Department of Revenue v. Magazine Publishers of America, Inc.

• Decision Date: 23 July 1992
• Docket Number: No. 75201,75201
• Citation: 604 So.2d 459
• Parties: DEPARTMENT OF REVENUE, Appellant, v. MAGAZINE PUBLISHERS OF AMERICA, INC., et al., Appellees. 604 So.2d 459, 17 Fla. L. Week. S547, 20 Media L. Rep. 1502
• Court: Florida Supreme Court

Page 459

604 So.2d 459

DEPARTMENT OF REVENUE, Appellant, v. MAGAZINE PUBLISHERS OF AMERICA, INC., et al., Appellees.

No. 75201.

604 So.2d 459, 17 Fla. L. Week. S547, 20 Media L. Rep. 1502

Supreme Court of Florida.

July 23, 1992.

Rehearing Denied Sept. 23, 1992.

Robert A. Butterworth, Atty. Gen. and Kevin J. ODonnell, Asst. Atty. Gen., Tallahassee, for appellant.

James M. Ervin, Jr. and Lawrence P. Stevenson of Holland & Knight, Tallahassee, on behalf of Magazine Publishers of America, Inc., The Hearst Corp., Time, Inc., Golf Digest/Tennis, Inc., and Meredith Corp., Laura Besvinick of Greer, Homer & Bonner, P.A., Miami, on behalf of The Miami Herald Pub. Co., and Barry S. Richard and William L. Hyde of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, Tallahassee, on behalf of The Florida Press Ass'n, The Tallahassee Democrat, Inc., Florida Pub. Co., and Citrus Pub. Co., Inc., for appellees.

PER CURIAM.

This case is before the Court on remand from the United States Supreme Court for reconsideration of our decision in Department of Revenue v. Magazine Publishers of America, Inc., 565 So.2d 1304 (Fla.1990), vacated, Miami Herald Publishing Co. v. Department of Revenue, --- U.S. ----, 111 S.Ct. 1614, 113 L.Ed.2d 712 (1991).

Magazine Publishers of America, Inc.; The Hearst Corporation; Time, Inc.; Golf Digest/Tennis, Inc.; and Meredith Corporation (Magazine Publishers) filed suit against the Department of Revenue (Department), challenging the constitutionality of the imposition of sales tax on the retail sales of secular magazines pursuant to chapter 212, Florida Statutes (1987). The trial court granted the Magazine Publishers' motion for summary judgment, and also granted the summary judgment motions of intervenors the Miami Herald Publishing Company and the Florida Press Association to the extent that they asserted that the sales tax on magazines should be invalidated. Finding that chapter 212 imposed a differential tax on the press and that the Department failed to assert a compelling state interest which would support the tax, the trial court held that the tax was an unconstitutional violation of the First Amendment of the United States Constitution. The trial court also ordered that the Department be enjoined from collecting the tax on magazines. Upon appeal by the Department, the First District Court of Appeal certified that the trial court's order passed upon a question of great public importance requiring immediate resolution by this Court.

This Court accepted jurisdiction pursuant to article V, section 3(b)(5), Florida Constitution, and upon review, affirmed in part and reversed in part the trial court's order. Department of Revenue v. Magazine Publishers of America, Inc., 565 So.2d 1304 (Fla.1990). The Court affirmed the trial court's order finding that chapter 212 unconstitutionally burdened First Amendment interests, but reversed that part of the order striking the tax imposed on magazines. This Court concluded that under state law the proper solution was to eliminate the exemption for newspapers.

The United States Supreme Court granted the Miami Herald Publishing Company's petition for a writ of certiorari, vacated the judgment of this Court, and remanded for further consideration in light of Leathers v. Medlock, --- U.S. ----, 111 S.Ct. 1438, 113 L.Ed.2d 494 (1991).

In Leathers, the United States Supreme Court considered the constitutionality of an Arkansas sales tax scheme that exempted both magazine and newspaper sales from taxation while imposing a sales tax on cable television. The Supreme Court noted that differential taxation of the media does not by itself raise First Amendment concerns. 111 S.Ct. at 1442. Instead, differential taxation of First Amendment speakers only triggers heightened scrutiny under the First Amendment if the tax: 1) singles out the press; 2) targets a small group of speakers; or 3) discriminates on the basis of the content of the speech. Id. at 1443-44. Finding that the Arkansas tax presented none of these types of discrimination, the Supreme Court concluded that "the State's extension of its generally applicable sales tax to ... cable and satellite services, while exempting the print media, does not violate the First Amendment." Id. at 1447.

