460 U.S. 575, 103 S. Ct. 1365, 75 L. Ed. 2d 295 (1983)
In 1967, Minnesota enacted a sales tax on most retail sales of goods exceeding a nominal amount.1 The tax included an exemption for periodic publications.2 In 1971, the legislature amended the law to impose a use tax on the cost of paper and ink consumed in producing publications, while maintaining the sales tax exemption for publications themselves.3
In 1974, Minnesota further amended the statute to exempt the first $100,000 worth of ink and paper used by any publication in a calendar year, resulting in an annual tax credit of $4,000 at the 4% rate.4 Publications remained exempt from the sales tax.5 This use tax on ink and paper applied only to components of goods sold at retail and did not serve the typical complementary function of a use tax.6
The Minneapolis Star & Tribune Company published morning and evening newspapers in Minneapolis.7 In 1974, it had the largest circulation in the state and paid $608,634 in use taxes, representing roughly two-thirds of the total revenue collected from the tax that year.8 Only 11 publishers, producing 14 of 388 paid circulation newspapers, incurred any tax liability in 1974.9 Similar figures held for 1975, with the Star Tribune again bearing about two-thirds of the burden.10
The Star Tribune paid the taxes under protest from January 1, 1974, to May 31, 1975, and filed suit in state court seeking a refund.11 It claimed the tax violated the First and Fourteenth Amendments.12 The Minnesota Supreme Court upheld the tax.13 The United States Supreme Court noted probable jurisdiction and reviewed the case.14
Whether Minnesota's use tax on ink and paper consumed in producing publications, which applies only to newspapers and not to other businesses, violates the First Amendment?15
A tax that singles out the press for differential treatment violates the First Amendment unless the burden is necessary to achieve an overriding governmental interest that cannot be achieved without such differential taxation.16 The Framers were concerned about differential taxation of the press as a means of abridging freedom.17 Such treatment weakens the political constraints that protect against burdensome taxes.18
Yes. Minnesota created a special use tax that applied only to publications protected by the First Amendment.19 It taxed an intermediate transaction rather than the ultimate retail sale.20 The tax failed to serve the complementary function of a typical use tax.21
The tax was facially discriminatory.22 It singled out publications for treatment unique in Minnesota tax law.23
The state offered no compelling interest that could not be achieved by taxing businesses generally.24 This differential treatment imposes a heavy burden on the state that Minnesota did not meet.25
The tax violates the First Amendment because it singles out the press for special treatment.26
Related opinions on this issue
Justice Rehnquist dissented. He argued that the First Amendment does not prohibit a state from structuring its taxing system to the advantage of newspapers.27 The use tax actually benefited the press.28
The amount paid was significantly less than the sales tax liability would have been.29 The classifications were rational to achieve revenue goals without abridging press freedoms.30 Rehnquist maintained that differential treatment alone does not trigger strict scrutiny absent a significant burden on First Amendment rights.31
The Court should have deferred to the legislature's reasonable choice of tax methods.32
Whether Minnesota's use tax on ink and paper, which exempts the first $100,000 annually and thereby applies to only a small number of large newspapers, violates the First Amendment?33
A tax that targets a small group of newspapers by exempting all but a few large publications violates the First Amendment.34 It presents a potential for abuse and resembles a penalty rather than a legitimate revenue measure.35 The state must show a compelling interest that cannot be achieved without such targeting.36
Yes. The $100,000 exemption meant that in 1974 only eleven publishers paid the tax.37 The Star Tribune paid the vast majority.38 The state offered no interest other than an equitable tax system that could not justify singling out a few large newspapers.39 The exemption was not applied to small enterprises outside the press.40 The tax began to resemble a penalty for the largest newspapers.41 No compelling interest justified this scheme that targeted a small group within the press.42
The tax violates the First Amendment because it targets a small group of newspapers.43
Related opinions on this issue
Justice White concurred in part and dissented in part. He agreed that the $100,000 exemption limiting the tax burden to only a few papers provided fully sufficient grounds to invalidate the tax and reverse the Minnesota Supreme Court.44 White subscribed to Part V of the opinion.45
White would have left for another day the question whether a use tax not targeted on a small group of newspapers could be imposed.46 He disagreed with the majority's broader holdings on the inability of courts to evaluate tax burdens and the threat posed by any differential treatment.47