Note by Leila Sadat-Keeling
In 1967, Minnesota adopted a system of sales and use taxes that imposed a sales tax on retail goods, and a use tax on the price of goods purchased for which no sales tax had been paid. Components used in the production of goods destined for retail sale were exempted from the use tax, including the ink and paper consumed by industrial users and publishers. Publications, in addition to being exempted from the payment of the use tax on components, were also exempted from the sales tax. In 1971, the statute was amended to impose a use tax on paper and ink consumed in the production of publications, and was amended again in 1973 to exempt from this use tax the first $100,000 of ink and paper consumed in any year. As a result of the $100,000 exemption, in the years 1974 and 1975, approximately ninety-seven percent of the papers in Minnesota paid no use tax, and of the $1,837,410 collected in those years, the petitioner, Minneapolis Star and Tribune (Tribune), publisher of two newspapers in the State of Minnesota, paid approximately two-thirds. After paying the use taxes due for 1974 and 1975, the Tribune filed for a refund, which the Minnesota Department of Revenue denied. The Tribune appealed the Commissioner's decision to a Minnesota district court, attacking the statute imposing the tax as constituting a denial of equal protection and an abridgment of freedom of the press, in contravention of both the United States and Minnesota Constitutions. The trial court held for the Tribune, but was subsequently reversed by the Supreme Court of Minnesota. The United States Supreme Court, declining to reach the equal protection claim presented, held the Minnesota tax unconstitutional because it violated first amendment guaranties by singling out publications for tax treatment different from that imposed on other businesses without serving any counterbalancing state interest of compelling importance. The $100,000 exemption provision of the tax was also held to violate the first amendment as it had the effect of impermissibly subjecting only a small group of newspapers to the tax. Minneapolis Star & Tribune Company v. Minnesota Commissioner of Revenue, 103 S. Ct. 1365 (1983).
About the Author
Leila Sadat-Keeling.
Citation
58 Tul. L. Rev. 1073 (1984)