Minneapolis Star v. Minnesota Commissioner of Revenue

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 Minnesota special 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 financially favored 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 retail sales 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 the newspaper, the state was still found in clear violation of the Press Clause. The Court found that Minnesota presented no compelling public or government interest to impose a different method of taxation on the press instead of the general 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 Amendment rights] almost as potently as the actual application of sanctions."

On a second point, O'Connor found the statute not only singled out the press in 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 only be 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 that recognizing 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 justify the scheme." O'Connor continued, "the tax begins to resemble more a penalty for a few of the largest newspapers than an attempt to favor struggling smaller enterprises." In concurrence, Justice Byron White wrote that the $100,000 exemption 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 whether censorship was a motive or not.