Taxation of the press
Taxation of the press refers to the various tax laws and regulations that specifically apply to media outlets, including newspapers, magazines, and other forms of publication. Historically, tax laws have been utilized as a means of censorship, particularly in the nineteenth century when many European countries imposed stamp taxes on publications, effectively restricting access for lower-income individuals. In the United States, while taxation of the press is not explicitly prohibited, it is subject to scrutiny under the First Amendment, which safeguards free speech.
Court cases, such as Grossjean v. American Press Co. (1936) and Minneapolis Star & Tribune Company v. Minnesota Commissioner of Revenue (1980), have established principles that assess the constitutionality of press-specific taxes. Generally applicable taxes, which affect a broad range of taxpayers, are more likely to be deemed constitutional, while differential taxes that single out the press face stricter scrutiny. The Supreme Court requires that the burden imposed by differential taxes must be weighed against a compelling government interest, and any taxation scheme must not discriminate based on content. Furthermore, the administration of tax laws must also respect free speech rights, ensuring transparency and the opportunity for public comment, while preventing punitive measures that might stifle political expression on tax returns.
Taxation of the press
DEFINITION: Legislation relating to various forms of taxation
SIGNIFICANCE: Tax laws have sometimes been used as a censorship tool, particularly as a means of controlling the press
Taxes on the press have served as an important tool of censorship. In the nineteenth century, for example, many European nations enacted stamp taxes on newspapers and magazines, thereby placing the prices of the taxed publications beyond the means of the poor. Other government assessments have included taxes on advertising and paper. Additional forms of taxation have been requirements that newspapers deposit money as a condition of operation; such deposits are held in case newspapers are found guilty of libel. Practices such as these have generally been expressly intended to limit publication of news media to the members of the middle and upper classes, who alone could be entrusted to publish “appropriate” material.
Taxes on the Press
American jurisprudence has long recognized the potential dangers of taxation of the press. Thus, although restrictions on speech that take the form of taxation are not specifically outlawed, they are subject to judicial scrutiny under the First Amendment. The underlying First Amendment concern is that taxes shall not be used to force a publishing business—by reducing its profitability—to adopt the government’s point of view. This is far from a frivolous concern. In 1934, for example, the state of Louisiana imposed a 2 percent tax on the gross advertising receipts of all newspapers with circulations greater than twenty thousand. Although only thirteen of the state’s 124 newspapers were subject to the tax, all but one of the thirteen happened to be papers that had recently published negative information about the state’s powerful senator Huey Long. Shortly afterward Long and Louisiana’s governor complained to the state legislature about “lying newspapers,” and described the new tax as a “tax on lying.” Ultimately the US Supreme Court held this tax unconstitutional, in Grossjean v. American Press Co. (1936), presumably because of its improper censorial purpose.
When an improper purpose does not appear to be present, however, the question remains whether taxes on press are constitutional. In Minneapolis Star & Tribune Company v. Minnesota Commissioner of Revenue (1980), the US Supreme Court fashioned an approach to this question that focused first on whether a tax is one of “general applicability.” A generally applicable tax is one applied to a broad group of taxpayers, who may include the press. Such taxes are constitutional as an acceptable economic regulation of the press under traditional First Amendment analysis. The rationale for this requirement is that because a generally applicable tax applies to taxpayers other than the press, it cannot easily be used to manipulate the views of the press or advertisers. Of particular concern in this arena is a state’s ability to target specific members of the press or advertising community—ones whose views are not agreeable to its government. The test of general applicability effectively deals with this danger by requiring no discrimination among members of the press or among advertisers.
Differential Taxes
For taxes that are not generally applicable—known as “differential taxes”—the Supreme Court fashioned a two-step analysis. Under this approach, a court analyzing a differential tax must first weigh the burdens of the tax on the press against the asserted state interest. It must then examine the state’s asserted goal to determine whether it could have been achieved without the differential tax. With respect to the first step, the very fact of singling out the press for taxation is an implicit and significant burden because of the traditional speech-related function of the press in a democratic society. This burden must be weighed against a compelling state interest. Mere collection of revenue is not a sufficient interest: The interest must be more important and significant.
In the second step of the test, the “fit” between the stated governmental interest and the means (differential tax) must be tested. In order to pass constitutional scrutiny, a state must show that its differential tax is the only means to achieve its goal—a difficult standard to meet. Extending this analysis, the courts have frowned upon attempts to differentiate among various types of press based on content of their publications. For example, the US Supreme Court invalidated a statute exempting from a state sales tax religious publications, while subjecting other types of publications to the tax. However, in Leathers v. Medlock (1991), the Court approved a tax on cable television, while leaving other media exempt. In this case, the Court examined the potential of the tax for suppression of particular ideas or viewpoints. The tax at issue did not target a small group of operators, and did not discriminate on the basis of content—either on its face or in practice. Thus, the Court held this tax constitutional.
Free Speech and Tax Laws
Another important issue is the exercise of free speech in the administration of the tax laws. The Department of the Treasury promulgates various regulations interpreting the federal tax code. In doing so, it must offer adequate public notice and opportunity to be heard before regulations are made final. The degree of openness of the department to public comment is an important aspect of free speech in the administration of the tax system.
Another question that frequently arises is whether individual taxpayers can be punished for including with their tax returns information about political or social issues that relate to tax collection or budget expenditures. The federal Internal Revenue Service (IRS) has the power to invoke section 6702 of the Internal Revenue Code, which imposes a five-hundred-dollar civil penalty on taxpayers who file frivolous returns. When this section is used to deter inclusion of a taxpayer’s views on political issues in a tax form, it might well be viewed as a form of censorship. For example, section 6702 was invoked when a taxpayer claimed a twenty-five-hundred-dollar “conscientious objection to war deduction,” and enclosed letters explaining the taxpayer’s objection to war and the reasons for taking the (illegal) deduction. Similarly, the penalty has been invoked when a taxpayer shared his opinion on the US policy in Central America, instead of financial information, on a tax return. In such cases taxpayers have often invoked the First Amendment to combat imposition of the tax code’s penalty, on the theory that they have a right to express themselves on their tax returns.
Courts have generally dismissed such claims on two grounds. First, it is not clear that the expression on a tax return of dissatisfaction with government policy is protected speech. Second, assuming that there is a protected First Amendment right to express oneself on one’s tax return, this regulation of speech is evaluated under traditional First Amendment doctrine. Section 6702 usually passes constitutional muster in judicial eyes: The rule is within the constitutional power of the government; the rule furthers an important or substantial governmental interest (the administration of a sound tax system); the governmental interest is unrelated to the suppression of free expression; and the incidental restriction on alleged First Amendment freedoms is narrowly constrained to no more than is needed to accomplish the stated interest. Under this approach, section 6702’s application has been found constitutional.
Bibliography
Goldstein, Robert Justin. Political Censorship of the Arts and the Press in Nineteenth Century Europe. St. Martin’s Press, 1989.
"Grosjean V. American Press Co., Inc. 297 U.S. 233 (1936)." Encyclopedia.com, www.encyclopedia.com/politics/encyclopedias-almanacs-transcripts-and-maps/grosjean-v-american-press-co-inc-297-us-233-1936. Accessed 1 July 2024.
Smolla, Rodney A. Smolla and Nimmer on Freedom of Speech: A Treatise on the First Amendment. Matthew Bender, 1994.
Swanson, James L. First Amendment Law Handbook. Clark Boardman Callaghan, 1995.
Baker, C. Edwin. Advertising and a Democratic Press. Princeton University Press, 1994.