481 U.S. 221 (1987), 85-1370, Arkansas Writers' Project v. Ragland

Docket Nº:No. 85-1370
Citation:481 U.S. 221, 107 S.Ct. 1722, 95 L.Ed.2d 209, 55 U.S.L.W. 4522
Party Name:Arkansas Writers' Project v. Ragland
Case Date:April 22, 1987
Court:United States Supreme Court
 
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Page 221

481 U.S. 221 (1987)

107 S.Ct. 1722, 95 L.Ed.2d 209, 55 U.S.L.W. 4522

Arkansas Writers' Project

v.

Ragland

No. 85-1370

United States Supreme Court

April 22, 1987

Argued January 20, 1987

APPEAL FROM THE SUPREME COURT OF ARKANSAS

Syllabus

Arkansas imposes a tax on receipts from sales of tangible personal property, but exempts numerous items, including newspapers and "religious, professional, trade, and sports journals and/or publications printed and published within this State" (magazine exemption). Appellant publishes in Arkansas a general interest magazine that includes articles on a variety of subjects, including religion and sports. In 1984, relying on Minneapolis Star & Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S. 575, appellant sought a refund of sales tax it had paid since 1982, asserting that the magazine exemption must be construed to include its magazine, and that subjecting its magazine to the sales tax, while sales of newspapers and other magazines were exempt, violated the First and Fourteenth Amendments. After appellee denied the refund claim, appellant sought review in State Chancery Court, stating an additional claim under 42 U.S.C. §§ 1983 and 1988 for injunctive relief and attorney's fees. That court granted appellant summary judgment, construing the magazine exemption to include appellant because its magazine was published and printed in Arkansas. The Arkansas Supreme Court reversed, holding that the magazine exemption applies only to religious, professional, trade, or sports periodicals. The court rejected the claim that the exemption granted to other publications discriminated against appellant, ruling that success on this claim would avail appellant nothing, since it would still be subject to tax even if the exemption fell. The court also refused to find that appellant's First and Fourteenth Amendment rights had been violated, ruling that the sales tax was a permissible "ordinary form of taxation" to which publishers are not immune. Accordingly, the court did not consider appellant's attorney's fees claim.

Held:

1. Appellant has standing to challenge the Arkansas sales tax scheme. Appellee's argument that appellant has not asserted an injury that this Court can redress, since appellant concededly publishes neither a newspaper nor a religious, professional, trade, or sports journal, is unpersuasive, since it would effectively insulate underinclusive statutes from constitutional [107 S.Ct. 1724] challenge. Appellant has alleged a sufficient personal stake in this litigation's outcome, in that the State Supreme Court's holding stands as a total bar to appellant's relief, and its constitutional attack

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holds the only promise of escape from the burden imposed upon it by the challenged statute. P. 227.

2. The Arkansas sales tax scheme that taxes general interest magazines, but exempts newspapers and religious, professional, trade, and sports journals, violates the First Amendment's freedom of the press guarantee. Pp. 227-234.

(a) Even though there is no evidence of an improper censorial motive, the Arkansas tax burdens rights protected by the First Amendment by discriminating against a small group of magazines, including appellant's, which are the only magazines that pay the tax. Such selective taxation is one of the types of discrimination identified in Minneapolis Star. Indeed, its use here is even more disturbing than in that case, because the Arkansas statute requires official scrutiny of publications' content as the basis for imposing a tax. This is incompatible with the First Amendment, whose requirements are not avoided merely because the statute does not burden the expression of particular views expressed by specific magazines, and exempts other members of the media that might publish discussions of the various subjects contained in appellant's magazine. Pp. 227-231.

(b) Appellee has not satisfied its heavy burden of showing that its discriminatory tax scheme is necessary to serve a compelling state interest, and is narrowly drawn to achieve that end. The State's general interest in raising revenue does not justify selective imposition of the sales tax on some magazines and not others, based solely on their content, since revenues could be raised simply by taxing businesses generally. Furthermore, appellee's assertion that the magazine exemption serves the state interest of encouraging "fledgling" publishers is not persuasive, since the exemption is not narrowly tailored to achieve that end. To the contrary, the exemption is both overinclusive and underinclusive in that it exempts the enumerated types of magazines regardless of whether they are "fledgling" or are lucrative and well established, while making general interest magazines and struggling specialty magazines on other subjects ineligible for favorable tax treatment. Moreover, although the asserted state need to "foster communication" might support a blanket exemption of the press from the sales tax, it cannot justify selective taxation of certain publishers. Pp. 231-232.

