Economics @ ITT

A Tax on Christmas Trees?

Posted in economics, microeconomics, Taxation by ittecon on November 9, 2011

The Obama administration has imposed a 15-cent tax on Christmas trees in order to pay for a new board tasked with promoting the Christmas tree industry. 

In classic media reporting bias, Fox released this non-news article in faux outrage. The author trips over himself trying to position this as a slam on the Obama administration.

Nonetheless, the article has intermingled with tid-bits of facts a heaping dose of subterfuge. The bottom line is this, economically, the tax incidence is likely to be shared between suppliers and consumers. I don’t presume Christmas trees to be particularly inelastic, so there may not be a lot of leeway anyway.

Of course, Fox and its Conservative ilk, go on at length to marginalise government involvement in private affairs, and so when a private industry group effectively requests assistance and government agrees (and wants to do the sensible thing, which is to ensure the programme costs are covered), we hear complaints about government meddling.

Moreover, whether government assessed the fee or not, the industry would still have to pay for the campaign, in which case the costs still need to be covered.

Finally as with any advertising or PR campaign, the goal is to increase demand in order to diminish the marginal costs of operation. So, sorry, Judson Burger, you are the Grinch here.

via Merry Christmas? Agriculture Department Imposes Christmas Tree Tax | Fox News.

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