Appellant
Minneapolis Star & Tribune Company
Appellee
Minnesota Commissioner of Revenue
Appellant's Claim
That a state special tax assessment on ink and paper used in publication of the Star Tribune newspaper violated freedom of the press.
Chief Lawyer for Appellant
Lawrence C. Brown
Chief Lawyer for Appellee
Paul R. Kempainen, Special Assistant Attorney General of Minnesota
Justices for the Court
Harry A. Blackmun, William J. Brennan, Jr., Warren E. Burger, Thurgood Marshall, Sandra Day O'Connor (writing for the Court), Lewis F. Powell, Jr., John Paul Stevens, Byron R. White
Justices Dissenting
William H. Rehnquist
Place
Washington, D.C.
Date of Decision
29 March 1983
Decision
Upheld the Minnesota Star's claim and overturned the Minnesota SupremeCourt's decision that the special tax did not violate the newspaper's constitutional protections.
Significance
The ruling found that state tax systems cannot treat the press differently than any other business unless substantial justification exists. The state of Minnesota could demonstrate no compelling reason to justify imposing a specialuse tax on a select few newspaper publishers. Therefore, the tax was in violation of the First Amendment's Press Clause. The ruling was unique in subjecting state laws to strict scrutiny based on mere potential for censorship.
In 1967, the Minnesota state legislature established a general system of taxation including a sales tax on the retail sale of most goods and a use tax applied to certain personal property for which a sales tax did not apply. Initially, the Star Tribune newspaper, published by the Minneapolis Star & Tribune Co., was exempted from the sales and use taxes as were other newsperiodicals. But in 1971, the state legislature revised the tax system by imposing a use tax solely on the cost of paper and ink products used in their publication. In 1974, the legislature further revised the law by exempting thefirst $100,000 worth of ink and paper used by a publication in a calendar year. In effect, the special use tax applied only to the publications with largest circulations. As a consequence, only 14 of the 388 circulation newspapersin Minnesota were assessed use taxes in 1974. The Star Tribune, havingthe largest circulation in the state, paid approximately two-thirds of the total amount of ink and paper tax assessed statewide.
The Star Tribune subsequently filed a lawsuit challenging the constitutionality of both the use tax and its exemptions. The newspaper also sought arefund for use taxes paid for 1974 expenses and part of 1975. In 1981 the Minnesota Supreme Court held that the use tax did not violate the Constitutiondue to the lack of any censorship intent by the state.
Equal Treatment of the Press
Taxation of the press has long been a major issue in the United States. Opposition to unfair taxation policies of Britain played a central role in the American Revolution and greatly influenced the writing of the U.S. Constitution.The British government policy of using taxes to control the press and inhibit access of information to the general population profoundly influenced colonial America. Framers of the U.S. Constitution argued that the press should serve a unique role by keeping the public informed and arousing sentiment on key issues. The press should serve to restrain government and keep it under control. Consequently, the writers of the First Amendment inserted the "Press Clause," which states that government actions are prohibited from "abridging the freedom of . . . the press." Some even described the news media as the "fourth branch" of the U.S. government by providing yet another check on its powers. This public purpose is the essence of the First Amendment protection. Oddly, the issue of the First Amendment's Press Clause was rarely addressed by the Supreme Court prior to the 1936 Grosjean v. American Press Co. case. The focus of that case was on obvious censorship by a state attempting to limit circulation of a select group of newsletters through a special tax on their advertising revenue. The Star Tribune contended that the Minnesotaspecial use tax should be voided based on precedence the Court established in the Grosjean case.
In response, the state of Minnesota argued their use tax was not actually "special," but part of the ordinary tax system. In fact, the system financiallyfavored publishers because they actually paid much less tax to the state through the special use tax than if subjected to the general sales tax.