The first issue before this Court on remand is whether Florida's differential tax scheme triggers heightened scrutiny under the First Amendment. Florida's sales tax is a tax of general applicability, which applies to receipts from the sales of all tangible personal property unless specifically exempted, and does not single out the press for special treatment. The state may impose a generally applicable tax on the press without raising First Amendment concerns. Id. at 1444; see also Jimmy Swaggart Ministries v. Board of Equalization, 493 U.S. 378, 110 S.Ct. 688, 107 L.Ed.2d 796 (1990).

In Arkansas Writers' Project, Inc. v. Ragland, 481 U.S. 221, 107 S.Ct. 1722, 95 L.Ed.2d 209 (1987), the Supreme Court declared invalid an Arkansas sales tax scheme which taxed general interest magazines, but exempted newspapers and religious, professional, trade, and sports journals. Unlike Arkansas Writers' where the "burden of the tax clearly falls on a limited group of publishers," 481 U.S. at 229 n. 4, 107 S.Ct. at 1728 n. 4, Florida's taxation scheme applies uniformly to the retail sales of all secular magazines and does not select a narrow group of publishers to bear the burden of the tax. The trial court's final summary judgment states that Magazine Publishers of America, Inc. is "a national trade association comprised of 213 publishers" and that "[m]ost, if not all, of these publishers sell magazines and other publications to Florida residents." The extension of Florida's sales tax to this large number of publishers does not resemble the discriminatory tax which the Supreme Court invalidated in Arkansas Writers', where at most only three Arkansas magazines were subject to the tax. Id. at 229 & n. 4, 107 S.Ct. at 1728 & n. 4.

Thus, Florida's tax does not discriminate either by singling out the press for a special tax or by targeting a small group within the press to bear the burden of the tax. However, the third circumstance which would trigger a heightened scrutiny analysis under the First Amendment, that the tax discriminates on the basis of the content of the speech, does pose a problem in this case. Like the statute at issue in Leathers, the language of Florida's sales tax statute does not refer to the content of the media taxed or exempted. ¹ However, unlike Leathers, the record shows that the content of a publication is a key factor in determining whether the publication is subject to taxation.

In Leathers, the Supreme Court found that cable television offered subscribers a mixture of news, information, and entertainment and that there was no record evidence "that this material differs systematically in its message from that communicated by satellite broadcast programming, newspapers, or magazines." Id. 111 S.Ct. at 1445. Consequently, the Supreme Court determined that the Arkansas sales tax is not content based.

In contrast, the deposition of the Assistant Executive Director of the Department indicates that the Department will "review the content of the publication" to determine whether a publication qualifies for the newspaper exemption. In reviewing a publication, the Department is guided by Florida Administrative Code Rule 12A-1.008(1)(b) which specifies that "[i]n order to constitute a newspaper, the principal purpose of the publication must be to disseminate news." The rule also provides that the publication must contain five enumerated elements in order to constitute a newspaper. ² While most of these elements relate to the form or frequency of publication, the fifth element requires the Department to evaluate the contents of the publication to determine whether it contains "reports of current events and matters of general interest which appeal to a wide spectrum of the general public." Fla.Admin.Code R. 12A-1.008(1)(b)5. ³ This is not a content-neutral requirement. As the Supreme Court emphasized in Arkansas Writers', " '[t]he First Amendment's hostility to content-based regulation extends not only to restrictions on particular viewpoints, but also to prohibition of public discussion of an entire topic.' " 481 U.S. at 230, 107 S.Ct. at 1728 (alteration in original) (quoting Consolidated Edison Co. v. Public Service Comm'n, 447 U.S. 530, 537, 100 S.Ct. 2326, 2333, 65 L.Ed.2d 319 (1980)).

Because Florida's differential taxation of the press is content-based, the tax must withstand heightened scrutiny under the First Amendment. See Leathers, 111 S.Ct. at 1444. In order to pass this strict scrutiny muster, the tax must serve some compelling state interest and must be narrowly drawn to achieve that end. See Arkansas Writers', 481 U.S. at 231, 107 S.Ct. at 1728. The Department argues that the newspaper exemption furthers the compelling state interest of encouraging the literacy and general knowledge of Florida's citizens. Although the State has a legitimate interest in fostering literacy, we find that this tax scheme is not narrowly tailored to achieve that end. The State need not look to the content of publications to attain the desired goal of increased public knowledge and literacy. Moreover, magazines and other publications not eligible for the exemption also provide a wealth of information to the public.

The Department asserted for the first time at oral argument that the newspaper exemption is related to the fact that newsprint can be recycled while slick magazine paper cannot. If the Department looked solely to the type of paper or other format-based criteria in determining whether a publication will be taxed or is exempt from taxation, First Amendment rights would not be implicated. Although Florida Administrative Code Rule 12A-1.008(1)(c)2 states that a newspaper "is customarily printed on newsprint,"...