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Differential taxation of speakers, even members of the press, does not implicate U.S. Const. amend. I unless the tax is directed at, or presents the danger of suppressing, particular ideas.
Petitioner cable companies filed a class action challenging an Arkansas state sales tax which excluded or exempted certain segments of the media. Petitioner cable companies argued that the tax violated their U.S. Const. amend. I rights. The Chancery Court, although initially granting the petitioners' motion for a preliminary injunction, ultimately upheld the constitutionality of the sales tax as applied to cable television services, and dissolved the preliminary injunction. In 1989, shortly after the Chancery Court issued its decision, Arkansas again amended the tax statute so as to extend the sales tax to satellite television broadcast services provided to home dish-antennae owners. On appeal to the Supreme Court of Arkansas, the petitioners argued that the sales tax statute, as so amended, continued to discriminate unconstitutionally against cable television services. The Supreme Court of Arkansas, reversing and remanding, held that the First Amendment did not prohibit the differential taxation of different media, but prohibited discriminatory taxation among members of the same medium. It also found that cable television services and satellite broadcast services to home dish-antennae owners were substantially the same medium, and ultimately held that the sales tax violated the First Amendment for the period during which cable services but not satellite broadcast services were subject to the tax. However, the Court also held that the illegality of the tax under the First Amendment was cured by the application of the tax to satellite broadcast services (301 Ark 483, 785 SW2d 202). Both the taxpayers and the officials petitioned the United States Supreme Court for certiorari.
Did the Arkansas state sales tax violate the First Amendment?
The Court held there was no First Amendment violation as the tax did not single out the press, which included petitioner cable companies, and did not threaten to hinder the press as a watchdog of government activity. There was no indication that the statute targeted petitioner cable companies in a purposeful attempt to interfere with their First Amendment rights. This tax structure did not resemble a penalty for particular speakers or particular ideas, and was not content based. A tax statute could have classifications and distinctions.