Agriculture will appoint a Christmas Tree Promotion Board.  The purpose of the Board is to run a “program of promotion, research, evaluation, and information designed to strengthen the Christmas tree industry’s position in the marketplace; maintain and expend existing markets for Christmas trees; and to carry out programs, plans, and projects designed to provide maximum benefits to the Christmas tree industry” (7 CFR 1214.46(n)).  And the program of “information” is to include efforts to “enhance the image of Christmas trees and the Christmas tree industry in the United States” (7 CFR 1214.10).

To pay for the new Federal Christmas tree image improvement and marketing program, the Department of Agriculture imposed a 15-cent fee on all sales of fresh Christmas trees by sellers of more than 500 trees per year (7 CFR 1214.52).  And, of course, the Christmas tree sellers are free to pass along the 15-cent Federal fee to consumers who buy their Christmas trees.

Acting Administrator Shipman had the temerity to say the 15-cent mandatory Christmas tree fee “is not a tax nor does it yield revenue for the Federal government” (76 CFR 69102).  The Federal government mandates that the Christmas tree sellers pay the 15-cents per tree, whether they want to or not.  The Federal government directs that the revenue generated by the 15-cent fee goes to the Board appointed by the Secretary of Agriculture to carry out the Christmas tree program established by the Secretary of Agriculture.  Mr. President, that’s a new 15-cent tax to pay for a Federal program to improve the image and marketing of Christmas trees.

There’s a few important things to note here. First of all, this is a tax on Christmas Tree growers, not on the trees that we all buy in parking lots and landscaping centers starting the day after Thanksgiving, although presumably at least some portion of the cost of the tax will be passed on and reflected in the price of the trees themselves. The tax itself, and the program, is apparently authorized by something called the Commodity Promotion, Research and Information Act of 1996  which set up various programs under the auspices of the Department of Agriculture to promote American agricultural products. Finally, it appears that this is something that the Christmas Tree industry lobbied for and wanted from the Department of Agriculture so, to the extent this tax is being imposed on them, it’s being imposed for something they want.

Not surprisingly, a good deal of the reaction to this on the right side of the blogosphere misses the point of why this program is such a mistake. The problem here isn’t that the Federal Government is imposing a “tax” on Christmas trees, but that it’s doing so to finance a program that it shouldn’t be implementing to begin with. The reason that the Christmas Tree growers want a program like this is because natural trees have been steadily losing market share to artificial trees in recent years. Artificial trees have been around for a long time, of course, and their benefits are pretty obvious. There’s no, or at least much less, danger of fire, they don’t cause a mess, their safer for people with allergies and homes with pets, and in the end they cost less than buying a comparably sized natural tree every year. It’s a choice consumers are making in increasing numbers apparently, and the natural tree industry obviously doesn’t like it.So, they decided to get the government involved in “promoting” natural Christmas trees.

Does anyone really need to be reminded that natural Christmas trees are available? Starting at least by the day after Thanksgiving, and in some places earlier than that, lots selling Christmas trees pop up all over the country. They’re pretty easy to find for the most part and, if you need reminding then driving around and seeing random people with trees tied to the roof of their car is pretty good advertisement. Then, there are all the trees you see in public places and shopping malls, the National Tree in Washington, D.C., and the tree at Rockefeller Center in New York City. Put simply, you’d pretty much have to be blind not to be aware of the existence and availability of natural Christmas trees in the United States.

Why, then, do we need a government program to promote their sale?

We don’t, of course, and in reality the government shouldn’t be involved in product promotion of any kind. That’s not their job, it’s the job of the industry itself. If tree growers want to create a promotional campaign, then they can do so through their trade association. This simply isn’t something that the government should be doing, especially for a product that is sold primarily in a domestic market. Instead of doing that, though, they lobbied the government to create a program to do it for them.

What we’ve got here, then, is another example of crony capitalism, with the government putting its finger on the scale to benefit the natural tree industry at the presumed expense of the artificial tree industry and, most likely, the taxpayers (that 15 cent a tree fee is unlikely to be enough to fund the program completely). That’s crony capitalism, folks. It’s a small example, but it’s just as wrong as subsidies for ethanol and specialized tax breaks for the oil industry. They’re all wrong, they all need to go.