3. Since the state courts have not yet indicated whether they will exercise jurisdiction over appellant's claims under §§ 1983 and 1988, this Court remands to give them an opportunity to do so. Pp. 233-234.

287 Ark. 155, 697 S.W.2d 94 and 698 S.W.2d 802, reversed and remanded.

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MARSHALL, J., delivered the opinion of the Court, in which BRENNAN, WHITE, BLACKMUN, POWELL, and O'CONNOR, JJ., joined, and in Parts I, II, III-B, IV, and V of which STEVENS, J., joined. STEVENS, J., filed an opinion concurring in part and concurring in the judgment, post, p. 234. SCALIA, J., filed a dissenting opinion, in which REHNQUIST, C.J., joined, post, p. 235.

MARSHALL, J., lead opinion

JUSTICE MARSHALL delivered the opinion of the Court.

The question presented in this case is whether a state sales tax scheme that taxes general interest magazines, but exempts newspapers and religious, professional, trade, and sports journals, violates the First Amendment's guarantee of freedom of the press.

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I

Since 1935, Arkansas has imposed a tax on receipts from sales of tangible personal property. 1935 Ark. Gen. Acts 233, § 4, pp. 593, 594, now codified at Ark.Stat.Ann. § 84-1903(a) (1980 and Supp.1985). The rate of tax is currently four percent of gross receipts. § 84-1903 (three percent); Ark.Stat.Ann. § 84-1903.1 (Supp.1985) (additional one percent). Numerous items are exempt from the state sales tax, however. These include "[g]ross receipts or gross proceeds derived from the sale of newspapers," § 84-1904(f) (newspaper exemption),1 and "religious, professional, trade and sports journals and/or publications printed and published within this State . . . when sold through regular subscriptions." § 84-1904(j) (magazine exemption).2

Appellant Arkansas Writers' Project, Inc., publishes Arkansas Times, a general interest monthly magazine with a circulation of approximately 28,000. The magazine includes articles on a variety of subjects, including religion and sports. It is printed and published in Arkansas, and is sold through mail subscriptions, coin-operated stands, and over-the-counter sales. In 1980, following an audit, appellee Commissioner of Revenue assessed tax on sales of Arkansas

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Times. Appellant initially contested the assessment, but eventually reached a settlement with the State and agreed to pay the tax beginning in October, 1982. However, appellant reserved the right to renew its challenge if there were a change in the tax law or a court ruling drawing into question the validity of Arkansas' exemption structure. Record 46-47.

Subsequently, in Minneapolis Star & Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S. 575 (1983), this Court held unconstitutional a Minnesota tax on paper and ink used in the production of newspapers. In January, 1984, relying on this authority, appellant sought a refund of sales tax paid since October, 1982, asserting that the magazine exemption must be construed to include Arkansas Times. It maintained that subjecting Arkansas Times to the sales tax, while sales of newspapers and other magazines were exempt, violated the First and Fourteenth Amendments. The Commissioner denied appellant's claim for refund. App. to Juris. Statement 12-14.

Having exhausted available administrative remedies, appellant filed a complaint in the Chancery Court for Pulaski County, Arkansas, seeking review of the Commissioner's decision. The complaint also stated a claim under 42 U.S.C. §§ 1983 and 1988 for injunctive relief and attorney's fees. The parties stipulated that Arkansas Times is not a "newspaper" or a "religious, professional, trade or sports journal," and that, during the relevant time period, appellant had paid $15,838.22 in sales tax. The Chancery Court granted appellant summary judgment, construing § 84-1904(j) to create two categories of tax-exempt magazines sold through subscriptions, one for religious, professional, trade, and sports journals, and one for publications published and printed within the State of Arkansas. No. 84-1268 (Pulaski Cty. Chancery Ct., [107 S.Ct. 1726] Mar. 29, 1985). Because Arkansas Times came within the second category, the court held that the magazine was exempt from sales tax, and appellant was entitled to a refund. The court determined...

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