Abstract
Abstract The Tax Reform Act of 1986 had a large impact on the profits of Christmas tree growers. Growers have significant costs for at least 7 years before they realize any returns. Prior to the Tax Reform Act, 60% of these returns were exempt from federal income tax if they qualified as long-term capital gains. Currently 100% of these returns are subject to taxation. Using a comprehensive survey of production costs of Michigan Christmas tree growers, this study found that after-tax rates of return dropped from 41% down to 31.6% for Scotch pine on an 8-year rotation. Other species and rotation showed corresponding decreases. North. J. Appl. For. 7:89-91, June 1990.
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