Justice O'Connor, writing for the 8-1 majority, wrote that the special use tax imposed by Minnesota on the Star Tribune indeed singled out the press for special treatment. The ordinary tax system focused primarily on retailsales of goods. In contrast, the state was taxing publishers on materials purchased wholesale to produce a newspaper, which "is without parallel in the State's tax scheme." However, O'Connor found Grosjean not a relevant precedent since "censorship" was the motive in that case. Even though Minnesota's intent was solely to raise revenue without intent to censor or suppress thenewspaper, the state was still found in clear violation of the Press Clause.The Court found that Minnesota presented no compelling public or governmentinterest to impose a different method of taxation on the press instead of thegeneral sales tax. Though imposition of a special use tax rather than the general sales tax actually favored the press, the Court found differential treatment between the news media and other businesses could be abused with less favorable results in the future. In 1963, the Court wrote in National Association for the Advancement of Colored People v. Button, that simply the "threat of sanctions [censorship] may deter [the] exercise [of First Amendmentrights] almost as potently as the actual application of sanctions."
On a second point, O'Connor found the statute not only singled out the pressin general, but even a select group of publishers. The special tax actually applied to only a few large publishers due to the $100,000 exemption. Even fewer paid a substantial amount. The Court ruled that the press should not onlybe treated equal to other business entities, but equal to other press organizations as well. In essence, the First Amendment allows regulation of the press, but not differential treatment in any form. O'Connor wrote, "we think thatrecognizing a power in the State not only to single out the press but also to tailor the tax so that it singles out a few members of the press presents such a potential for abuse that no interest suggested by Minnesota can justifythe scheme." O'Connor continued, "the tax begins to resemble more a penaltyfor a few of the largest newspapers than an attempt to favor struggling smaller enterprises." In concurrence, Justice Byron White wrote that the $100,000exemption was sufficient alone to rule a constitutional violation. He believed the other findings by the Court, such as a tax posing a threat by financially favoring the press, were questionable and need not be addressed.
Importantly, the Court majority in Minneapolis Star established that tax schemes did not have to involve censorship in order for them to be ruled in violation of the First Amendment. As in race, age, and gender discrimination, discrimination among media members or between the media institution and other businesses is prohibited under the First Amendment, regardless of whethercensorship was a motive or not.
Benefit or Burden?
In dissent, Justice Rehnquist questioned the Court's rationale in determiningthat a tax system financially favoring the press poses a threat. He could not see how freedom was diminished by Minnesota's actions. He then calculated the cost of imposing the standard state sales tax, as suggested by the majority, rather than the special use tax. The Star Tribune would have paid over $3.6 million for the period a refund was sought, rather than the $1.2 million actually paid. Rehnquist was also troubled by the Court asserting itselfinto a state legislature's business. The Court had traditionally avoided involvement in the development of states' tax schemes, particularly where an inappropriate burden did not clearly exist. In sum, Rehnquist found the Court'sdecision, based on an "unprecedented" application of a "differential treatment" standard, a very hollow victory for the Star Tribune.
Impact
The 1983 Minnesota Star decision alerted states that taxation policiesmust treat the press very carefully. The case further validated the specialinstitutional role of the press in American society. Through the 1980s, statecourts strictly applied the Minnesota Star decision to a number of cases, creating problems with various states' revenue raising efforts. Two other Supreme Court cases involving state taxation of the media followed Minnesota Star. Arkansas Writers' Project, Inc. v. Ragland (1987) and Leathers v. Medlock (1991) focused on taxes imposed on the media in Arkansas. In the Medlock case, the Court developed a three-part test to judge cases involving differential taxation of the news media. The test incorporated the Minnesota Star finding that a tax must be applied equally to all. The other two parts question if a tax is inappropriately based on thesubject matter of the particular news media and if the tax is targeted at only a small group of the media. If a tax scheme initially fails any of the three parts, then the tax legislation must be subjected to close scrutiny to determine if it poses an intolerable threat of state censorship.
Many defenders of press freedom worried, however, that the scope and impact of Minnesota Star was greatly reduced by Medlock. The latter decision reemphasized the primary concern over censorship motives by holding that differential taxes must be shown to actually pose a significant danger of censorship. The Court found that differential taxation involving the news media does not alone implicate the First Amendment violation. As a result, a Court test for violation of the First Amendment became increasingly stringent again. To many, the Medlock decision significantly detracted from the gains in freedom of the press protection offered by Minnesota Star by giving states greater control over regulation of the news media.
