Magazine article Editor & Publisher

David Takes on Goliath

Magazine article Editor & Publisher

David Takes on Goliath

Article excerpt

DALE ANDREASEN, PUBLISHER of a 6,000-circulation newspaper, is taking on the state of California, which wants to tax the comics and political cartoons he runs.

"It's hard to believe," said Andreasen, who also is general manager of the five-day paper, the Siskiyou Daily News, in the remote community of Yreka, near the Oregon border. "I'm not even opposing this on First Amendment grounds, but from a common sense point of view. I don't have to pay a tax on Ann Landers or any other column, but I do for `Peanuts' or `For Better or For Worse.' Does that make sense?"

The State Board of Equalization (BOE) has handed Andreasen a quarterly bill of $1,007.69 for "un reported comic strips purchased without tax subject to use tax."

The publisher, who is appealing the levy, said he has made several calls to newspapers papers in California and around the country, but has found no parallel situation.

However, BOE previously targeted Creators Syndicate in Los Angeles and free lance cartoonist Paul Mavrides for the same kind of audit that led to the tax bill for Andreasen (E&P, June 3, p. 49). Both Creators president Richard S. Newcombe and Mavrides have filed appeals, Newcombe for a use tax levy and Mavrides for a sales tax.

A California newspaper sales tax was enacted in 1991, but the use tax imposed on the Daily News, comic strips and cartoons stems from an obscure 1939 statute taxing art objects used for commercial purposes.

BOE program manager Dennis Fox said in an interview the state takes the position that newspaper comics and cartoons "have a lot of artistic elements" as camera-ready finished art work, making them subject to a use tax.

Fox added that as the BOE conducts audits of other rlewspapers, more of them are likely to be hit with the tax. State audits of newspapers began, he disclosed, as the result of the 1991 sales tax, which gave the BOE its first glimpse into their records.

Tom Newton, general counsel for the California Newspaper Publishers Association, said that to CNPA's knowledge, the Siskiyou Daily News is the only state newspaper to be billed under the 1939 law. Noting that the state previously had not imposed the use tax, he asked, "Why now7"

He also pointed out that since the law exempts manuscripts from taxation, the exemption should in. clude cartoons and comics, as well.

"Cartoons and comics have words," he reasoned. "Take the words out and they make no sense at all"

Andreasen is arguing that the entire content of the Daily News is paid at the point of sale.

"Besides," he added, "comics have no tangible afterlife and they are not original works of art, just copies. It's all pretty absurd."

The publisher is further miffed that the paper is regularly taxed on film, chemicals and press plates whichj he claims, are not taxed in other states.

"If I printed phone books, I would think seriously of moving out of the state," he remarked. "I could publish this newspaper in Oregon, 40 miles away, and not pay a dime in taxes."

Newcombe, the Creators head, sent a Nov. 2 memo to California newspaper editors an-d publishers and all major syndicates, warning that the BOE auditors have told him that "they in tend to go after every California newspaper and every syndicate that sells cartoons to them, and to apply the tax retroactively."

The cost to newspapers and syndicates could be substantial, he said.

If Andreasen is not raising a First Amendment issue, Newcombe is, declaring that if the state taxes drawings with words, "it would be only a short step before it taxed words without drawings. …

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