Facts
- Minnesota exempted “periodic publications,” including newspapers, from the State’s general sales and use tax.
- Minnesota enacted a separate use tax on paper and ink products consumed in producing such publications.
- The tax exempted the first $100,000 of paper and ink used each year.
- Because of the exemption threshold, the tax applied to only a small number of publishers (about 11), with the Minneapolis Star & Tribune bearing most of the tax burden.
- The publisher paid the tax and sought a refund, alleging the scheme violated the First Amendment (as applied to the States through the Fourteenth Amendment) by singling out the press and effectively targeting a small subset of newspapers.
- The Minnesota Supreme Court upheld the tax as a permissible alternative to the sales tax from which newspapers were exempt.
Issues
- Whether a State violates the First and Fourteenth Amendments by imposing a special tax on ink and paper used to publish newspapers, where the structure and exemptions cause the tax to apply to only a small group of newspapers.
- Whether differential taxation that singles out the press (and a subset of the press) is presumptively unconstitutional absent a compelling justification that cannot be achieved through generally applicable taxation.
Decision
- The U.S. Supreme Court reversed, holding the tax unconstitutional under the First Amendment.
- The Court held, 8–1 (O’Connor, J.), that Minnesota created a special tax directed at publications protected by the First Amendment and further tailored it to fall on only a few members of the press.
- The Court rejected Minnesota’s revenue-raising rationale because general, nondiscriminatory taxation methods were available.
- The Court did not require proof of censorial intent; the discriminatory structure and the risk of abuse were sufficient to invalidate the tax.
- Rehnquist, J., dissented, reasoning the tax did not abridge press freedom and that the publisher could be better off than under a general sales tax.
Legal Principles
- Taxes that single out the press for special treatment are subject to heightened constitutional concern because they threaten press independence and can function as an indirect restraint on criticism of government.
- Differential taxation of the press is presumptively unconstitutional unless the State shows a countervailing interest of compelling importance that cannot be achieved without the differential tax.
- A tax that not only targets the press but is structured to burden only a small subset of publishers presents a particularly serious risk of governmental abuse and is difficult to justify under the First Amendment.
- The absence of evidence of censorial motive does not save a press-specific tax when the tax’s design and operation discriminate against the press.
- Raising revenue, by itself, does not justify singling out the press where alternative, generally applicable taxes are available.
Conclusion
The Court invalidated Minnesota’s ink-and-paper use tax because it singled out the press and, through a high exemption threshold, effectively targeted only a few newspapers, creating an impermissible risk that government could use selective taxation to burden or control protected expression.