GROSJEAN v. AMERICAN PRESS Co.

Legal Principle at Issue

Does a Louisiana state license tax of 2% on the gross advertising receipts of newspapers with a weekly circulation exceeding 20,000 violated violate the freedom of the press protected by the First and Fourteenth Amendments?

Action

In a unanimous decision, the Supreme Court ruled Louisiana's license tax was unconstitutional

Facts/Syllabus

This suit was brought by nine publishers of newspapers in the State of Louisiana to enjoin the enforcement against them of the provisions of Act No. 23, passed and approved July 12, 1934. The law states that "every person, firm, association, or corporation, domestic or foreign, engaged in the business of selling, or making any charge for, advertising or for advertisements, whether printed or published, or to be printed or published, in any newspaper, magazine, periodical or publication whatever having a circulation of more than 20,000 copies per week, or displayed and exhibited, or to be displayed and exhibited by means of moving pictures, in the State of Louisiana, shall, in addition to all other taxes and licenses levied and assessed in this State, pay a license tax for the privilege of engaging in such business in this State of two percent. (2%) of the gross receipts of such business."

The nine publishers who brought the suit publish thirteen newspapers, and these thirteen publications are the only ones within the State of Louisiana having each a circulation of more than 20,000 copies per week, although the U.S. District Court for the Eastern District of Louisiana found there are four other daily newspapers each having a circulation of "slightly less than 20,000 copies per week" which are in competition with those published by appellees both as to circulation and as to advertising. In addition, there are 120 weekly newspapers published in the state, also in competition, to a greater or less degree, with the newspapers of appellees. The revenue derived from appellees' newspapers comes almost entirely from regular subscribers or purchasers thereof and from payments received for the insertion of advertisements therein.

The act requires everyone subject to the tax to file a sworn report every three months showing the amount and the gross receipts from the business described in § 1. The resulting tax must be paid when the report is filed. Failure to file the report or pay the tax as thus provided constitutes a misdemeanor and subjects the offender to a fine not exceeding $500, or imprisonment not exceeding six months, or both, for each violation. Any corporation violating the act subjects itself to the payment of $50 to be recovered by suit. All of the appellees are corporations. The lower court entered a decree for appellees and granted a permanent injunction.