The Minnesota Star decision also established precedence for deliberating cases involving cable television as mass media technologies evolved through the 1980s. Issues regarding differential treatment of the various forms ofcommunications media, such as traditional print media, broadcast media, and cable media were raised. Application of the First Amendment Press Clause to restrictions placed on these various forms of communication continued to be anissue through the 1990s, as demonstrated in Turner Broadcasting System v.Federal Communications Commission.
In conformance with Rehnquist's dissenting opinion in the Minnesota Star case, some believe the courts should concentrate on infringements of a more substantial and direct nature. They believe "incidental burdens" on fundamental constitutional rights are contained in most state and federal legislation. Therefore, the court system could become excessively mired in less meaningful cases. As a result, the politically conservative Supreme Court began developing more stringent limiting principles in the 1990s, such as the Medlock test. These decisions serve to limit the Court's role in state and federal legislative review.
Tax systems are a primary means states have to regulate business, raise revenue, and provide special support to particular industries important to their region. Consequently, the Court has held that states are fairly free to tax asthey see fit. As established by Minnesota Star, state tax schemes will normally not be challenged unless they treat the news media differently than other businesses. Legal scholars are concerned about the implications of the Medlock case. They contend more factors than just reliance on censorship motives should be used to determine if a differential tax system appliedto the news media warrants judicial scrutiny. Based on the Minnesota Star decision, it is imperative that states tax the press in the least discriminatory manner possible.
Related Cases
Minneapolis Star & Tribune Company
Appellee
Minnesota Commissioner of Revenue
Appellant's Claim
That a state special tax assessment on ink and paper used in publication of the Star Tribune newspaper violated freedom of the press.
Chief Lawyer for Appellant
Lawrence C. Brown
Chief Lawyer for Appellee
Paul R. Kempainen, Special Assistant Attorney General of Minnesota
Justices for the Court
Harry A. Blackmun, William J. Brennan, Jr., Warren E. Burger, Thurgood Marshall, Sandra Day O'Connor (writing for the Court), Lewis F. Powell, Jr., John Paul Stevens, Byron R. White
Justices Dissenting
William H. Rehnquist
Place
Washington, D.C.
Date of Decision
29 March 1983
Decision
Upheld the Minnesota Star's claim and overturned the Minnesota SupremeCourt's decision that the special tax did not violate the newspaper's constitutional protections.
Significance
The ruling found that state tax systems cannot treat the press differently than any other business unless substantial justification exists. The state of Minnesota could demonstrate no compelling reason to justify imposing a specialuse tax on a select few newspaper publishers. Therefore, the tax was in violation of the First Amendment's Press Clause. The ruling was unique in subjecting state laws to strict scrutiny based on mere potential for censorship.
In 1967, the Minnesota state legislature established a general system of taxation including a sales tax on the retail sale of most goods and a use tax applied to certain personal property for which a sales tax did not apply. Initially, the Star Tribune newspaper, published by the Minneapolis Star & Tribune Co., was exempted from the sales and use taxes as were other newsperiodicals. But in 1971, the state legislature revised the tax system by imposing a use tax solely on the cost of paper and ink products used in their publication. In 1974, the legislature further revised the law by exempting thefirst $100,000 worth of ink and paper used by a publication in a calendar year. In effect, the special use tax applied only to the publications with largest circulations. As a consequence, only 14 of the 388 circulation newspapersin Minnesota were assessed use taxes in 1974. The Star Tribune, havingthe largest circulation in the state, paid approximately two-thirds of the total amount of ink and paper tax assessed statewide.
The Star Tribune subsequently filed a lawsuit challenging the constitutionality of both the use tax and its exemptions. The newspaper also sought arefund for use taxes paid for 1974 expenses and part of 1975. In 1981 the Minnesota Supreme Court held that the use tax did not violate the Constitutiondue to the lack of any censorship intent by the state.
