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I was writing an email to the principal of my former school, and came up with a question. The letter is to be read by the principal, so I should be more polite, I need to be careful about the etiquette.
But how and where in the letter should I write "I wish you a Merry Christmas"?
Is it polite to say "I wish you a Merry Christmas" to the people that have higher social status?

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Yes, you can say "Merry Christmas" to someone of higher social status. (I would argue that social status isn't very important in this case, but that's a separate question.) There are two common places to put it -- at the beginning (as a greeting) or at the end. If you put it at the beginning, normally you would just say "Merry Christmas!" instead of using a complete sentence. Here's an example:

Dear Principal So-and-So,

Merry Christmas! I hope you and your family are doing well. I've been...

If you want to use a complete sentence, it's more appropriate to do so at the end. Here are a couple examples of that:

...I'll try to visit the school the next time I come home. I wish you and your family a Merry Christmas and a Happy New Year.

Sincerely,

-Your Name Here

or:

...I'll try to visit the school the next time I come home.

Merry Christmas!

-Your Name Here

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Make sure they celebrate Christmas before wishing them Merry Christmas. Not everyone celebrates Christmas, and some may be offended by the assumption.

If they do celebrate Christmas, then Merry Christmas. If they do not celebrate Christmas, you can either wish them well on their specific holiday, or use the umbrella term, "Happy Holidays!".

You can put it either as the first sentence of the email or the last sentence of the email.

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    Sure, some share that sentiment, but to flat-out say, "You cannot wish them Merry Christmas" seems a bit too strong. A more toned-down caution that not everyone may want to hear this greeting might have been more fitting. – J.R. Dec 27 '14 at 23:26
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    @J.R. Good point. Edited – Evorlor Dec 27 '14 at 23:27
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    If the recipient is truly offended by receiving a Merry Christmas wish despite not celebrating Christmas, wouldn't they be just as offended by receiving a Happy Holidays wish when they happen to work through that holiday season and thus cannot "celebrate" (enjoy, relax during, ...) those holidays? – O. R. Mapper Dec 28 '14 at 11:37
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I think most principals (and others, like politicians) that deal with a diverse set of people and religious backgrounds would not be in the least offended by "Merry Christmas" or any other common positive religious or secular holiday expression.

One need not necessarily go to the trouble to determine a principal's personal belief system first, especially if you know them. How would one do that? By asking the principal first in a preliminary email and then following up in a second email? By asking someone else (and maybe getting it wrong)? You could employ a private detective... It's all really just a waste of people's bandwidth/time.

And why not express your own holiday greeting in your own manner, so that your principal can know what your preference is? Principals are generally more concerned with knowing what your preference is than taking offense at all the various students and parents who have a different viewpoint than their own.

However, there are some formal situations in which it may be inappropriate, such as an email that touches upon some deeply personal matter related to the principal. There are various business and social etiquette guidelines that one might want to review to consider various options. Also, if in doubt or under unusual circumstances, you could ask the principal's secretary for advice.

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If the letter is primarily for some other purpose, but happens to be sent around Christmas time, you should use a complete sentence at the start of the letter.

For example:

Dear So-and-so,

First, let me wish you and your family a very Merry Christmas. I hope Santa is very generous this year!

With respect to our joint investment in XYZ Inc., I am of the opinion that ....

etc.

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    "I hope Santa..." <-- That is very informal and, in terms of formal etiquette, would be totally inappropriate. – CoolHandLouis Dec 28 '14 at 5:35

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