# Leathers v. Medlock/Dissent Marshall

* Court Documents
* Case Syllabus
* Opinion of the Court
* Dissenting Opinion Marshall
Justice MARSHALL, with whom Justice BLACKMUN joins, dissenting.
This Court has long recognized that the freedom of the press prohibits government from using the tax power to discriminate against individual members of the media or against the media as a whole. See Grosjean v. American Press Co., 297 U.S. 233, 56 S.Ct. 444, 80 L.Ed. 660 (1936); Minneapolis Star & Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S. 575, 103 S.Ct. 1365, 75 L.Ed.2d 295 (1983); Arkansas Writers' Project, Inc. v. Ragland, 481 U.S. 221, 107 S.Ct. 1722, 95 L.Ed.2d 209 (1987). The Framers of the First Amendment, we have explained, specifically intended to prevent government from using disparate tax burdens to impair the untrammeled dissemination of information. We granted certiorari in this case to consider whether the obligation not to discriminate against individual members of the press prohibits the State from taxing one information medium-cable television-more heavily than others. The majority's answer to this question-that the State is free to discriminate between otherwise like-situated media so long as the more heavily taxed medium is not too "small" in number-is no answer at all, for it fails to explain which media actors are entitled to equal tax treatment. Indeed, the majority so adamantly proclaims the irrelevance of this problem that its analysis calls into question whether any general obligation to treat media actors even-handedly survives today's decision. Because I believe the majority has unwisely cut back on the principles that inform our selective-taxation precedents, and because I believe that the First Amendment prohibits the State from singling out a particular information medium for heavier tax burdens than are borne by like-situated media, I dissent.
* A.
Our decisions on selective taxation establish a nondiscrimination principle for like-situated members of the press. Under this principle, "differential treatment, unless justified by some special characteristic of the press, . . . is presumptively unconstitutional," and must be struck down "unless the State asserts a counterbalancing interest of compelling importance that it cannot achieve without differential taxation." Minneapolis Star, supra, 460 U.S., at 585, 103 S.Ct., at 1372.
The nondiscrimination principle is an instance of government's general First Amendment obligation not to interfere with the press as an institution. As the Court explained in Grosjean, the purpose of the Free Press Clause "was to preserve an untrammeled press as a vital source of public information." 297 U.S., at 250, 56 S.Ct., at 449. Reviewing both the historical abuses associated with England's infamous " 'taxes on knowledge' " and the debates surrounding ratification of the Constitution, see id., at 246-250, 56 S.Ct., at 447-449; Minneapolis Star, 460 U.S., at 583-586, and nn. 6-7, 103 S.Ct., at 1370-1372, and nn. 6-7, our decisions have recognized that the Framers viewed selective taxation as a distinctively potent "means of abridging the freedom of the press," id., at 586, n. 7, 103 S.Ct., at 1372, n. 7.
We previously have applied the nondiscrimination principle in two contexts. First, we have held that this principle prohibits the State from imposing on the media tax burdens not borne by like-situated nonmedia enterprises. Thus, in Minneapolis Star, we struck down a use tax that applied to the ink and paper used in newspaper production but not to any other item used as a component of a good to be sold at retail. See id., at 578, 581-582, 103 S.Ct., at 1368, 1369-1370. Second, we have held that the non-discrimination principle prohibits the State from taxing individual members of the press unequally. Thus, as an alternative ground in Minneapolis Star, we concluded that the State's use tax violated the First Amendment because it exempted the first $100,000 worth of ink and paper consumed and thus effectively singled out large publishers for a disproportionate tax burden. See id., at 591-592, 103 S.Ct., at 1375-1376. Similarly, in Arkansas Writers' Project, we concluded that selective exemptions for certain periodicals rendered unconstitutional the application of a general sales tax to the remaining periodicals "because [the tax] [was] not evenly applied to all magazines." See 481 U.S., at 229, 107 S.Ct., at 1727 (emphasis added); see also Grosjean v. American Press Co., supra (tax applied only to newspapers that meet circulation threshold unconstitutionally discriminates against more widely circulated newspapers).
