Tag: Christmas

Yes, Virginia, There Is a Christmas Tree Tax

Via Heritage’s “The Foundry” blog (and the outraged Facebook posts of former Cato interns), behold the Christmas Tree Tax.

It’s an announcement from the Agriculture Department’s Agriculture Marketing Service that it will be levying a fifteen cent tax on Christmas trees, payable to a new “Christmas Tree Promotion Board.” The tax will raise about $2 million from Christmas tree farmers and importers directly. That money comes indirectly from you.

As noted at The Foundry, the Ag Department claims the fifteen-cents-per-tree “assessment” is “not a tax nor does it yield revenue for the Federal government.” This claim fails both informal and formal analysis.

Informal: Do Christmas tree farmers go to jail if they refuse to pay? Yes. It’s a tax.

Formal: Is it a “non-penal, mandatory payment of money or its equivalent to the extent such payment does not compensate the Federal Government or other payee for a specific benefit conferred directly on the payer”? Bingo. Tax.

The formal definition is from the Taxpayer’s Defense Act, a bill I helped write while a congressional staffer after carefully researching the distinction between taxes and other government revenues, such as fines, legitimate fees, and such.

The Taxpayer’s Defense Act would have barred agencies from establishing or increasing taxes without first getting Congress’ approval. The idea was simple: No taxation without representation. And that idea is violated by the Agriculture Department’s new Christmas Tree Tax.

Free Trade’s “Peace Dividend”

“Peace on earth, good will toward men” is a phrase we associate with the Christmas season. One bit of good news that you will probably not see in the newspaper or on cable TV over the holiday is that the world in recent decades has actually been moving closer to that ideal, and free trade and globalization have played a role.

In its latest “Trade Fact of the Week,” the pro-trade Democratic Leadership Council reminds us that “The world has become more peaceful.”

Citing a recent report from the Human Security Center in British Colombia, the DLC memo notes that wars are less frequent and less bloody than in decades past. The average annual death toll from armed conflicts has been declining since the 1950s, from an average of 155,000 down to 17,000 in 2002-2008. None of the world’s “great powers” have clashed since the 1969 border conflict between Russia and China, and none of the major European powers have exchanged fire for 65 years—-the longest intervals of peace for centuries.

In Chapter 8 of my 2009 Cato book, Mad about Trade: Why Main Street America Should Embrace Globalization, I describe this phenomenon as “Free Trade’s ‘Peace Dividend’” (pp. 140-143). There are two main ways that globalization promotes peace: The growing network of global trade and investment has raised the cost of war, so that now if two nations go to war, they not only lose soldiers and tax dollars, they also lose markets and cause lasting damage to their economies. Globalization has also reduced the spoils of war by allowing people to acquire resources through peaceful exchange rather than conquest.

The DLC Trade Fact memo shares the credit with decolonization, the end of the Cold War, the spread of democracy, and peacekeeping missions, while also recognizing the contribution of economic openness:

[L]ower trade barriers, more open economic policies, more efficient logistics industries and better communications technology speed up and deepen integration across borders through trade and investment, strengthening mutual interests and reducing reasons for conflict. The [Human Security Center] report suggests that a 10 percent increase in FDI reduces a nation’s chance of international or civil war by about 3 percent, and that globalization reduces the reasons a country might want to fight:

“[T]he most effective path to prosperity in modern economies is through increasing productivity and international trade, not through seizing land and raw materials. In addition, the existence of an open global trading regime means it is nearly always cheaper to buy resources from overseas than to use force to acquire them.”

Eliminating all remaining trade barriers would be one of the best Christmas presents our politicians could give us.