Dow Jones Sues Texas; Says Taxing The Wall Street Journal Is A First Amendment Violation

from the tax-the-ink dept

Fri, May 27th 2011 9:14am — Mike Masnick

Apparently Texas has a bizarre tax law, in which newspapers don't have to pay sales tax, but where newspapers are very specifically defined as "being printed on newsprint, distributed in short intervals, disseminating the news, with an average sale price that doesn't exceed $1.50." Having that price point in there seems like a really strange static number. Of course, due to inflation, the Wall Street Journal and the NY Times have both increased their cover price such that they're over an average of $1.50, and the state government, so desperate for tax money, declared that both newspapers are no longer newspapers, and must now pay sales tax. Dow Jones paid the tax, but is now suing the state, claiming that the tax code represents a First Amendment violation.

While this may sound silly, there is a pretty strong basis for the lawsuit. There have been a few Supreme Court cases that cover similar grounds, including Minneapolis Star v. Minnesota Comm'r which found that a tax on ink for newspapers was prior restraint and a violation of the First Amendment and Grosjean v. American Press Co., Inc., where the Court found that a tax on newspapers that had a circulation of 20,000 was similarly a restraint on the First Amendment. It seems like the Texas tax is pretty similar to both of those situations...

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Filed Under: free speech, newspapers, prior restraint, texas, wall street journal
Companies: dow jones

22 Comments

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E. Zachary Knight (profile), 27 May 2011 @ 9:23am

If such a sales tax is in violation of our first amendment right to free speech, why are we allowed to apply sales tax to non-fiction works in any media category? This is an honest question.

I guess in this category it is a matter of treating one newspaper different from another, but why treat newspapers different than magazines, periodicals or even books and documentaries? After all a sales tax on those is a violation of the authors/producers' rights to free speech.
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Vincent Clement (profile), 27 May 2011 @ 9:39am

Re:
Or taxes on internet services? Cell phones? Books? Paper? Pens?
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Seth, 27 May 2011 @ 9:41am

RE: E. Zachary Knight
Why stop at non-fiction, fiction is just as much a part of freedom of speech.
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:Lobo Santo (profile), 27 May 2011 @ 9:41am

Re: Taxes!
You've hit the root of it:
taxes are just plain wrong and should be abolished.
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Easy Win, 27 May 2011 @ 9:47am

This isn't even a close call - when Senator Ron Wyden (D-Ore) first wrote the Internet Tax Freedom Act (which is law) he specifically cited a state taxing an Internet subscription to the Wall Street Journal and not taxing the print version as being the sort of discriminatory tax that the law banned. With that degree of legislative intent to fall back on The WSJ should win an MSJ striking down the tax without breaking a sweat. The First Amdt argument is an interesting one - useful should the ITFA fail to be renewed in a couple of years, but the Comptrollers decision to ignore bright-line black and white federal law is going to cost his state a fair amount in court fees and restitution.
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Someantimalwareguy, 27 May 2011 @ 9:54am

Re:
On the surface, it would appear to be a distinction between "news" and "narrative" where the news is considered to have more weight due to its timeliness and its relevance to longevity. IOWs, what is printed in the newspapers is of immediate or near short-term importance while stories in magazines, periodicals, and books have a longer life/sales cycle.

so whereas you would expect sales to persist for a book over a long time with popularity of the subject, a printed newspaper edition is not going to sell past the next edition which can be as frequent as the next day or the next week.

I am not defending the lack of seeming tax fairness here, just highlighting a possible reason for the distinction as a newspaper is far more likely to publish information that the public needs to know right now and taxing the publication might reduce the number of copies available to said public. This in turn might have the effect of leaving some uninformed; especially those in lower income brackets.

Now in the age of the Internet and the plethora of alternative sources for the type of information traditionally served by newspapers, there is room for argument here that perhaps the distinction need no longer apply.

It will be interesting to see where this goes however and what the consequences would be for allowing taxation of newspapers going forward. One question remains here though: If the tax reduces the number of physical copies of the paper available to the public, does this mean that the State could go after pay wall revenues in the same way - or do they already do this?
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Anonymous Coward, 27 May 2011 @ 10:06am

Re:
It seems like the possibly discriminatory tax regulation here is the exemption for the narrowly defined "newspapers"; even if the WSJ gets this struck down, wouldn't the result just be that cheaper newspapers have to collect the same sales tax that they do?
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Jason, 27 May 2011 @ 10:08am

This reminds me of the time the GOP denied climate change
Not so much the cause, not so much affects but rather they simply denied that the climate is changing. Nearly every scientist in the world agrees that it is changing. And I have to post thisrather large quote/reply. So if the GOP in congress can define scientific laws and principles, why can;t the politicians in texas define what a newspaper is?

Mr. Chairman, I rise in opposition to a bill that overturns the scientific finding that pollution is harming our people and our planet.

However, I won�t rise physically, because I�m worried that Republicans will overturn the law of gravity, sending us floating around the room.

I won�t call for the sunlight of additional hearings, for fear that Republicans might excommunicate the finding that the Earth revolves around the sun.

Instead, we will embody Newton�s third law of motion and be an equal and opposing force against this attack on science and on laws that will reduce America�s importation of foreign oil.

This bill will live in the House while simultaneously being dead in the Senate. It will be a legislative Schr�dinger�s cat killed by the quantum mechanics of the legislative process!

