Grosjean v. American Press Co.
297 U.S. 233 (1936)
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Rule of Law:
A state tax imposed only on newspapers with a circulation above a certain threshold is an unconstitutional abridgment of the freedom of the press under the First and Fourteenth Amendments, as it acts as a prior restraint on circulation and the dissemination of information.
Facts:
- In 1934, the Louisiana legislature enacted a law imposing a 2% license tax on the gross receipts of any business that sells advertising in publications.
- The tax applied only to newspapers, magazines, or periodicals with a circulation of more than 20,000 copies per week.
- Nine publishers, including the American Press Co., published thirteen newspapers in Louisiana.
- These thirteen newspapers were the only publications in the state with circulations exceeding the 20,000-copy threshold, making them the only ones subject to the tax.
- Numerous other smaller daily and weekly newspapers in Louisiana, which were in competition with the taxed newspapers, were not subject to the tax.
- The revenue for the taxed newspapers was derived almost entirely from subscriptions and advertising payments.
Procedural Posture:
- Nine Louisiana newspaper publishers sued Alice Lee Grosjean, the Supervisor of Public Accounts for Louisiana, in the United States District Court.
- The publishers sought an injunction to prevent the enforcement of a state tax on newspaper advertising revenue.
- The district court entered a decree in favor of the publishers and granted a permanent injunction against the enforcement of the tax.
- Grosjean, the state official, appealed the district court's decision directly to the Supreme Court of the United States.
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Issue:
Does a Louisiana statute imposing a license tax on the gross receipts from advertising for newspapers with a circulation of more than 20,000 copies per week abridge the freedom of the press in violation of the Due Process Clause of the Fourteenth Amendment?
Opinions:
Majority - Justice Sutherland
Yes. The Louisiana statute imposing the tax is unconstitutional because it abridges the freedom of the press. Freedom of the press, protected from state action by the Fourteenth Amendment, extends beyond immunity from prior censorship to include prohibitions on taxes that are designed to curtail circulation. The Court reasoned that this tax was not an ordinary business tax but was a special and discriminatory tax directed at a select group of newspapers. By examining the history of English "taxes on knowledge" and American colonial opposition to them, the Court concluded that the framers intended the First Amendment to prevent such targeted financial burdens, which were historically used to suppress dissent and limit the dissemination of information to the public. The tax's structure, which penalizes publications for achieving a wide circulation, acts as a restraint on the press's ability to inform the public and is therefore a 'deliberate and calculated device' to limit the circulation of information.
Analysis:
This landmark decision significantly expanded the protection of the press under the First Amendment by establishing that discriminatory taxation can constitute an unconstitutional prior restraint. The Court moved beyond the traditional understanding of prior restraint as mere censorship, recognizing that financial burdens specifically targeted at the press can have the same chilling effect. By invalidating the Louisiana law, the Court set a crucial precedent that the government cannot use its taxing power to single out and penalize the press, particularly larger newspapers critical of the government. This case ensures that newspapers are protected from punitive financial measures intended to control their content or limit their reach.
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