460 U.S. 575 (1983), 81-1839, Minneapolis Star & Tribune Co. v. Minnesota Commissioner of Revenue

Docket Nº:No. 81-1839
Citation:460 U.S. 575, 103 S.Ct. 1365, 75 L.Ed.2d 295
Party Name:Minneapolis Star & Tribune Co. v. Minnesota Commissioner of Revenue
Case Date:March 29, 1983
Court:United States Supreme Court

Page 575

460 U.S. 575 (1983)

103 S.Ct. 1365, 75 L.Ed.2d 295

Minneapolis Star & Tribune Co.


Minnesota Commissioner of Revenue

No. 81-1839

United States Supreme Court

March 29, 1983

Argued January 12, 1983



While exempting periodic publications from its general sales and use tax, Minnesota imposes a "use tax" on the cost of paper and ink products consumed in the production of such a publication, but exempts the first $100,000 worth of paper and ink consumed in any calendar year. Appellant newspaper publisher brought an action seeking a refund of the ink and paper use taxes it had paid during certain years, contending that the tax violates, inter alia, the guarantee of the freedom of the press in the First Amendment. The Minnesota Supreme Court upheld the tax.

Held: The tax in question violates the First Amendment. Pp. 579-593.

(a) There is no legislative history, and no indication, apart from the structure of the tax itself, of any impermissible or censorial motive on the part of the Minnesota Legislature in enacting the tax. Grosjean v. American Press Co., 297 U.S. 233, distinguished. Pp. 579-580.

(b) But by creating the special use tax, which is without parallel in the State's tax scheme, Minnesota has singled out the press for special treatment. When a State so singles out the press, the political constraints that prevent a legislature from imposing crippling taxes of general applicability are weakened, and the threat of burdensome taxes becomes acute. That threat can operate as effectively as a censor to check critical comment by the press, thus undercutting the basic assumption of our political system that the press will often serve as an important restraint on government. Moreover, differential treatment, unless justified by some special characteristic of the press, suggests that the goal of the regulation is not unrelated to suppression of expression, and such goal is presumptively unconstitutional. Differential treatment of the press, then, places such a burden on the interests protected by the First Amendment that such treatment cannot be countenanced unless the State asserts a counterbalancing interest of compelling importance that it cannot achieve without differential taxation. Pp. 581-585.

(c) Minnesota has offered no adequate justification for the special treatment of newspapers. Its interest in raising revenue, standing alone, cannot justify such treatment, for the alternative means of taxing businesses generally is clearly available. And the State has offered no explanation of why it chose to use a substitute for the sales tax, rather

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than the sales tax itself. A rule that would automatically allow the State to single out the press for a different method of taxation as long as the effective burden is no different from that on other taxpayers or, as Minnesota asserts here, is lighter than that on other businesses, is to be avoided. The possibility of error inherent in such a rule poses too great a threat to concerns at the heart of the First Amendment. Pp. 586-590.

(d) Minnesota's ink and paper tax violates the First Amendment not only because it singles out the press, but also because it targets a small group of newspapers. The effect of the $100,000 exemption is that only a handful of publishers in the State pay any tax at all, and even fewer pay any significant amount of tax. To recognize 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. Pp. 591-592.

314 N.W.2d 201, reversed.

O'CONNOR, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, MARSHALL, POWELL, and STEVENS, JJ., joined, in Part V of which WHITE, J., joined, and in all but footnote 12 of which BLACKMUN, J., joined. WHITE, J., filed an opinion concurring in part and dissenting in part, post, p. 593. REHNQUIST, J., filed a dissenting opinion, post, p. 596.

O'CONNOR, J., lead opinion

JUSTICE O'CONNOR delivered the opinion of the Court. *

This case presents the question of a State's power to impose a special tax on the press and, by enacting exemptions, to limit its effect to only a few newspapers.

Page 577


Since 1967, Minnesota has imposed a sales tax on most sales of goods for a price in excess of a nominal sum.1 Act of June 1, 1967, ch. 32, Art. XIII, § 2, 1967 Minn. Laws 2143, 2179, codified at Minn.Stat. § 297A.02 (1982). In general, the tax applies only to retail sales. Ibid. An exemption for industrial and agricultural users shields from the tax sales of components to be used in the production of goods that will themselves be sold at retail. § 297A.25(1)(h). As part of this general system of taxation and in support of the sales tax, see Minn.Code of Agency Rules, Tax S & U 300 (1979), Minnesota also enacted a tax on the "privilege of using, storing or consuming in Minnesota tangible personal property." This use tax applies to any nonexempt tangible personal property unless the sales tax was paid on the sales price. Minn.Stat. § 297A.14 (1982). Like the classic use tax, this use tax protects the State's sales tax by eliminating the residents' [103 S.Ct. 1368] incentive to travel to States with lower sales taxes to buy goods, rather than buying them in Minnesota. §§ 297A.14, 297A.24.

