Facts
- Louisiana enacted Act No. 23 (1934), imposing a 2% “license tax” on gross receipts from advertising in newspapers with weekly circulation exceeding 20,000.
- The tax applied to a small set of large-circulation newspapers in the state (13 papers), many of which were critical of the dominant political organization associated with Senator Huey P. Long.
- Nine newspaper publishers sued in federal district court to enjoin enforcement, alleging the tax was a calculated device to penalize disfavored newspapers and restrict circulation of news and opinion.
- The publishers claimed the tax violated freedom of the press under the Fourteenth Amendment and denied equal protection.
- The district court declared the statute unconstitutional and permanently enjoined its enforcement; the state official responsible for enforcement appealed directly to the Supreme Court.
Issues
- Whether the federal district court properly exercised equitable jurisdiction to enjoin collection of the tax.
- Whether the selective 2% tax on advertising receipts of large-circulation newspapers violated freedom of the press as protected against state action by the Fourteenth Amendment.
- Whether the statute denied equal protection of the laws.
Decision
- The Supreme Court unanimously affirmed the injunction and held the tax unconstitutional.
- The Court found equitable relief proper because payment of the tax did not afford taxpayers a clear remedy of restitution.
- The Court held that freedom of the press is a fundamental liberty protected from state infringement by the Due Process Clause of the Fourteenth Amendment, and that corporate newspaper publishers are “persons” within the Fourteenth Amendment.
- The Court concluded the law was not an ordinary revenue measure but a targeted press-burdening device with censorial effect, functioning as a restraint on circulation through discriminatory taxation.
- Because the law violated press freedom, the Court did not reach the equal-protection claim.
Legal Principles
- Freedom of the press is a fundamental right protected against state action through the Fourteenth Amendment’s Due Process Clause.
- Corporations are “persons” entitled to Due Process and Equal Protection protections under the Fourteenth Amendment.
- States may impose ordinary, generally applicable taxes on newspapers, but may not impose special, selective taxes on the press that operate to penalize particular publishers or restrain the dissemination and circulation of information.
- Equity may enjoin an unconstitutional tax exaction where payment would leave the taxpayer without a clear remedy of restitution.
Conclusion
The Court invalidated Louisiana’s selective advertising-receipts tax on large newspapers as an unconstitutional state-imposed restraint on press freedom, while reaffirming that the press remains subject to ordinary, nondiscriminatory taxation.