The Ironies Of Taxing Christmas Trees

Well, the Christmas tree tax sprouted and got chopped down before I had time to blog about it, but I’m going to blog about it today anyway. The audacious folks of Fox News almost certainly had a part in destroying the plan before it started by combining the words “OBAMA and TAX and CHRISTMAS” enough times in enough headlines to scare the Administration off. I have a love-hate relationship with those folks; they spend a lot of time, er, barking up the wrong tree (like complaining about Obama visiting a mosque that George Bush also visited), but when I don’t like the tree I’m glad to have them around doing all that barking, if you take my meaning. Though I sympathize with Cato’s disappointment that the GOP also had hands in the history of this proposal and “certain people saw the ‘Christmas Tree Tax’ as an opportunity to further partisan aims rather than provoke a discussion and debate on the proper role of the federal government.”

So let’s discuss that proper role. At first I was all like, hey, this is a classic example of the unholy alliance between government and business, where established businesses lobby for regulations that protect it from competition and distort the market. All the signs were there.

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. (source)

New Federal program… check!

A group of Christmas tree producers and importers worried about the skyrocketing use of artificial trees proposed the new board. (source)

Attempt by some businesses to use government to protect themselves from other businesses… check!

Throw in a bonus feature about negative rights (whereby smaller sellers can get an exemption but only if they apply for it), and it’s all proof that the government is still definitely not cutting back but marching ever down and onwards into the debt-ridden interventionist abyss! (Despite all the handwringing about budget cuts, federal spending is still up an incredible 5% this year alone.)

Why can’t the artificial tree industry lobby to get their own federal marketing board? Can Blockbuster get the government to charge a video rental tax to fund a program to prop up the dying video rental industry? If only the candle wax industry had been smart enough to lobby for a federal board to market candles when light bulbs were catching on… Hey, let’s pay 15 cents more for everything so the government can promote everything! (I mean, we’re already paying the government to tell us to eat more cheese and less cheese, you know.)

To top things off, the issue was full of weird ironies. A liberal administration trying to encourage people to cut down trees? How evergreen of them! Wait, the proposal has something to do with the Bush administration? But it was Obama that actually implemented it (what great “change”!) But those are all coincident partisan jabs that Cato wants me to stay away from. The real irony (I thought) was that the Christmas tree industry was taxing itself to attack its competition. What, did you guys fail Lobbying 101? You’re supposed to convince the government that your industry is better than the other one so they will tax the other one to promote you. Then at least you’d only tick off half the nation… But this way, everybody gets mad, because you either hate Christmas too much (because you’re taxing it) or you love Christmas too much (because you’re promoting it). Congratulations, Christmas tree lobby, you managed to tick off Christians who think the government hates them too much and non-Christians who think the government loves Christians too much at the same time!

Besides, I thought, if the taxing and marketing is all contained within the same industry, why don’t they just, you know, charge the equivalent amount and spend it on marketing themselves? You know, like every other business with a marketing budget?

Well, a couple people in the Marginal Revolution post (thanks Alex) are claiming that this irony is the whole point of it all. First, because it’s all contained, the government is not really growing at all here. It’s not coming out with a profit from the evil tax, and it’s not coming out with a debt from the evil board. And secondly, it’s solving a “collective action problem.” They need the government to force every Christmas tree seller to participate, or else some of them will choose not to participate and free ride on the marketing efforts of the others. That’s why they created the 1996 Commodity Promotion, Research and Information Act that allows the Department of Agriculture to do this kind of thing. It’s just like the Got Milk commercials!

But I’m not convinced. I mean, I’m glad for the containment, but I still don’t think it’s something the government should be doing. These folks can’t have too much of a collective action problem or they wouldn’t have been able to form the “Christmas Tree Checkoff Task Force” to lobby for the “Christmas Tree Promotion Board” in the first place, right? If a majority of their members want a pooled collection for marketing efforts, they can vote for that. Unions do that kind of stuff without the government, right? If a majority of them don’t actually want it, then they shouldn’t be doing it. And if a majority of members want it but they want to also impose the tax on the sellers that aren’t in the association, well, I think that’s unjust. If I’m selling a product, why should an outside association be able to force me to charge a tax on my items so they can use that money to promote my product? It might raise my net revenues in the end, but it might not, either. Besides, while the Obama administration is now “delaying” the “collection” of the fee, perhaps to get Fox News off its back, I haven’t heard that they’re cancelling the new board, and if it’s going to operate from the general fund without the fee, then we’re just back to good old-fashioned corporate rent-seeking.

So, in summary, the whole thing isn’t quite the egregious example of government intervention that it looked like on first glance (at least for now), but I still don’t think it’s something the government should be involved in. “A lot of people choosing to abandon my industry because they think another industry is superior” is not a “problem” the government should be trying to “solve.”