The appellant, Minneapolis Star & Tribune Co., "Star Tribune," is the publisher of a morning newspaper and an evening newspaper (until 1982) in Minneapolis. From 1967 until 1971, it enjoyed an exemption from the sales and use tax provided by Minnesota for periodic publications. 1967 Minn. Laws 2187, codified at Minn.Stat. § 297A.25(1)(i) (1982). In 1971, however, while leaving the exemption from the sales tax in place, the legislature amended the scheme to impose a "use tax" on the cost of paper and ink products consumed in the production of a publication. Act of Oct. 31, 1971, ch. 31, Art. I, § 5, 1971 Minn. Laws 2561, 2565, codified

Page 578

with modifications at Minn.Stat. §§ 297A.14, 297A.25(1)(i) (1982). Ink and paper used in publications became the only items subject to the use tax that were components of goods to be sold at retail. In 1974, the legislature again amended the statute, this time to exempt the first $100,000 worth of ink and paper consumed by a publication in any calendar year, in effect giving each publication an annual tax credit of $4,000. Act of May 24, 1973, ch. 650, Art. XIII, § 1, 1973 Minn.Laws 1606, 1637, codified at Minn.Stat. § 297A.14 (1982).2 Publications remained exempt from the sales tax, § 2, 1973 Minn. Laws 1639.

After the enactment of the $100,000 exemption, 11 publishers, producing 14 of the 388 paid circulation newspapers in the State, incurred a tax liability in 1974. Star Tribune was one of the 11, and, of the $893,355 collected, it paid $608,634, or roughly two-thirds of the total revenue raised by the tax.

Page 579

See 314 N.W.2d 201, 203, and n. 4 (1981). In 1975, 13 publishers, producing 16 out of 374 paid circulation papers, paid a tax. That year, Star Tribune again bore roughly two-thirds of the total receipts from the use tax on ink and paper. Id. at 204, and n. 5.

Star Tribune instituted this action to seek a refund of the use taxes it paid from January 1, 1974, to May 31, 1975. It challenged the imposition of the use tax on ink and paper used in publications as a violation of the guarantees of freedom of the press and equal protection in the First and Fourteenth Amendments. The Minnesota Supreme Court upheld the tax against the federal constitutional challenge. 314 N.W.2d 201 (1981). We noted probable jurisdiction, 457 U.S. 1130 (1982), and we now reverse.


Star Tribune argues that we must strike this tax on the authority of Grosjean v. American Press Co., 297 U.S. 233 (1936). Although there are similarities between the two cases, we agree with the State that Grosjean is not controlling.

[103 S.Ct. 1369] In Grosjean, the State of Louisiana imposed a license tax of 2% of the gross receipts from the sale of advertising on all newspapers with a weekly circulation above 20,000. Out of at least 124 publishers in the State, only 13 were subject to the tax. After noting that the tax was "single in kind" and that keying the tax to circulation curtailed the flow of information, id. at 250-251, this Court held the tax invalid as an abridgment of the freedom of the press. Both the brief and the argument of the publishers in this Court emphasized the events leading up to the tax and the contemporary political climate in Louisiana. See Argument for Appellees, id. at 238 [omitted from electronic version]; Brief for Appellees, O.T. 1936, No. 303, pp. 8-9, 30. All but one of the large papers subject to the tax had "ganged up" on Senator Huey Long, and a circular distributed by Long and the Governor to each member of the state legislature

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described "lying newspapers" as conducting "a vicious campaign" and the tax as "a tax on lying, 2 cent [sic] a lie." Id. at 9. Although the Court's opinion did not describe this history, it stated

[the tax] is bad because, in the light of its history and of its present setting, it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information,

297 U.S. at 250, an explanation that suggests that the motivation of the legislature may have been significant.

Our subsequent cases have not been consistent in their reading of Grosjean on this point. Compare United States v. O'Brien, 391 U.S. 367, 384-385 (1968) (stating that legislative purpose was irrelevant in Grosjean), with Houchins v. KQED, Inc., 438 U.S. 1, 9-10 (1978) (plurality opinion) (suggesting that purpose was relevant in Grosjean); Pittsburgh Press Co. v. Pittsburgh Comm'n on Human Relations, 413 U.S. 376, 383 (1973)...

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