Before today, however, we had not addressed whether the nondiscrimination principle prohibits the State from singling out a particular information medium for tax burdens not borne by other media. Grosjean and Minneapolis Star both invalidated tax schemes that discriminated between different members of a single medium, namely, newspapers. Similarly, Arkansas Writers' Project invalidated a general sales tax because it "treat[ed] some magazines less favorably than others," 481 U.S., at 229, 107 S.Ct., at 1728, leaving open the question whether less favorable tax treatment of magazines than of newspapers furnished an additional ground for invalidating the scheme, see id., at 233, 107 S.Ct., at 1729-30. This case squarely presents the question whether the State may discriminate between distinct information media, for under Arkansas' general sales tax scheme, cable operators pay a sales tax on their subscription fees that is not paid by newspaper or magazine companies on their subscription fees or by television or radio broadcasters on their advertising revenues. In my view, the principles that animate our selective-taxation cases clearly condemn this form of discrimination.
Although cable television transmits information by distinctive means, the information service provided by cable does not differ significantly from the information services provided by Arkansas' newspapers, magazines, television broadcasters, and radio stations. This Court has recognized that cable operators exercise the same core press function of "communication of ideas as do the traditional enterprises of newspaper and book publishers, public speakers, and pamphleteers," Los Angeles v. Preferred Communications, Inc., 476 U.S. 488, 494, 106 S.Ct. 2034, 2038, 90 L.Ed.2d 480 (1986), and that "[c]able operators now share with broadcasters a significant amount of editorial discretion regarding what their programming will include," FCC v. Midwest Video Corp., 440 U.S. 689, 707, 99 S.Ct. 1435, 1445, 59 L.Ed.2d 692 (1979). See also ante, at 444 (acknowledging that cable television is "part of the 'press' "). In addition, the cable-service providers in this case put on extensive and unrebutted proof at trial designed to show that consumers regard the news, sports, and entertainment features provided by cable as largely interchangeable with the services provided by other members of the print and electronic media. See App. 81-85, 100-101, 108, 115, 133-137, 165-170. See generally Competition, Rate Deregulation and the Commission's Policies Relating to Provision of Cable Television Service, 5 FCC Record 4962, 4967 (1990) (discussing competition between cable and other forms of television).
Because cable competes with members of the print and electronic media in the larger information market, the power to discriminate between these media triggers the central concern underlying the nondiscrimination principle: the risk of covert censorship. The nondiscrimination principle protects the press from censorship prophylactically, condemning any selective-taxation scheme that presents the "potential for abuse" by the State, Minneapolis Star, 460 U.S., at 592, 103 S.Ct., at 1375-76 (emphasis added), independent of any actual "evidence of an improper censorial motive," Arkansas Writers' Project, supra, 481 U.S., at 228, 107 S.Ct., at 1727; see Minneapolis Star, supra, 460 U.S., at 592, 103 S.Ct., at 1376 ("Illicit legislative intent is not the sine qua non of a violation of the First Amendment"). The power to discriminate among like-situated media presents such a risk. By imposing tax burdens that disadvantage one information medium relative to another, the State can favor those media that it likes and punish those that it dislikes.
Inflicting a competitive disadvantage on a disfavored medium violates the First Amendment "command that the government . . . shall not impede the free flow of ideas." Associated Press v. United States, 326 U.S. 1, 20, 65 S.Ct. 1416, 1424-25, 89 L.Ed. 2013 (1945). We have previously recognized that differential taxation within an information medium distorts the marketplace of ideas by imposing on some speakers costs not borne by their competitors. See Grosjean, 297 U.S., at 241, 244-245, 56 S.Ct., at 445, 446-47 (noting competitive disadvantage arising from differential tax based on newspaper circulation). Differential taxation across different media likewise "limit[s] the circulation of information to which the public is entitled," id., at 250, 56 S.Ct., at 449, where, as here, the relevant media compete in the same information market. By taxing cable television more heavily relative to its social cost than newspapers, magazines, broadcast television and radio, Arkansas distorts consumer preferences for particular information formats, and thereby impairs "the widest possible dissemination of information from diverse and antagonistic sources." Associated Press v. United States, supra, 326 U.S., at 20, 65 S.Ct., at 1424-1425.
