In The

Supreme Court of the United States

Commissioner of Revenues of Arkansas


MEDLOCK et al.

Decided April 16, 1991

Justice O’Connor, For the Court

Topic: First Amendment*Court vote: 7–2
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Citation: 499 U.S. 439 Docket: 90–29, 90-38Audio: Listen to this case's oral arguments at Oyez

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JUSTICE O'CONNOR delivered the opinion of the Court.

These consolidated cases require us to consider the constitutionality of a state sales tax that excludes or exempts certain segments of the media, but not others.


Arkansas' Gross Receipts Act imposes a 4% tax on receipts from the sale of all tangible personal property and specified services. Ark.Code Ann. §§ 26-52-301, 26-52-302 (1987 and Supp.1989). The Act exempts from the tax certain sales of goods and services. § 26-52-401 (Supp.1989). Counties within Arkansas impose a 1% tax on all goods and services subject to taxation under the Gross Receipts Act, §§ 26-74-307, 26-74-222 (1987 and Supp.1989), and cities may impose a further 1/2 or 1% tax on these items, § 26-75-307 (1987).

The Gross Receipts Act expressly exempts receipts from subscription and over-the-counter newspaper sales and subscription magazine sales. See §§ 26-52-401(4), (14) (Supp.1989); Revenue Policy Statement 1988-1 (Mar. 10, 1988), reprinted in CCH Ark.Tax Rep. 1169-415. Before 1987, the Act did not list among those services subject to the sales tax either cable television [ Footnote 1 ] or scrambled satellite broadcast television services to home dish-antennae owners. [ Footnote 2 ] See § 26-52-301 (1987). In 1987, Arkansas adopted Act 188, which amended the Gross Receipts Act to impose the sales tax on cable television. 1987 Ark.Gen.Acts, No. 188, § 1.

Daniel L. Medlock, a cable television subscriber, Community Communications Co., a cable television operator, and the Arkansas Cable Television Association, Inc., a trade organization composed of approximately 80 cable operators with systems throughout the State (cable petitioners), brought this class action in the Arkansas Chancery Court to challenge the extension of the sales tax to cable television services. Cable petitioners contended that their expressive activities are protected by the First Amendment and are comparable to those of newspapers, magazines, and scrambled satellite broadcast television. They argued that Arkansas' sales taxation of cable services, and exemption or exclusion from the tax of newspapers, magazines, and satellite broadcast services, violated their constitutional rights under the First Amendment and under the Equal Protection Clause of the Fourteenth Amendment.

The Chancery Court granted cable petitioners' motion for a preliminary injunction, requiring Arkansas to place in escrow the challenged sales taxes and to keep records identifying collections of the taxes. Both sides introduced extensive testimony and documentary evidence at the hearing on this motion and at the subsequent trial. Following the trial, the Chancery Court concluded that cable television's necessary use of public rights-of-way distinguishes it for constitutional purposes from other media. It therefore upheld the constitutionality of Act 188, dissolved its preliminary injunction, and ordered all funds collected in escrow released.

In 1989, shortly after the Chancery Court issued its decision, Arkansas adopted Act 769, which extended the sales tax to

all other distribution of television, video or radio services with or without the use of wires provided to subscribers or paying customers or users.

1989 Ark.Gen.Acts, No. 769, § 1. On appeal to the Arkansas Supreme Court, cable petitioners again challenged the State's sales tax on the ground that, notwithstanding Act 769, it continued unconstitutionally to discriminate against cable television. The Supreme Court rejected the claim that the tax was invalid after the passage of Act 769, holding that the Constitution does not prohibit the differential taxation of different media. Medlock v. Pledger, 301 Ark. 483, 487, 785 S.W.2d 202, 204 (1990). The Court believed, however, that the First Amendment prohibits discriminatory taxation among members of the same medium. On the record before it, the court found that cable television services and satellite broadcast services to home dish-antennae owners were "substantially the same." Ibid. The State Supreme Court rejected the Chancery Court's conclusion that cable television's use of public rights-of-way justified its differential sales tax treatment, explaining that cable operators already paid franchise fees for that right. Id. at 485, 785 S.W.2d at 203. It therefore held that Arkansas' sales tax was unconstitutional under the First Amendment for the period during which cable television, but not satellite broadcast services, were subject to the tax. Id. at 487; 785 S.W.2d at 204.