Update: ABC News White House Correspondent Jake Tapper is reporting that implementation of the program is being delayed:

The U.S. Department of Agriculture is going to delay implementation and revisit a proposed new 15 cent fee on fresh-cut Christmas trees,  sources tell ABC News. The fee, requested by the National Christmas Tree Association in 2009, was first announced in the Federal Registry yesterday and has generated criticism of President Obama from conservative media outlets. The well-trafficked Drudge Report is leading with the story, linking to a blog by David Addington, a former top aide to then-Vice President David Addington, at the conservative Heritage Foundation assailing the president thus: “The economy is barely growing and nine percent of the American people have no jobs. Is a new tax on Christmas trees the best President Obama can do? And, by the way, the American Christmas tree has a great image that doesn’t need any help from the government.”

The National Christmas Tree Association says the fee would fund a program “designed to benefit the industry and will be funded by the growers” and is “not expected to have any impact on the final price consumers pay for their Christmas tree.” According to the Federal Registry, the proposed Christmas Tree Promotion Board, which would be funded by the new fee, would launch a “program of promotion, research, evaluation, and information designed to strengthen the Christmas tree industry’s position in the marketplace; maintain and expend existing markets for Christmas trees; and to carry out programs, plans, and projects designed to provide maximum benefits to the Christmas tree industry” and to “enhance the image of Christmas trees and the Christmas tree industry in the United States.”

(…)

Nonetheless, the criticisms have apparently had an impact as the program is now being delayed.

Well, that was a pretty quick back down.

 

 

FILED UNDER: Economics and Business, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. PD Shaw says:

    It might be better if the tax code were amended to charge an extra $15 if you don’t attach proof that you bought a Christmas tree last year.

  2. Rob in CT says:

    I’m not even sure crony capitalism is quite right. To me, crony capitalism is when you take revenue from a broad-based tax (e.g. income taxes) and spend it to the benefit of a narrow interest (and that narrow interest has close connections to you, donates to you, etc).

    This is just… plain weird. It’s a narrow tax supporting advertising for a correspondingly* narrow interest.

    * without knowing more detail as to what group(s), precisely, lobbied for this tax and how they correspond with the tax base, it’s hard to say if this is exactly true.

    Anyway, wierd. Just wierd.

    I still go to the local tree farm and cut my own tree. It’s once a year. Yeah, it makes a mess. Yes, I’m killing trees (that will be replanted, of course). Yes, it would be easier to have a fake tree. But the real ones smell nice and, well, they’re real. I don’t really know what that matters to me, and I’m not sure I care to bother wondering about it much. I’m an atheist who puts up a Christmas tree every year, fer goodnessakes. We all do at least some things that don’t make a whole lot of sense.

  3. Rob,

    I guess I apply “crony capitalism” to any kind of program that involves this kind of government-business partnership, or the government favoring one industry over another.

  4. Ron Beasley says:

    I don’t see this as crony capitalism. The artificial trees are made by a few multinational corporations and have the resources to advertise and push their product. The thousands of natural tree farmers can’t do it individually so they asked for the opportunity to combine their resources for an advertising campaign.

  5. legion says:

    Cue the “Mooslim Obama’s War on Xmas” bandwagon in 3…. 2…. 1….

  6. There’s a National Christmas Tree Association? And official Washington listens to them?

    Sounds like an argument for smaller government.

  7. Rob in CT says:

    @Doug Mataconis:

    I hear you. In this instance, though, it appears the funding is coming from the “favored” industry and no other, right? In that case, I’m not sure the government is really favoring it. It just sounds like the industry decided (via some lobbying, which is suspect of course) to pay the government for advertising, rather than a private advertising company. No?

  8. JKB says:

    This would seem like an excellent reason not to buy a natural tree as the growers association would rather funnel the money through the government than to simply combine the same money within the association and do their own promotions. Seems suspicious that some who control the association want some cash that the members weren’t willing to cough up or the association doesn’t really represent all that many growers.

    So exactly how can the government do this promotion better and more efficiently than the private industry?

  9. @Ron Beasley:

    Yea because all those tree lots I see on the side of the road for a month are really crappy advertising.

  10. @Rob in CT:

    Perhaps, but how is that a proper function of government?

  11. Rob in CT says:

    JKB:

    Seems suspicious that some who control the association want some cash that the members weren’t willing to cough up or the association doesn’t really represent all that many growers.