Equal Treatment of the Press
Taxation of the press has long been a major issue in the United States. Opposition to unfair taxation policies of Britain played a central role in the American Revolution and greatly influenced the writing of the U.S. Constitution.The British government policy of using taxes to control the press and inhibit access of information to the general population profoundly influenced colonial America. Framers of the U.S. Constitution argued that the press should serve a unique role by keeping the public informed and arousing sentiment on key issues. The press should serve to restrain government and keep it under control. Consequently, the writers of the First Amendment inserted the "Press Clause," which states that government actions are prohibited from "abridging the freedom of . . . the press." Some even described the news media as the "fourth branch" of the U.S. government by providing yet another check on its powers. This public purpose is the essence of the First Amendment protection. Oddly, the issue of the First Amendment's Press Clause was rarely addressed by the Supreme Court prior to the 1936 Grosjean v. American Press Co. case. The focus of that case was on obvious censorship by a state attempting to limit circulation of a select group of newsletters through a special tax on their advertising revenue. The Star Tribune contended that the Minnesotaspecial use tax should be voided based on precedence the Court established in the Grosjean case.
In response, the state of Minnesota argued their use tax was not actually "special," but part of the ordinary tax system. In fact, the system financiallyfavored publishers because they actually paid much less tax to the state through the special use tax than if subjected to the general sales tax.
Justice O'Connor, writing for the 8-1 majority, wrote that the special use tax imposed by Minnesota on the Star Tribune indeed singled out the press for special treatment. The ordinary tax system focused primarily on retailsales of goods. In contrast, the state was taxing publishers on materials purchased wholesale to produce a newspaper, which "is without parallel in the State's tax scheme." However, O'Connor found Grosjean not a relevant precedent since "censorship" was the motive in that case. Even though Minnesota's intent was solely to raise revenue without intent to censor or suppress thenewspaper, the state was still found in clear violation of the Press Clause.The Court found that Minnesota presented no compelling public or governmentinterest to impose a different method of taxation on the press instead of thegeneral sales tax. Though imposition of a special use tax rather than the general sales tax actually favored the press, the Court found differential treatment between the news media and other businesses could be abused with less favorable results in the future. In 1963, the Court wrote in National Association for the Advancement of Colored People v. Button, that simply the "threat of sanctions [censorship] may deter [the] exercise [of First Amendmentrights] almost as potently as the actual application of sanctions."
On a second point, O'Connor found the statute not only singled out the pressin general, but even a select group of publishers. The special tax actually applied to only a few large publishers due to the $100,000 exemption. Even fewer paid a substantial amount. The Court ruled that the press should not onlybe treated equal to other business entities, but equal to other press organizations as well. In essence, the First Amendment allows regulation of the press, but not differential treatment in any form. O'Connor wrote, "we think thatrecognizing a power in the State not only to single out the press but also to tailor the tax so that it singles out a few members of the press presents such a potential for abuse that no interest suggested by Minnesota can justifythe scheme." O'Connor continued, "the tax begins to resemble more a penaltyfor a few of the largest newspapers than an attempt to favor struggling smaller enterprises." In concurrence, Justice Byron White wrote that the $100,000exemption was sufficient alone to rule a constitutional violation. He believed the other findings by the Court, such as a tax posing a threat by financially favoring the press, were questionable and need not be addressed.
Importantly, the Court majority in Minneapolis Star established that tax schemes did not have to involve censorship in order for them to be ruled in violation of the First Amendment. As in race, age, and gender discrimination, discrimination among media members or between the media institution and other businesses is prohibited under the First Amendment, regardless of whethercensorship was a motive or not.
Benefit or Burden?
In dissent, Justice Rehnquist questioned the Court's rationale in determiningthat a tax system financially favoring the press poses a threat. He could not see how freedom was diminished by Minnesota's actions. He then calculated the cost of imposing the standard state sales tax, as suggested by the majority, rather than the special use tax. The Star Tribune would have paid over $3.6 million for the period a refund was sought, rather than the $1.2 million actually paid. Rehnquist was also troubled by the Court asserting itselfinto a state legislature's business. The Court had traditionally avoided involvement in the development of states' tax schemes, particularly where an inappropriate burden did not clearly exist. In sum, Rehnquist found the Court'sdecision, based on an "unprecedented" application of a "differential treatment" standard, a very hollow victory for the Star Tribune.