Because the power selectively to tax cable operators triggers the concerns that underlie the nondiscrimination principle, the State bears the burden of demonstrating that "differential treatment" of cable television is justified by some "special characteristic" of that particular information medium or by some other "counterbalancing interest of compelling importance that [the State] cannot achieve without differential taxation." Minneapolis Star, supra, 460 U.S., at 585, 103 S.Ct., at 1372 (footnote omitted). The State has failed to make such a showing in this case. As the Arkansas Supreme Court found, the amount collected from the cable operators pursuant to the state sales tax does not correspond to any social cost peculiar to cable-television service, see 301 Ark. 483, 485, 785 S.W.2d 202, 203 (1990); indeed, cable operators in Arkansas must pay a franchise fee expressly designed to defray the cost associated with cable's unique exploitation of public rights of way. See ibid. The only justification that the State asserts for taxing cable operators more heavily than newspapers, magazines, television broadcasters and radio stations is its interest in raising revenue. See Brief for Respondents in No. 90-38, p. 9. This interest is not sufficiently compelling to overcome the presumption of unconstitutionality under the nondiscrimination principle. See Arkansas Writers' Project, 481 U.S., at 231-232, 107 S.Ct., at 1728-1729; Minneapolis Star, supra, 460 U.S., at 586, 103 S.Ct., at 1372-73. II
The majority is undisturbed by Arkansas' discriminatory tax regime. According to the majority, the power to single out cable for heavier tax burdens presents no realistic threat of governmental abuse. The majority also dismisses the notion that the State has any general obligation to treat members of the press evenhandedly. Neither of these conclusions is supportable.
The majority dismisses the risk of governmental abuse under the Arkansas tax scheme on the ground that the number of media actors exposed to the tax is "large." Ante, at 449. According to the majority, where a tax is generally applicable to nonmedia enterprises, the selective application of that tax to different segments of the media offends the First Amendment only if the tax is limited to "a small number of speakers," ante, at 448, for it is only under those circumstances that selective taxation "resembles a penalty for particular speakers or particular ideas," ante, at 449. The selective sales tax at issue in Arkansas Writers' Project, the majority points out, applied to no more than three magazines. See ante, at 448. The tax at issue here, "[i]n contrast," applies "uniformly to the approximately 100 cable systems" in operation in Arkansas. Ibid. (emphasis added). In my view, this analysis is overly simplistic and is unresponsive to the concerns that inform our selective-taxation precedents.
To start, the majority's approach provides no meaningful guidance on the intermedia scope of the nondiscrimination principle. From the majority's discussion, we can infer that three is a sufficiently "small" number of affected actors to trigger First Amendment problems and that one hundred is too "large" to do so. But the majority fails to pinpoint the magic number between three and one hundred actors above which discriminatory taxation can be accomplished with impunity. Would the result in this case be different if Arkansas had only 50 cable-service providers? Or 25? The suggestion that the First Amendment prohibits selective taxation that "resembles a penalty" is no more helpful. A test that turns on whether a selective tax "penalizes" a particular medium presupposes some baseline establishing that medium's entitlement to equality of treatment with other media. The majority never develops any theory of the State's obligation to treat like-situated media equally, except to say that the State must avoid discriminating against too "small" a number of media actors.
In addition, the majority's focus on absolute numbers fails to reflect the concerns that inform the nondiscrimination principle. The theory underlying the majority's "small versus large" test is that "a tax on the services provided by a large number of cable operators offering a wide variety of programming throughout the State," ante, at 449, poses no "risk of affecting only a limited range of views," ante, at 448. This assumption is unfounded. The record in this case furnishes ample support for the conclusion that the State's cable operators make unique contributions to the information market. See, e.g., App. 82 (testimony of cable operator that he offers "certain religious programming" that "people demand . . . because they otherwise could not have access to it"); id., at 138 (cable offers Spanish-language information network); id., at 150 (cable broadcast of local city council meetings). The majority offers no reason to believe that programs like these are duplicated by other media. Thus, to the extent that selective taxation makes it harder for Arkansas' 100 cable operators to compete with Arkansas' 500 newspapers, magazines, and broadcast television and radio stations, see 1 Gale Directory of Publications and Broadcast Media 67-68 (123d ed. 1991), Arkansas' discriminatory tax does "risk . . . affecting only a limited range of views," and may well "distort the market for ideas" in a manner akin to direct "content-based regulation." Ante, at 448.
The majority also mistakenly assesses the impact of Arkansas' discriminatory tax as if the State's 100 cable operators comprised 100 additional actors in a statewide information market. In fact, most communities are serviced by only a single cable operator. See generally 1 Gale Directory, supra, at 69-91. Thus, in any given locale, Arkansas' discriminatory tax may disadvantage a single actor, a "small" number even under the majority's calculus.
Even more important, the majority's focus on absolute numbers ignores the potential for abuse inherent in the State's power to discriminate based on medium identity. So long as the disproportionately taxed medium is sufficiently "large," nothing in the majority's test prevents the State from singling out a particular medium for higher taxes, either because the State does not like the character of the services that the medium provides or because the State simply wishes to confer an advantage upon the medium's competitors.