    I suspect this too.

  12. mantis says:

    @PD Shaw:

    It might be better if the tax code were amended to charge an extra $15 if you don’t attach proof that you bought a Christmas tree last year.

    Zing!

    Not sure if others picked up on your meaning there…

  13. Gustopher says:

    Why does Obama want good, fine Christians to experience the higher risks of fire that comes with natural Christmas trees?

    (Alternately, are Christmas tree fires simply God’s vengeance?)

  14. Franklin says:

    That’s not their job, it’s the job of the industry itself. If tree growers want to create a promotional campaign, then they can do so through their trade association.

    I think this is the key point. Why do they need to use the government as a tool here? Cynically, you’d have to go with JKB’s view and presume that they want the government to foot more of the bill than the tax will impose.

    … and I’m even a bit of a (natural) treehugger. On the other hand, I do hate Christmas.

  15. Rob in CT says:

    @mantis:

    The mandate, I presumed.

    Franklin,

    Actually, I think JKB is saying the purpose is to get the entire industry (minus sellers of fewer than 500 trees/yr) to pay for an ad campaign, which suggests that the national org might have been having trouble getting their members to contribute to said campaign voluntarily. The question of dipping into general funds is another issue (and also entirely possible).

  16. Moosebreath says:

    “Seems suspicious that some who control the association want some cash that the members weren’t willing to cough up or the association doesn’t really represent all that many growers.

    So exactly how can the government do this promotion better and more efficiently than the private industry?”

    Because this gets around the free-rider problem, that some growers will refuse to pay a voluntary association to perform the advertising, but willing gladly piggyback off the benefits of the advertising. So really this is like pretty much any agricultural association which uses similar methods from almond growers to mushroom farmers.

    “not on the trees that we all buy in parking lots and landscaping centers starting the day after Thanksgiving”

    The Christian Nation folks have even gotten to Doug.

  17. PD Shaw says:

    @Rob in CT: There are a lot of similar agricultural checkoffs (IIRC, pork, beef, cheese, dairy); the notion is that a voluntary association runs into a free rider program where the producers are too numerous. Promotional advertising and research that benefits the entire industry needs to be compulsary or it won’t happen.

    @Doug Mataconis: The SCOTUS declared a similar mushroom program to violate the First Amendment. Sylabus:

    The Mushroom Promotion, Research, and Consumer Information Act mandates that fresh mushroom handlers pay assessments used primarily to fund advertisements promoting mushroom sales. Respondent refused to pay the assessment, claiming that it violates the First Amendment. It filed a petition challenging the assessment with the Secretary of Agriculture, and the United States filed an enforcement action in the District Court. After the administrative appeal was denied, respondent sought review in the District Court, which consolidated the two cases. In granting the Government summary judgment, the court found dispositive the decision in Glickman v. Wileman Brothers & Elliott, Inc., 521 U.S. 457, that the First Amendment was not violated when agricultural marketing orders, as part of a larger regulatory marketing scheme, required producers of California tree fruit to pay assessments for product advertising. The Sixth Circuit reversed, holding that Glickman did not control because the mandated payments in this case were not part of a comprehensive statutory agricultural marketing program.

    Held: The assessment requirement violates the First Amendment.

  18. WR says:

    @Doug Mataconis: “I guess I apply “crony capitalism” to any kind of program that involves this kind of government-business partnership, ”

    You might as well call it genocide. I mean, as long as you’re going to take a term that has a specific meaning and apply it to something that has nothing to do with that specific meaning you could use any word or phrase you wanted. Racism, oligarchy, happy fluffy bunnies.

    Who knew that Humpty Dumpty taught at George Mason?

  19. Liberty60 says:

    This is one program that ilustrates why some government regulation is important, and others not.

    The premise of banking regulations is that government interference is necessary because banks are so vital to the economy- e.g., bank failures can bring down the entire economy, and so constitute a compelling public interest.

    Christmas tree growers and vendors?

    Not so much in my view.

    If we want to keep clear the importance of government regulation of things like banking we need to be less promiscuous about supporting narrow interests like this.

  20. Rob in CT says:

    This isn’t regulation, though, so I’m not clear on how your comparison works, Liberty.

