As I Wrote in 1991—Don’t Tax Newspapers

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Reading Jim Miller’s Sacramento Bee report that newspapers may soon see the end of a sales tax imposed on them during the early 1990s recession brought back memories. As head of the Howard Jarvis Taxpayers Association at the time, I regularly opposed tax increases—but a tax increase on newspapers was tempting. Why? A reality check for the newspapers. As I wrote in a Los Angeles Times op-ed piece published January 14, 1991, “my reaction says, raise taxes on newspapers and let them see what we mean about tax increases hurting.”

Newspapers, particularly editorials, were hard on the tax revolt. Editorial pages frequently campaigned for new taxes. The temptation to support the tax would allow me to point to a tax we supported.

But I came out against the tax on newspapers arguing that newspapers were invaluable resources and suggesting, like other businesses, they should not be taxed during a recession.

Newspapers, themselves, apparently agreed with the idea of not being taxed—after a fashion.

My favorite story, which I included in a book on the California tax revolt, involved a February 1991 editorial in the San Francisco Examiner headlined: “Raise State Taxes.” The editorial went on to support a package of tax increases proposed by a San Diego state senator. That is until the paper discovered that a newspaper tax was part of the tax package.

Three days later another editorial appeared saying the original editorial was misinterpreted. The previous editorial was just suggesting that the legislature look at various tax ideas, the new editorial explained. Since the senator’s package contained a newspaper tax the Examiner stated, “As we have an inherent conflict of interest on the newspaper sales tax idea, we recuse ourselves and take no position on it.”

The Examiner applauded the idea of raising taxes on others, not so much on raising taxes on newspapers.

Now, that the newspaper business is changing with a greater emphasis on digital news products, it appears the 25-year-old newspaper sales tax will go away.

Better late than never.

My January 14, 1991 Los Angeles Times op-ed is re-produced here:

Should Newspapers Eat Their Words?

Budget: Losing their immunity from the sales tax would be a lesson for those that fought tax reform.

I have often been asked if there is any tax increase I would support readily. “Yes,” I respond, “a tax on newspapers.”

Now I have the chance. Gov. Pete Wilson, as part of his “crisis” budget, has proposed removing the sales-tax exemption from newspapers, along with periodicals, candy and snack foods, to bring in $384 million in new revenues.

I attribute my reaction to a touch of bitterness, a common malady for those who toil in the public arena and whose ideas are trashed by the media.

Remember Thomas Jefferson’s words: “Were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter.” But he also wrote: “Perhaps an editor might begin a reformation in some such way as this. Divide his paper into four chapters, heading the first Truths; the second, Probabilities; the third, Possibilities, the fourth, Lies.”

Too many California newspapers, particularly editorial pages, have been hard on the tax revolt, blaming it for many ills in the state. My files are full of newspaper editorials calling for increased taxes. So, my reaction says, raise taxes on newspapers and let them see what we mean about tax increases hurting.

A sales tax on a 25-cent newspaper would be 2 cents. Many publishers say they would have to raise the cost of a paper a nickel for vending machines to handle the increase, which would keep some buyers away. The fewer papers sold means fewer readers for advertisers and a commensurate drop in income, meaning less revenue available to gather the news. Like other businesses during a recession, California newspapers are struggling.

Now, with Wilson’s proposal on the table, my opportunity is at hand. The temptation to support the tax is magnified by the added reward of being able to boast that my organization is not always against tax increases (which we are not) and pull out an endorsement for the newspaper tax like an old soldier pulling out a war medal to relive past glory.

But with the chips on the table I cannot play the cards. We should not raise taxes on newspapers.

Newspapers are an invaluable resource. Often they are the spine that holds a community together. The tax would restrict the ability of newspapers to gather information and discourage people from getting that information.

These same arguments suggest that tax increases would damage other businesses as well, especially in time of recession. Yet without some of the tax increases he proposes, where does that leave Wilson’s carefully crafted budget?

The new governor has done a commendable job with his first budget, in the face of an 18-month shortfall of about $7 billion. His budget intends to reset priorities, investing now to prevent long-term problems while at the same time attempting to discourage a welfare state and cutting out-of-control spending. However, because of the huge gap between available revenues and demands, Wilson has turned to new revenue sources. He should be applauded for avoiding a general tax increase.

The answer is to help the governor and the Legislature identify other ways of meeting our needs. A good place to start: Last year the Howard Jarvis Taxpayers Assn. study found that privatization could save $1 billion–half the revenue increase sought by Wilson.

The governor is urging us to think anew about government fiscal problems. We should take up the challenge. But now is not the time to raise taxes on newspapers–or on anyone else.

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