Arbitrary rejection of scientific fact will not cause us to rise from our seats today. But with this bill, pollution levels will rise. Oil imports will rise. Temperatures will rise.

And with that, I yield back the balance of my time. That is, unless a rejection of Einstein�s Special Theory of Relativity is somewhere in the chair�s amendment pile.
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Howard the Duck, 27 May 2011 @ 10:26am

Re: This reminds me of the time the GOP denied climate change
"Arbitrary rejection of scientific fact will not cause us to rise from our seats today. But with this bill, pollution levels will rise. Oil imports will rise. Temperatures will rise."

It looks to me like the GOP denied that climate change was due to mankind's pollution.
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Jon B. (profile), 27 May 2011 @ 10:34am

Re:
I think the point is not that the sales tax itself is bad. It's that taxing one publication differently from another is bad. And you're right, that tax should probably apply to ALL publications equally.
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Jon B. (profile), 27 May 2011 @ 10:34am

Re:
I think the point is not that the sales tax itself is bad. It's that taxing one publication differently from another is bad. And you're right, that tax should probably apply to ALL publications equally.
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TechnoMage (profile), 27 May 2011 @ 10:44am

Re: Re: Taxes!
Yeah, I'd hate to have clean water, clean air, safe neighborhoods, be rescued from a fire, or have safe roads that are in working condition, or let alone a military...

Taxes are not "plain wrong" ,nor should they be abolished.

Perhaps you feel that your personal share of taxes is too high or that you feel that high taxes drive away businesses, which (ignoring either point's validity) are at least some kind of talking points about policy.

Try to actually add to discussions, not just rhetorical comments that have no real basis in any real discussion about a topic. K. Thanks :)
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Sean T Henry (profile), 27 May 2011 @ 10:48am

Re: Re:
They do apply it the same for all newspapers sold for over $1.50
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Chris Rhodes (profile), 27 May 2011 @ 10:56am

Re: Re: Re: Taxes!
Yeah, I'd hate to have clean water, clean air, safe neighborhoods, be rescued from a fire, or have safe roads that are in working condition, or let alone a military...

I take it you're implying that taxes are the only way to have those?
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The Groove Tiger (profile), 27 May 2011 @ 11:26am

Re: Re: Re:
They also apply to anything else not in newsprint, even if it's under $1.50.
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Skeptical Cynic (profile), 27 May 2011 @ 11:36am

Fair and equal taxation.
All publications should be taxed at the same rate. Weekly or daily publication will by nature pay more tax and monthly will pay less. So to set an arbitrary tax rate based on price is not valid.
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Chuck Norris' Enemy (deceased) (profile), 27 May 2011 @ 12:01pm

Re: This reminds me of the time the GOP denied climate change
They rejected that global warming is man made. Greenies changed global warming to climate change so no matter if the climate warms or cools, as it seems to do all the time, the phrase makes them look correct.
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Charlie Potatoes, 27 May 2011 @ 1:22pm

Re: Re: Re: Taxes!
Typical GOP newspeak. Argument from Ignorance..Strawmen...Logical Fallacy...then claim that your opponents' "rhetorical comments" have 'no real basis in any real discussion about a topic'? WHAT? God save us all from right wing nut jobs. And George Bush DID say there was NO global warming... not just that it was a natural event. So why don't you try to actually add to the discussion and not just snow the room with a blizzard of Right Wing blather? God save us from WingNut Fundamentalists. If you like the Taliban you'll love their Theocracy.
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Anonymous Coward, 27 May 2011 @ 2:01pm

Re: Re: Re: Re: Taxes!
Wrong god. Not that there are any major differences between the Taliban and christian fundamentalists besides that....
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slander (profile), 27 May 2011 @ 7:11pm

Re: This reminds me of the time the GOP denied climate change
LOL U MAD?
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TechnoMage (profile), 28 May 2011 @ 11:53pm

Re: Re: Re: Re: Taxes!
The funniest part is that you didn't catch that I was implying that taxes aren't bad, and "shouldn't" be abolished...

Which is not a GOP POV. I gave possible alternative stances which would actually be beneficial to the discussion, such as "My personal share of taxes are too high" or "High taxes drive away businesses". These arguments at least could contribute to a discussion about tax policy. Just saying they are "just plain wrong" is the GOP-Faux-News-astro-turf-Koch-brothers-tea-party point of view.

And wanting someone to give a more well thought out argument than "taxes are evil" isn't "GOP Newspeak", it is being tired of people not being involved in the running of their government and only spouting off catch phrases that fit on bumper stickers.

Plus... You got it backwards... if you are going to insult someone, at least understand which angle they are talking from. You should have called me a "Marxist Socialist Commie" instead. lol
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John Doe, 31 May 2011 @ 6:09am

What about the 2nd amendment?
There have been a few Supreme Court cases that cover similar grounds, including Minneapolis Star v. Minnesota Comm'r which found that a tax on ink for newspapers was prior restraint and a violation of the First Amendment

Very interesting. Taxing ink is prior restraint. So taxing ammo should be considered prior restraint of the 2nd amendment too by that logic. Yet guns and ammo are heavily taxed and if the anti-gunners had their way, would be taxed even more heavily. Seems the NRA should take this to court.
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