Indeed, the facts of this case highlight the potential for governmental abuse inherent in the power to discriminate among like-situated media based on their identities. Before this litigation began, most receipts generated by the media-including newspaper sales, certain magazine subscription fees, print and electronic media advertising revenues, and cable television and scrambled-satellite television subscription fees-were either expressly exempted from, or not expressly included in, the Arkansas sales tax. See Ark.Code Ann. §§ 84-1903, 84-1904(f), (j), (1947 and Supp.1985); see also Arkansas Writers' Project, 481 U.S., at 224-225, 107 S.Ct., at 1725-1726. Effective July 1, 1987, however, the legislature expanded the tax base to include cable television subscription fees. See App. to Pet. for Cert. in No. 90-38, p. 16a. Cable operators then filed this suit, protesting the discriminatory treatment in general and the absence of any tax on scrambled-satellite television-cable's closest rival-in particular. While the case was pending on appeal to the Arkansas Supreme Court, the Arkansas legislature again amended the sales tax, this time extending the tax to the subscription fees paid for scrambled satellite television. 301 Ark., at 484, 785 S.W.2d, at 203. Of course, for all we know, the legislature's initial decision selectively to tax cable may have been prompted by a similar plea from traditional broadcast media to curtail competition from the emerging cable industry. If the legislature did indeed respond to such importunings, the tax would implicate government censorship as surely as if the government itself disapproved of the new competitors.
As I have noted, however, our precedents do not require "evidence of an improper censorial motive," Arkansas Writers' Project, supra, 481 U.S. at 228, 107 S.Ct. at 1727, before we may find that a discriminatory tax violates the Free Press Clause; it is enough that the application of a tax offers the "potential for abuse," Minneapolis Star, 460 U.S., at 592, 103 S.Ct., at 1375 (emphasis added). That potential is surely present when the legislature may, at will, include or exclude various media sectors from a general tax.
The majority, however, does not flinch at the prospect of intermedia discrimination. Purporting to draw on Regan v. Taxation With Representation of Washington, 461 U.S. 540, 103 S.Ct. 1997, 76 L.Ed.2d 129 (1983)-a decision dealing with the tax-deductibility of lobbying expenditures-the majority embraces "the proposition that a tax scheme that discriminates among speakers does not implicate the First Amendment unless it discriminates on the basis of ideas." Ante, at 450 (emphasis added). "[T]he power to discriminate in taxation," the majority insists, is "[i]nherent in the power to tax." Ante, at 451.
Read for all they are worth, these propositions would essentially annihilate the nondiscrimination principle, at least as it applies to tax differentials between individual members of the press. If Minneapolis Star, Arkansas Writers' Project, and Grosjean stand for anything, it is that the "power to tax" does not include "the power to discriminate" when the press is involved. Nor is it the case under these decisions that a tax regime that singles out individual members of the press implicates the First Amendment only when it is "directed at, or presents the danger of suppressing, particular ideas." Ante, at 453 (emphasis added). Even when structured in a manner that is content-neutral, a scheme that imposes differential burdens on like-situated members of the press violates the First Amendment because it poses the risk that the State might abuse this power. See Minneapolis Star, supra, at 592, 103 S.Ct., at 1375-76.
At a minimum, the majority incorrectly conflates our cases on selective taxation of the press and our cases on the selective taxation (or subsidization) of speech generally. Regan holds that the government does not invariably violate the Free Speech Clause when it selectively subsidizes one group of speakers according to content-neutral criteria. This power, when exercised with appropriate restraint, inheres in government's legitimate authority to tap the energy of expressive activity to promote the public welfare. See Buckley v. Valeo, 424 U.S. 1, 90-97, 96 S.Ct. 612, 668-672, 46 L.Ed.2d 659 (1976).
But our cases on the selective taxation of the press strike a different posture. Although the Free Press Clause does not guarantee the press a preferred position over other speakers, the Free Press Clause does "protec[t] [members of press] from invidious discrimination." L. Tribe, American Constitutional Law § 12-20, p. 963 (2d ed. 1988). Selective taxation is precisely that. In light of the Framers' specific intent "to preserve an untrammeled press as a vital source of public information," Grosjean, 297 U.S., at 250, 56 S.Ct., at 449; see Minneapolis Star, supra, 460 U.S., at 585, n. 7, 103 S.Ct., at 1372, n. 7, our precedents recognize that the Free Press Clause imposes a special obligation on government to avoid disrupting the integrity of the information market. As Justice Stewart explained:
"[T]he Free Press guarantee is, in essence, a structural provision of the Constitution. Most of the other provisions in the Bill of Rights protect specific liberties or specific rights of individuals: freedom of speech, freedom of worship, the right to counsel, the privilege against compulsory self-incrimination, to name a few. In contrast, the Free Press Clause extends protection to an institution." Stewart, "Or of the Press," 26 Hastings L.J. 631, 633 (1975) (emphasis in original).