Both cable petitioners and the Arkansas Commissioner of Revenues petitioned this Court for certiorari. We consolidated these petitions and granted certiorari, 498 U.S. 809 (1990), in order to resolve the question, left open in Arkansas Writers' Project, Inc. v. Ragland, 481 U. S. 221, 481 U. S. 233 (1987), whether the First Amendment prevents a State from imposing its sales tax on only selected segments of the media.


Cable television provides to its subscribers news, information, and entertainment. It is engaged in "speech" under the First Amendment, and is, in much of its operation, part of the "press." See Los Angeles v. Preferred Communications, Inc., 476 U. S. 488, 476 U. S. 494 (1986). That it is taxed differently from other media does not, by itself, however, raise First Amendment concerns. Our cases have held that a tax that discriminates among speakers is constitutionally suspect only in certain circumstances.

In Grosjean v. American Press Co., 297 U. S. 233 (1936), the Court considered a First Amendment challenge to a Louisiana law that singled out publications with weekly circulations above 20,000 for a 2% tax on gross receipts from advertising. The tax fell exclusively on 13 newspapers. Four other daily newspapers and 120 weekly newspapers with weekly circulations of less than 20,000 were not taxed. The Court discussed at length the pre-First Amendment English and American tradition of taxes imposed exclusively on the press. This invidious form of censorship was intended to curtail the circulation of newspapers, and thereby prevent the people from acquiring knowledge of government activities. Id. at 297 U. S. 246 -251. The Court held that the tax at issue in Grosjean was of this type, and was therefore unconstitutional. Id. at 297 U. S. 250.

In Minneapolis Star & Tribune Co. v. Minnesota Comm'r of Revenue, 460 U. S. 575 (1983), we noted that it was unclear whether the result in Grosjean depended on our perception in that case that the State had imposed the tax with the intent to penalize a selected group of newspapers or whether the structure of the tax was sufficient to invalidate it. See 460 U.S. at 460 U. S. 580 (citing cases and commentary). Minneapolis Star resolved any doubts about whether direct evidence of improper censorial motive is required in order to invalidate a differential tax on First Amendment grounds: "Illicit legislative intent is not the sine qua non of a violation of the First Amendment." Id. at 460 U. S. 592.

At issue in Minneapolis Star was a Minnesota special use tax on the cost of paper and ink consumed in the production of publications. The tax exempted the first $100,000 worth of paper and ink consumed annually. Eleven publishers, producing only 14 of the State's 388 paid circulation newspapers, incurred liability under the tax in its first year of operation. The Minneapolis Star and Tribune Company (Star Tribune) was responsible for roughly two-thirds of the total revenue raised by the tax. The following year, 13 publishers, producing only 16 of the State's 374 paid circulation papers, paid the tax. Again, the Star Tribune bore roughly two-thirds of the tax's burden. We found no evidence of impermissible legislative motive in the case apart from the structure of the tax itself.

We nevertheless held the Minnesota tax unconstitutional for two reasons. First, the tax singled out the press for special treatment. We noted that the general applicability of any burdensome tax law helps to ensure that it will be met with widespread opposition. When such a law applies only to a single constituency, however, it is insulated from this political constraint. See id. at 460 U. S. 585. Given "the basic assumption of our political system that the press will often serve as an important restraint on government," we feared that the threat of exclusive taxation of the press could operate "as effectively as a censor to check critical comment." Id. at 460 U. S. 585. "Differential taxation of the press, then, places such a burden on the interests protected by the First Amendment," that it is presumptively unconstitutional. Ibid.

Beyond singling out the press, the Minnesota tax targeted a small group of newspapers -those so large that they remained subject to the tax despite its exemption for the first $100,000 of ink and paper consumed annually. The tax thus resembled a penalty for certain newspapers. Once again, the scheme appeared to have such potential for abuse that we concluded that it violated the First Amendment:

[W]hen the exemption selects such a narrowly defined group to bear the full burden of the tax, the tax begins to resemble more a penalty for a few of the largest newspapers than an attempt to favor struggling smaller enterprises.

Id. at 460 U. S. 592.

Arkansas Writers' Project, Inc. v. Ragland, 481 U. S. 221 (1987), reaffirmed the rule that selective taxation of the press through the narrow targeting of individual members offends the First Amendment. In that case, Arkansas Writers' Project sought a refund of state taxes it had paid on sales of the Arkansas Times, a general interest magazine, under Arkansas' Gross Receipts Act of 1941. Exempt from the sales tax were receipts from sales of religious, professional, trade and sports magazines. See id. at 481 U. S. 224 -226. We held that Arkansas' magazine exemption, which meant that only "a few Arkansas magazines pay any sales tax," operated in much the same way as did the $100,000 exemption in Minneapolis Star, and therefore suffered from the same type of discrimination identified in that case. Id. at 481 U. S. 229. Moreover, the basis on which the tax differentiated among magazines depended entirely on their content. Ibid.