    The narrow interest in question is funding this themselves, presumably via taxation to avoid a free rider problem with members of their own group. If you think that’s insufficient justification I won’t argue with you. But I fail to see how this somehow undermines the legitimacy of bank regulation.

  21. Dazedandconfused says:

    Mushrooms, milk, Xmas trees…

    Seems these trade groups are getting the government to do their advertizing. “Crony capitalism” seems to me a stretch, as they are not favoring one Xmas tree grower over another. This is a tax the trade groups asked for.

    I sure agree this is too much government, but at the same time, I wonder what the laws are if a trade group gets together on their own and agrees to raise their prices together to fund anything beyond really small stuff. Could anti-collusion and/or trust problems develop?

  22. Collusion and trust issues with Christmas trees? Really?

  23. Barb Hartwell says:

    I guess this is supposed to be a bad thing. How is 15 cents going to hurt anyone, Am I missing something? So many industries that are taxed just pass it on to the consumers and say nothing about it. I myself use a fake tree that I`ve had for many years to save the trees because I believe it is wasteful.to kill anything for nothing.

  24. michael reynolds says:

    Kids, I hate to tell you this because I know it will ruin Christmas, but that $40 tree actually costs $40 and fifteen cents! Christmas is canceled! Daddy’s going to go drink eggnog now. Don’t cry.

  25. matt b says:

    @michael reynolds: eff egg nog. Ever since the American Nog Guild lobbied for that fifteen cent tax, daddy’s gone straight to the rum…

  26. @michael reynolds: Sounds reasonable unless you think about how much of that $40.00 is regulations and taxes.

    Very strange to hear anyone defend the government doing this even if it only costs $0.01. Is there truly anything the government shouldn’t be doing?

  27. WR says:

    @charles austin: ” Is there truly anything the government shouldn’t be doing?”

    Sure. Torture. Kidnapping. Murder. Invading countries that didn’t attack us. But then, none of you bold conservatives or libertarians objected to any of that. Because that all pales in comparison to the horrors of a fifteen cent surcharge on a Christmas tree.

  28. jpe says:

    Crony capitalism: first thing I thought of, too. You seem to be the only other person that grasped the real issue. Your brethren were too busy hallucinating this into Obama’s war Christmas, my brethren were too busy ignoring it.

  29. PD Shaw says:

    @Barb Hartwell: “How is 15 cents going to hurt anyone, Am I missing something?”

    Its not 15 cents; the problem as exemplified by the mushroom grower is that he has low margins for advertising and the law compels him to use it for a collective purpose. However, he doesn’t want to advertise mushrooms as a good purchase, he wants to advertise that his mushrooms are better than those offered by other sellers.

    I think its a stupid government polcy premised on the paternal belief that consumers are stupid, but the economic harm lies on Christmas tree producers that don’t want to participate (where the cost is $0.15 x number of trees).

  30. Liberty60 says:

    @WR:

    For the win!

  31. @WR: I wonder, can any of the progressives here actually argue against the points made, or is it always strawman and ad hominem nonsense. Seriously, GTFU.

  32. WR says:

    @charles austin: It was you who expanded this completely insignificant issue into some bizarro libertarian rant on people who think there’s nothing the government shouldn’t be doing. I merely pointed out that you and your ilk only seem to think the government is overreaching when it might cost you something in the area of a dime and a nickel. If they’re torturing brown people to death, you’ve got no problem with that, ideological or otherwise. That’s neither a strawman nor an ad hominem, merely an observation on the moral poverty of libertarianism.

  33. PD Shaw says:

    @WR: I support murder, torture and invading other countries if it only costs me fifteen cents per year, what’s your price?

  34. Anon says:

    First, it’s important to note that it’s the real tree industry itself that is lobbying for this. Second, I think it’s highly likely that if the Obama administration had turned down the industry from the beginning, the right-wing noise machine would be screaming, “OBAMA ADMINISTRATION REFUSES TO ASSIST HARD-WORKING SMALL BUSINESS OWNERS IN COMBATING FAKE CHINESE CHRISTMAS TREES!”

  35. Him says:

    “Why, then, do we need a government program to promote their sale?”

    Who said you do? Wouldn’t you assume you need the government to impose the tax on behalf of the growers association who wants this, who don’t have their own legal basis for taxation?
    Is it even legal to tax otherwise? How do I get the money off you if you don’t have a legal obligation to pay it?