Dow Jones Sues Texas Claiming Tax Code Violates First Amendment

5:02 PM PDT 5/24/2011 by Eriq Gardner

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How much does Ruper Murdoch hate taxes? So much so that the media baron's Wall Street Journal has decided to go to war with the state of Texas over the state comptroller's ruling that the WSJ is really not a "newspaper" and should thus pay sale taxes. Dow Jones & Co. has now filed a lawsuit against the state, raising objections including the argument that Texas is violating the First Amendment with its tax policy.

Last week, the WSJ says it paid $97,206.96 in taxes to Texas, but did so under protest.

The Murdoch-owned newspaper believes it is being penalized by the state for charging more than $1.50 per paper for a newsstand sale.

According to the Texas tax code, a "newspaper" is defined as being printed on newsprint, distributed in short intervals, disseminating the news, with an average sale price that doesn't exceed $1.50.

In February, the state comptroller announced that some newspapers like the Wall Street Journal and the New York Times no longer meet the definition of a newspaper. "Because the average price of both publications is above $1.50, neither of these publications qualifies as a newspaper for Texas sales tax purposes," wrote the comptroller.

The ramifcations of the ruling meant that it wouldn't qualify for a "newspaper" sales tax exemption afforded to other, smaller publications.

We imagine this was enough to set off a mini-Tea Party riot within the Murdoch hub.

Dow Jones & Co., in a lawsuit filed against the state on Friday, says this policy is unconstitutional, violating the 1st and 14th Amendements to the U.S. Constitution. The media giant says that Texas is affording unequal tax policies on publications meant to serve free speech and wants a refund.

The company points out that Texas is using some funny math. Although the newstand price of the WSJ is above $1.50, it says that 96% of its customers in Texas get the paper by subscription and thus pay about 73 cents per daily copy.

E-mail: eriqgardner@yahoo.com

Twitter: @eriqgardner