Letting Small Tree Farms Opt Out of the Christmas Tree Tax (H.R. 4205)

What is H.R. 4205?

(Updated December 22, 2017)

This bill would allow “choose and cut” Christmas tree farms to opt out of a U.S. Dept. of Agriculture (USDA) marketing program funded by taxes on the sales of Christmas trees. Currently the Christmas tree promotion and research program is compulsory, so farms can't opt out of the tax — which is 15 cents per tree if they sell more than 500 trees.

This bill doesn't discontinue the USDA marketing program or the tax on Christmas tree sales. However, Christmas tree producers would no longer be compelled to pay the tax and participate in the program.

Argument in favor

The tax on Christmas trees that funds the USDA's marketing program hurts consumers and disadvantages small “choose-and-cut” tree farms in this niche industry. Small tree farms should be able to opt out of the program.

Argument opposed

The USDA’s Christmas tree marketing program is invaluable to the industries and benefits both large Christmas tree wholesalers and the small farms. Allowing the tax that funds the program to be voluntary for small farms is unfair.

Impact

People who purchase Christmas trees, small Christmas tree producers, and the USDA's marketing efforts.

Cost of H.R. 4205

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Sponsoring Rep. Michael McCaul (R-TX) expressed concerns about the usefulness of the USDA’s Christmas tree marketing program to the small “choose-and-cut” Christmas tree farms his bill seeks to exempt:

“By federally mandating that choose-and-cut businesses take part in this national promotional program, the U.S. Department of Agriculture is forcing the entire industry to pay for an advertising campaign that primarily benefits large, national Christmas tree producers selling to the wholesale market, not small tree farms.”

After introducing identical legislation during the 113th Congress in December 2014, Rep. McCaul added that while he supports a full repeal of the Christmas tree tax, he was optimistic that Congress could agree to at least his limited exemption.

Of Note: The Christmas tree tax has been in place since 2010. It began with a USDA issued regulation establishing a program for large-scale Christmas tree producers to tax sales to establish and fund the USDA’s marketing program for Christmas trees. It was removed from the law following public scrutiny, but was revived in the 2014 Farm Bill.

Media:

• Sponsoring Rep. Michael McCaul (R-TX) Press Release
• Bloomberg
• The Wall Street Journal (Context)
• KBTX
• The Hill (Previous Version)