These cases demonstrate that differential taxation of First Amendment speakers is constitutionally suspect when it threatens to suppress the expression of particular ideas or viewpoints. Absent a compelling justification, the government may not exercise its taxing power to single out the press. See Grosjean, 297 U.S. at 297 U. S. 244 -249; Minneapolis Star, 460 U.S. at 460 U. S. 585. The press plays a unique role as a check on government abuse, and a tax limited to the press raises concerns about censorship of critical information and opinion. A tax is also suspect if it targets a small group of speakers. See Minneapolis Star, supra, at 460 U. S. 575 ; Arkansas Writers, 481 U.S. at 481 U. S. 229. Again, the fear is censorship of particular ideas or viewpoints. Finally, for reasons that are obvious, a tax will trigger heightened scrutiny under the First Amendment if it discriminates on the basis of the content of taxpayer speech. See id. at 481 U. S. 229 -231.

The Arkansas tax at issue here presents none of these types of discrimination. The Arkansas sales tax is a tax of general applicability. It applies to receipts from the sale of all tangible personal property and a broad range of services, unless within a group of specific exemptions. Among the services on which the tax is imposed are natural gas, electricity, water, ice, and steam utility services; telephone, telecommunications, and telegraph service; the furnishing of rooms by hotels, apartment hotels, lodging houses, and tourist camps; alteration, addition, cleaning, refinishing, replacement, and repair services; printing of all kinds; tickets for admission to places of amusement or athletic, entertainment, or recreational events; and fees for the privilege of having access to or use of amusement, entertainment, athletic, or recreational facilities. See Ark.Code Ann. § 26-52-301 (Supp.1989). The tax does not single out the press, and does not therefore threaten to hinder the press as a watchdog of government activity. Cf. Minneapolis Star, supra, 460 U.S. at 460 U. S. 585. We have said repeatedly that a State may impose on the press a generally applicable tax. See Swaggart Ministries v. Board of Equalization of California, 493 U. S. 378, 493 U. S. 387 -388 (1990); Arkansas Writers supra, 481 U.S. at 481 U. S. 229 ; Minneapolis Star, supra, 460 U.S. at 460 U. S. 586, and n. 9.

Furthermore, there is no indication in this case that Arkansas has targeted cable television in a purposeful attempt to interfere with its First Amendment activities. Nor is the tax one that is structured so as to raise suspicion that it was intended to do so. Unlike the taxes involved in Grosjean and Minneapolis Star, the Arkansas tax has not selected a narrow group to bear fully the burden of the tax.

The tax is also structurally dissimilar to the tax involved in Arkansas Writers'. In that case, only "a few" Arkansas magazines paid the State's sales tax. See Arkansas Writers', 481 U.S. at 481 U. S. 229, and n. 4. Arkansas Writers' Project maintained before the Court that the Arkansas Times was the only Arkansas publication that paid sales tax. The Commissioner contended that two additional periodicals also paid the tax. We responded that, "[w]hether there are three Arkansas magazines paying tax or only one, the burden of the tax clearly falls on a limited group of publishers." Id. at 481 U. S. 229, n. 4. In contrast, Act 188 extended Arkansas' sales tax uniformly to the approximately 100 cable systems then operating in the State. See App. to Pet. for Cert. in No. 90-38, p. 12a. While none of the seven scrambled satellite broadcast services then available in Arkansas, Tr. 12 (Aug.19, 1987), was taxed until Act 769 became effective, Arkansas' extension of its sales tax to cable television hardly resembles a "penalty for a few." See Minneapolis Star, supra, 460 U.S. at 460 U. S. 592 ; Arkansas Writers supra, 481 U.S. at 481 U. S. 229, and n. 4.

The danger from a tax scheme that targets a small number of speakers is the danger of censorship; a tax on a small number of speakers runs the risk of affecting only a limited range of views. The risk is similar to that from content-based regulation: it will distort the market for ideas.

The constitutional right of free expression is... intended to remove governmental restraints from the arena of public discussion, putting the decision as to what views shall be voiced largely into the hands of each of us... in the belief that no other approach would comport with the premise of individual dignity and choice upon which our political system rests.