Impact
The 1983 Minnesota Star decision alerted states that taxation policiesmust treat the press very carefully. The case further validated the specialinstitutional role of the press in American society. Through the 1980s, statecourts strictly applied the Minnesota Star decision to a number of cases, creating problems with various states' revenue raising efforts. Two other Supreme Court cases involving state taxation of the media followed Minnesota Star. Arkansas Writers' Project, Inc. v. Ragland (1987) and Leathers v. Medlock (1991) focused on taxes imposed on the media in Arkansas. In the Medlock case, the Court developed a three-part test to judge cases involving differential taxation of the news media. The test incorporated the Minnesota Star finding that a tax must be applied equally to all. The other two parts question if a tax is inappropriately based on thesubject matter of the particular news media and if the tax is targeted at only a small group of the media. If a tax scheme initially fails any of the three parts, then the tax legislation must be subjected to close scrutiny to determine if it poses an intolerable threat of state censorship.
Many defenders of press freedom worried, however, that the scope and impact of Minnesota Star was greatly reduced by Medlock. The latter decision reemphasized the primary concern over censorship motives by holding that differential taxes must be shown to actually pose a significant danger of censorship. The Court found that differential taxation involving the news media does not alone implicate the First Amendment violation. As a result, a Court test for violation of the First Amendment became increasingly stringent again. To many, the Medlock decision significantly detracted from the gains in freedom of the press protection offered by Minnesota Star by giving states greater control over regulation of the news media.
The Minnesota Star decision also established precedence for deliberating cases involving cable television as mass media technologies evolved through the 1980s. Issues regarding differential treatment of the various forms ofcommunications media, such as traditional print media, broadcast media, and cable media were raised. Application of the First Amendment Press Clause to restrictions placed on these various forms of communication continued to be anissue through the 1990s, as demonstrated in Turner Broadcasting System v.Federal Communications Commission.
In conformance with Rehnquist's dissenting opinion in the Minnesota Star case, some believe the courts should concentrate on infringements of a more substantial and direct nature. They believe "incidental burdens" on fundamental constitutional rights are contained in most state and federal legislation. Therefore, the court system could become excessively mired in less meaningful cases. As a result, the politically conservative Supreme Court began developing more stringent limiting principles in the 1990s, such as the Medlock test. These decisions serve to limit the Court's role in state and federal legislative review.
Tax systems are a primary means states have to regulate business, raise revenue, and provide special support to particular industries important to their region. Consequently, the Court has held that states are fairly free to tax asthey see fit. As established by Minnesota Star, state tax schemes will normally not be challenged unless they treat the news media differently than other businesses. Legal scholars are concerned about the implications of the Medlock case. They contend more factors than just reliance on censorship motives should be used to determine if a differential tax system appliedto the news media warrants judicial scrutiny. Based on the Minnesota Star decision, it is imperative that states tax the press in the least discriminatory manner possible.
Related Cases
- Grosjean v. American Press Co., 297 U.S. 233 (1936).
- National Association for the Advancement of Colored People v. Button, 371 U.S. 415 (1963).
- Arkansas Writers' Project, Inc. v. Ragland, 481 U.S. 221 (1987).
- Leathers v. Medlock, 499 U.S. 439 (1991).
- Turner Broadcasting System v. Federal Communications Commission, 520 U.S. 180 (1994).
Further Readings
- Biskupic, Joan, and Elder Witt, eds. Congressional Quarterly's Guide to the U.S. Supreme Court, 3rd ed. Washington, DC: Congressional Quarterly, Inc., 1996.
- Hawke, Anne and Kevin Donnelly. "Paparazzi." The Quill. September1998, p. 19.
- Schwartz, Bernard. Freedom of the Press: Constitutional Issues. New York: Facts on File, Inc., 1992.
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