Differential treatment, unless justified by some special characteristic of the press, suggests that the goal of a regulation is not unrelated to suppression of expression, and such a goal is presumptively unconstitutional. Differential taxation of the press, then, places such a burden on the interests protected by the First Amendment that such treatment is not countenanced unless the state asserts a counterbalancing interest of compelling importance that it cannot achieve without differential taxation.
A Minnesota tax statute provided for a special use tax on publications, assessing the tax on the cost of the ink and paper used in producing the publications. The statute exempted the first $ 100,000 of such costs in any calendar year from the use tax. The appellant, Minneapolis Star & Tribune Co., brought an action seeking a refund of the ink and paper use taxes it had paid during certain years, contending that the tax violated, inter alia, the guarantee of the freedom of the press in the First Amendment. The Minnesota Supreme Court upheld the tax against the federal constitutional challenge.
Was the Minnesota tax statute violative of the guarantee of the freedom of the press in the First Amendment?
The Court held that the special use tax violated the First Amendment. The Court noted that there was no legislative history, and no indication, apart from the structure of the tax itself, of any impermissible or censorial motive on the part of the Minnesota Legislature in enacting the tax. According to the Court, by creating the special use tax, which is without parallel in the State's tax scheme, Minnesota has singled out the press for special treatment. The Court opined that when a State so singles out the press, the political constraints that prevent a legislature from imposing crippling taxes of general applicability are weakened, and the threat of burdensome taxes becomes acute; thus, differential treatment of the press, places such a burden on the interests protected by the First Amendment that such treatment cannot be countenanced unless the State asserts a counterbalancing interest of compelling importance that it cannot achieve without differential taxation. In the case at bar, Minnesota has offered no adequate justification for the special treatment of newspapers. Its interest in raising revenue, standing alone, cannot justify such treatment, for the alternative means of taxing businesses generally is clearly available. Moreover, the State has offered no explanation of why it chose to use a substitute for the sales tax rather than the sales tax itself. The Court also averred that Minnesota's ink and paper tax violates the First Amendment not only because it singles out the press, but also because it targets a small group of newspapers.