Cohen v. California, 403 U. S. 15, 403 U. S. 24 (1971). There is no comparable danger from a tax on the services provided by a large number of cable operators offering a wide variety of programming throughout the State. That the Arkansas Supreme Court found cable and satellite television to be the same medium does not change this conclusion. Even if we accept this finding, the fact remains that the tax affected approximately 100 suppliers of cable television services. This is not a tax structure that resembles a penalty for particular speakers or particular ideas.

Finally, Arkansas' sales tax is not content-based. There is nothing in the language of the statute that refers to the content of mass media communications. Moreover, the record establishes that cable television offers subscribers a variety of programming that presents a mixture of news, information, and entertainment. It contains no evidence, nor is it contended, that this material differs systematically in its message from that communicated by satellite broadcast programming, newspapers, or magazines.

Because the Arkansas sales tax presents none of the First Amendment difficulties that have led us to strike down differential taxation in the past, cable petitioners can prevail only if the Arkansas tax scheme presents "an additional basis" for concluding that the State has violated petitioners First Amendment rights. See Arkansas Writers' supra, 481 U.S. at 481 U. S. 233. Petitioners argue that such a basis exists here: Arkansas' tax discriminates among media and, if the Arkansas Supreme Court's conclusion regarding cable and satellite television is accepted, discriminated for a time within a medium. Petitioners argue that such intermedia and intramedia discrimination, even in the absence of any evidence of intent to suppress speech or of any effect on the expression of particular ideas, violates the First Amendment. Our cases do not support such a rule.

Regan v. Taxation with Representation of Washington, 461 U. S. 540 (1983), stands for the proposition that a tax scheme that discriminates among speakers does not implicate the First Amendment unless it discriminates on the basis of ideas. In that case, we considered provisions of the Internal Revenue Code that discriminated between contributions to lobbying organizations. One section of the Code conferred tax-exempt status on certain nonprofit organizations that did not engage in lobbying activities. Contributions to those organizations were deductible. Another section of the Code conferred tax-exempt status on certain other nonprofit organizations that did lobby, but contributions to them were not deductible. Taxpayers contributing to veterans' organizations were, however, permitted to deduct their contributions regardless of those organizations' lobbying activities.

The tax distinction between these lobbying organizations did not trigger heightened scrutiny under the First Amendment. Id. at 461 U. S. 546 -551. We explained that a legislature is not required to subsidize First Amendment rights through a tax exemption or tax deduction. [ Footnote 3 ] Id. at 461 U. S. 546. For this proposition, we relied on Cammarano v. United States, 358 U. S. 498 (1959). In Cammarano, the Court considered an Internal Revenue regulation that denied a tax deduction for money spent by businesses on publicity programs directed at pending state legislation. The Court held that the regulation did not violate the First Amendment because it did not discriminate on the basis of who was spending the money on publicity or what the person or business was advocating. The regulation was therefore "plainly not aimed at the suppression of dangerous ideas.'" Id. at 358 U. S. 513, quoting Speiser v. Randall, 357 U. S. 513, 357 U. S. 519 (1958).

Regan, while similar to Cammarano, presented the additional fact that Congress had chosen to exempt from taxes contributions to veterans' organizations, while not exempting other contributions. This did not change the analysis. Inherent in the power to tax is the power to discriminate in taxation. "Legislatures have especially broad latitude in creating classifications and distinctions in tax statutes." Regan, supra, 461 U.S. at 461 U. S. 547. See also Madden v. Kentucky, 309 U. S. 83, 309 U. S. 87 -88 (1940); New York Rapid Transit Corp. v. New York City, 303 U. S. 573, 303 U. S. 578 (1938); Magoun v. Illinois Trust & Savings Bank, 170 U. S. 283, 170 U. S. 294 (1898).

Cammarano established that the government need not exempt speech from a generally applicable tax. Regan established that a tax scheme does not become suspect simply because it exempts only some speech. Regan reiterated in the First Amendment context the strong presumption in favor of duly enacted taxation schemes. In so doing, the Court quoted the rule announced more than 40 years earlier in Madden, an equal protection case:

The broad discretion as to classification possessed by a legislature in the field of taxation has long been recognized.... [T]he passage of time has only served to underscore the wisdom of that recognition of the large area of discretion which is needed by a legislature in formulating sound tax policies. Traditionally classification has been a device for fitting tax programs to local needs and usages in order to achieve an equitable distribution of the tax burden. It has, because of this, been pointed out that in taxation, even more than in other fields, legislatures possess the greatest freedom in classification. Since the members of a legislature necessarily enjoy a familiarity with local conditions which this Court cannot have, the presumption of constitutionality can be overcome only by the most explicit demonstration that a classification is a hostile and oppressive discrimination against particular persons and classes.

