Arkansas imposes a tax on receipts from sales of tangible personal property, but exempts numerous items, including newspapers and "religious, professional, trade, and sports journals and/or publications printed and published within this State" (magazine exemption). Appellant publishes in Arkansas a general interest magazine that includes articles on a variety of subjects, including religion and sports. In 1984, relying on Minneapolis Star & Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S. 575, appellant sought a refund of sales tax it had paid since 1982, asserting that the magazine exemption must be construed to include its magazine, and that subjecting its magazine to the sales tax, while sales of newspapers and other magazines were exempt, violated the First and Fourteenth Amendments. After appellee denied the refund claim, appellant sought review in State Chancery Court, stating an additional claim under 42 U.S.C. §§ 1983 and 1988 for injunctive relief and attorney's fees. That court granted appellant summary judgment, construing the magazine exemption to include appellant because its magazine was published and printed in Arkansas. The Arkansas Supreme Court reversed, holding that the magazine exemption applies only to religious, professional, trade, or sports periodicals. The court rejected the claim that the exemption granted to other publications discriminated against appellant, ruling that success on this claim would avail appellant nothing since it would still be subject to tax even if the exemption fell. The court also refused to find that appellant's First and Fourteenth Amendment rights had been violated, ruling that the sales tax was a permissible "ordinary form of taxation" to which publishers are not immune. Accordingly, the court did not consider appellant's attorney's fees claim.
Held:
1. Appellant has standing to challenge the Arkansas sales tax scheme. Appellee's argument that appellant has not asserted an injury that this Court can redress since appellant concededly publishes neither a newspaper nor a religious, professional, trade, or sports journal is unpersuasive, since it would effectively insulate underinclusive statutes from constitutional challenge. Appellant has alleged a sufficient personal stake in this litigation's outcome, in that the State Supreme Court's holding stands as a total bar to appellant's relief, and its constitutional attack [p222] holds the only promise of escape from the burden imposed upon it by the challenged statute. P. 227.
2. The Arkansas sales tax scheme that taxes general interest magazines, but exempts newspapers and religious, professional, trade, and sports journals, violates the First Amendment's freedom of the press guarantee. Pp. 227–234.
(a) Even though there is no evidence of an improper censorial motive, the Arkansas tax burdens rights protected by the First Amendment by discriminating against a small group of magazines, including appellant's, which are the only magazines that pay the tax. Such selective taxation is one of the types of discrimination identified in Minneapolis Star. Indeed, its use here is even more disturbing than in that case because the Arkansas statute requires official scrutiny of publications' content as the basis for imposing a tax. This is incompatible with the First Amendment, whose requirements are not avoided merely because the statute does not burden the expression of particular views expressed by specific magazines, and exempts other members of the media that might publish discussions of the various subjects contained in appellant's magazine. Pp. 227–231.
(b) Appellee has not satisfied its heavy burden of showing that its discriminatory tax scheme is necessary to serve a compelling state interest and is narrowly drawn to achieve that end. The State's general interest in raising revenue does not justify selective imposition of the sales tax on some magazines and not others, based solely on their content, since revenues could be raised simply by taxing businesses generally. Furthermore, appellee's assertion that the magazine exemption serves the state interest of encouraging "fledgling" publishers is not persuasive, since the exemption is not narrowly tailored to achieve that end. To the contrary, the exemption is both overinclusive and underinclusive in that it exempts the enumerated types of magazines regardless of whether they are "fledgling" or are lucrative and well established, while making general interest magazines and struggling specialty magazines on other subjects ineligible for favorable tax treatment. Moreover, although the asserted state need to "foster communication" might support a blanket exemption of the press from the sales tax, it cannot justify selective taxation of certain publishers. Pp. 231–232.
3. Since the state courts have not yet indicated whether they will exercise jurisdiction over appellant's claims under §§ 1983 and 1988, this Court remands to give them an opportunity to do so. P. 233–234.
287 Ark. 155, 697 S.W.2d 94 and 698 S.W.2d 802, reversed and remanded.
[p223] Marshall, J., delivered the opinion of the Court, in which Brennan, White, Blackmun, Powell, and O'Connor, JJ., joined, and in Parts I, II, III-B, IV, and V of which Stevens, J., joined. Stevens, J., filed an opinion concurring in part and concurring in the judgment, post, p. 234. Scalia, J., filed a dissenting opinion; in which Rehnquist, C.J., joined, post, p. 235.
Anne Owings Wilson argued the cause and filed briefs for appellant.
John Steven Clark argued the cause for appellee. With him on the brief were R. B. Friedlander and Joseph V. Svoboda.*
Notes edit
* ↑ Briefs of amici curiae urging reversal were filed for the American Civil Liberties Union Foundation et al. by Jack Novik and Philip E. Kaplan; for the City & Regional Magazine Association by Donald M. Middlebrooks; for the Magazine Publishers Association by David Minton; for the Miami Herald Publishing Co. et al. by Edward Soto, Gerald B. Cope, Jr., W. Terry Maguire, and Parker Thomson; for Time Inc., by E. Barrett Prettyman, Jr., David J. Saylor, and John G. Roberts, Jr.; and for the Times Mirror Co. et al. by Rex S. Heinke, William A. Niese, and Jeffrey S. Klein.
Briefs of amici curiae urging affirmance were filed for the Territory of American Samoa et al. by the Attorneys General for their respective jurisdictions as follows: Thomas J. Miller of Iowa, Leulumoega S. Lutu of American Samoa, Joseph Lieberman of Connecticut, Jim Smith of Florida, Corinne K. A. Watanabe of Hawaii, Jim Jones of Idaho, William J. Guste, Jr., of Louisiana, Hubert H. Humphrey III of Minnesota, Michael Turpen of Oklahoma, LeRoy S. Zimmerman of Pennsylvania, T. Travis Medlock of South Carolina, Mark V. Meierhenry of South Dakota, Jim Mattox of Texas, David L. Wilkinson of Utah, and Jeffrey L. Amestoy of Vermont; and for the State of Maryland by Stephen H. Sachs, Attorney General, Ralph S. Tyler III, Assistant Attorney General, and Carmen M. Shepard, Special Assistant Attorney General.
This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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