Leathers v. Medlock
499 U.S. 439, 113 L. Ed. 2d 494, 1991 U.S. LEXIS 2220 (1991)
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Rule of Law:
A state tax of general applicability that imposes a burden on one medium of the press but not others does not violate the First Amendment unless it is directed at, or presents the danger of suppressing, particular ideas.
Facts:
- Arkansas' Gross Receipts Act imposed a 4% sales tax on a wide range of tangible personal property and services.
- The Act expressly exempted receipts from the sales of newspapers and subscription magazines.
- In 1987, the Arkansas legislature passed Act 188, which extended the generally applicable sales tax to the services provided by cable television operators.
- At the time Act 188 was passed, scrambled satellite broadcast television services, a competitor to cable, were not subject to the sales tax.
- The tax applied uniformly to the approximately 100 cable television systems operating within Arkansas.
- In 1989, while the case was being litigated, Arkansas passed Act 769, extending the sales tax to satellite broadcast services.
- The tax was not based on the content of the programming offered by any media provider.
Procedural Posture:
- Daniel Medlock, a cable subscriber, along with cable operators and a trade association (cable petitioners), filed a class-action suit against the Arkansas Commissioner of Revenues in the Arkansas Chancery Court, a state trial court.
- The Chancery Court upheld the constitutionality of the tax on cable television services.
- The cable petitioners (appellants) appealed the decision to the Arkansas Supreme Court.
- The Arkansas Supreme Court held that the tax was unconstitutional for the period when cable was taxed but satellite services were not (intramedia discrimination), but found that taxing cable while exempting print media (intermedia discrimination) was permissible.
- Both the cable petitioners and the Arkansas Commissioner of Revenues petitioned the U.S. Supreme Court for a writ of certiorari, which the Court granted.
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Issue:
Does a state sales tax that applies to cable television services, but exempts newspapers and magazines, violate the First Amendment's free speech and free press protections when the tax is not content-based and does not target a small group of speakers?
Opinions:
Majority - Justice O'Connor
No. A state sales tax that applies to cable television but exempts the print media does not violate the First Amendment when it is a tax of general applicability that is not content-based and does not target a small group of speakers. The Arkansas sales tax does not single out the press for special treatment, as it applies to a broad range of services and property. Unlike the taxes struck down in Minneapolis Star and Arkansas Writers' Project, this tax does not target a small, select group of speakers; it applies to approximately 100 cable systems across the state, removing the danger of censorship aimed at a narrow range of views. Finally, the tax is not content-based, as it applies to all cable programming regardless of its message. Differential taxation of speakers is permissible unless it is directed at suppressing particular ideas, and here there is no evidence of such an intent or danger.
Dissenting - Justice Marshall
Yes. A state sales tax that singles out a particular information medium for heavier tax burdens than those borne by like-situated media violates the First Amendment's nondiscrimination principle. The majority unwisely cuts back on the protections established in cases like Minneapolis Star by creating an arbitrary distinction based on the number of speakers affected. Cable television, newspapers, and magazines all compete in the same market for information, and allowing the state to tax one medium more heavily than others creates the potential for abuse and covert censorship by giving the government power to favor media it likes and punish those it dislikes. This power to discriminate distorts the marketplace of ideas, and the state's interest in raising revenue is not compelling enough to justify it. The First Amendment requires evenhanded treatment of different sectors of the press.
Analysis:
This decision significantly clarified the selective taxation of the press doctrine by establishing that not all differential tax treatment of the media is constitutionally suspect. It narrowed the scope of protections found in prior cases like Minneapolis Star by holding that a generally applicable, content-neutral tax that burdens a large segment of the press is permissible, even if it exempts other segments. The ruling provides states with greater latitude in designing tax schemes, shifting the constitutional inquiry away from merely identifying differential treatment and toward a more specific analysis of whether a tax singles out the press as a whole, targets a small group, or discriminates based on content. Consequently, it makes it more difficult for media organizations to challenge taxes on First Amendment grounds unless there is evidence of a censorial purpose or a structure that creates a distinct danger of suppressing ideas.
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