Madden, supra, 309 U.S. at 309 U. S. 87 -88 (footnotes omitted), quoted in Regan, 461 U.S. at 461 U. S. 547 -548.

On the record in Regan, there appeared no such "hostile and oppressive discrimination." We explained that

[t]he case would be different if Congress were to discriminate invidiously in its subsidies in such a way as to aim at the suppression of dangerous ideas.

Id. at 461 U. S. 548 (internal quotations omitted). But that was not the case. The exemption for contributions to veterans' organizations applied without reference to the content of the speech involved; it was not intended to suppress any ideas; and there was no demonstration that it had that effect. Ibid. Under these circumstances, the selection of the veterans' organizations for a tax preference was "obviously a matter of policy and discretion." Id. at 461 U. S. 549 (internal quotations omitted).

That a differential burden on speakers is insufficient by itself to raise First Amendment concerns is evident as well from Mabee v. White Plains Publishing Co., 327 U. S. 178 (1946), and Oklahoma Press Publishing Co. v. Walling, 327 U. S. 186 (1946). Those cases do not involve taxation, but they do involve government action that places differential burdens on members of the press. The Fair Labor Standards Act of 1938, 52 Stat. 1060, as amended, 29 U.S.C. § 201 et seq., applies generally to newspapers as to other businesses, but it exempts from its requirements certain small papers. § 213(a)(8). Publishers of larger daily newspapers argued that the differential burden thereby placed on them violates the First Amendment. The Court upheld the exemption because there was no indication that the government had singled out the press for special treatment, Walling, supra, at 327 U. S. 194, or that the exemption was a " deliberate and calculated device'" to penalize a certain group of newspapers, Mabee, supra, 327 U.S. at 327 U. S. 184, quoting Grosjean, 297 U.S. at 297 U. S. 250.

Taken together, Regan, Mabee, and Oklahoma Press establish that differential taxation of speakers, even members of the press, does not implicate the First Amendment unless the tax is directed at, or presents the danger of suppressing, particular ideas. That was the case in Grosjean, Minneapolis Star, and Arkansas Writers', but it is not the case here. The Arkansas Legislature has chosen simply to exclude or exempt certain media from a generally applicable tax. Nothing about that choice has ever suggested an interest in censoring the expressive activities of cable television. Nor does anything in this record indicate that Arkansas' broad-based, content-neutral sales tax is likely to stifle the free exchange of ideas. We conclude that the State's extension of its generally applicable sales tax to cable television services alone, or to cable and satellite services, while exempting the print media, does not violate the First Amendment.

Before the Arkansas Chancery Court, cable petitioners contended that the State's tax distinction between cable and other media violated the Equal Protection Clause of the Fourteenth Amendment as well as the First Amendment. App. to Pet. for Cert. in No. 90-38, p. 21a. The Chancery Court rejected both claims, and cable petitioners challenged these holdings before the Arkansas Supreme Court. That Court did not reach the equal protection question as to the State's temporary tax distinction between cable and satellite services, because it disallowed that distinction on First Amendment grounds. We leave it to the Arkansas Supreme Court to address this question on remand.

For the foregoing reasons, the judgment of the Arkansas Supreme Court is affirmed in part and reversed in part, and the cases are remanded for further proceedings not inconsistent with this opinion.

It is so ordered.


[ Footnote 1 ]

Cable systems receive television, radio, or other signals through antennae located at their so-called "headends." Information gathered in this way, as well as any other material that the system operator wishes to transmit, is then conducted through cables strung over utility poles and through underground conduits to subscribers. See generally D. Brenner, M. Price, & M. Meyerson, Cable Television and Other Non broadcast Video: Law and Policy § 1.03 (1989).

[ Footnote 2 ]

Satellite television broadcast services transmit over-the-air "scrambled" signals directly to the satellite dishes of subscribers, who must pay for the right to view the signals. See generally A. Easton & S. Easton, The Complete Sourcebook of Home Satellite TV 57-66 (1988).

[ Footnote 3 ]

Certain amici in support of cable petitioners argue that Regan is distinguishable from this case because the petitioners in Regan were complaining that their contributions to lobbying organizations should be tax deductible, while cable petitioners complain that sales of their services should be tax exempt. This is a distinction without a difference. As we explained in Regan, "[b]oth tax exemptions and tax deductibility are a form of subsidy that is administered through the tax system." Regan, 461 U.S. at 461 U. S. 544.

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