Because they distort the competitive forces that animate this institution, tax differentials that fail to correspond to the social cost associated with different information media, and that are justified by nothing more than the State's desire for revenue, violate government's obligation of evenhandedness. Clearly, this is true of disproportionate taxation of cable television. Under the First Amendment, government simply has no business interfering with the process by which citizens' preferences for information formats evolve. Today's decision unwisely discards these teachings. I dissent.

## Notes

* ↑ Subject to various exemptions, Arkansas law imposes a 4% tax on the receipts from sales of all tangible personal property and of specified services. Ark.Code Ann. §§ 26-52-301, 26-52-302, 26-52-401 (1987 and Supp.1989). Cable television service is expressly included in the tax. See § 26-52-301(3)(D)(i) (Supp.1989). Proceeds from the sale of newspapers, § 26-52-401(4) (Supp.1989), and from the sale of magazines by subscription, § 26-52-401(14) (Supp.1989); Revenue Policy Statement 1988-1 (Mar. 10, 1988), reprinted in CCH Ark. Tax Rep. ¶ 69-415, are expressly exempted, as are the proceeds from the sale of advertising in newspapers and other publications, § 26-52-401(13) (Supp.1989). Proceeds from the sale of advertising for broadcast radio and television services are not included in the tax.
* ↑ I need not consider what, if any, state interests might justify selective taxation of cable television, since the State has advanced no interest other than revenue enhancement. I also do not dispute that the unique characteristics of cable may justify special regulatory treatment of that medium. See Los Angeles v. Preferred Communications, Inc., 476 U.S. 488, 496, 106 S.Ct. 2034, 2038-39, 90 L.Ed.2d 480 (1986) (BLACKMUN, J., concurring); cf. Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 386-401, 89 S.Ct. 1794, 1804-1812, 23 L.Ed.2d 371 (1969). I conclude only that the State is not free to burden cable with a selective tax absent a clear nexus between the tax and a "special characteristic" of cable television service or a "counterbalancing interest of compelling importance." Minneapolis Star, 460 U.S., at 585, 103 S.Ct., at 1372.
* ↑ Even if it did happen to apply neutrally across the range of viewpoints expressed in the Arkansas information market, Arkansas' discriminatory tax would still raise First Amendment problems. "It hardly answers one person's objection to a restriction on his speech that another person, outside his control, may speak for him." Regan v. Taxation with Representation of Washington, 461 U.S. 540, 553, 103 S.Ct. 1997, 2005, 76 L.Ed.2d 129 (1983) (BLACKMUN, J., concurring).
* ↑ The majority's reliance on Mabee v. White Plains Publishing Co., 327 U.S. 178, 66 S.Ct. 511, 90 L.Ed. 607 (1946), and Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614 (1946), is also misplaced. At issue in those cases was a provision that exempted small newspapers with primarily local distribution from the Fair Labor Standards Act of 1938 (FLSA). In upholding the provision, the Court noted that the exemption promoted a legitimate interest in placing the exempted papers "on a parity with other small town enterprises" that also were not subject to regulation under the FLSA. Mabee, supra, 327 U.S., at 184, 66 S.Ct., at 514; see also Oklahoma Press, supra, 327 U.S., at 194, 66 S.Ct., at 498. In Minneapolis Star, we distinguished these cases on the ground that, unlike the FLSA exemption, Minnesota's discrimination between large and small newspapers did not derive from, or correspond to, any general state policy to benefit small businesses. See 460 U.S., at 592, and n. 16, 103 S.Ct., at 1375, and n. 16. Similarly, Arkansas' discrimination against cable operators derives not from any general, legitimate state policy unrelated to speech but rather from the simple decision of state officials to treat one information medium differently from all others. Thus, like the schemes in Arkansas Writers' Project and Minneapolis Star, but unlike the scheme at issue in Mabee and Oklahoma Press, the Arkansas tax scheme must be supported by a compelling interest to survive First Amendment scrutiny. Cf. United States v. O'Brien, 391 U.S. 367, 377, 88 S.Ct. 1673, 1679, 20 L.Ed.2d 672 (1968).
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