*1 Executives, F. et al. v. James Society of Association Vermont Secretary Milne, of State A.2d

[779 20] No. J., JJ., Cheever, Supr. J., Dooley, Skoglund, Amestoy, Morse

Present: C Assigned Specially 8, 2001 Opinion Filed June August Denied to Amend Motion Shea, Hemley Robert B. of Gravel and Burlington, Nory Miller of Block, Jenner & and Jerald A. Jacobs of Shaw & Pittman Potts Counsel), D.C., Trowbridge (Of Washington, for Plaintiffs-Appellees. Sorrell, General, Attorney William H. Bridget C. Asay, General, Assistant Attorney Montpelier, for Defendant-Appellant. Skoglund, Secretary J. this appeal, challenges State superior ruling court’s that Vermont’s tax on lobbying *2 that, unconstitutional. We conclude singling burdening and protected by Amendment, interests the First lobby the tax violates the United States heightened Constitution under the scrutiny required. Accordingly,we affirm the superior judgment. court’s 1, 1998,

Effective January the Legislature imposed a five-percent tax “on the of expenditures lobbyists and of . . employers lobbyists. . $2,500.00.” §264a(a).1 in excess of 2 V.S.A The tax is expressly restricted to expenditures connected with communications or activities aimed at influencing legislation or administrative action. See 2 V.S.A. 261(5), § (defining “Expenditure” terms and “lobbying”).The lobby tax was enacted as part of a finance campaign reform statute that established a fund to provide public grants to running candidates for entirety, challenged provides In its the statute as follows: expenditures lobbyists

§ 264a. Tax on of (a) There expenditures and shall be collected a tax on the of lobbyists employers lobbyists. and percent of The tax shall be at the rate of five $2,500.00 of the required amount of the reported excess of to be year by lobbyists employers in each calendar under section 264 of this title. (b) paid secretary The tax shall be to the of state at the time that each periodic 264(a) report required disclosure to be filed under section of this title. (c) any (b) paid section, If tax is not when due under subsection of this secretary notify name, shall the commissioner of taxes of the address and taxpayer taxpayer identification number of such other information necessary liability. to determine the tax The commissioner of taxes shall collect section, imposed by and enforce the tax powers this and shall have all the granted the commissioner for collection and enforcement of the sales and chapter use tax under payment of Title 32. Persons liable for the of the tax imposed by penalties imposed this section shall be to all on and have all rights appeal persons payment afforded to liable for of the sales and use tax chapter under 233 of Title 32. (d) by secretary All revenues collected of state and the commissioner of imposed by taxes from the tax this section shall be submitted to the state deposit campaign treasurer for in the Vermont fund established under section 2856 of Title 17. 64, § 2. The No. governor, and lieutenant governor the offices of grants. to fund these primary sources tax was earmarked as one 264a(d) (all be submitted lobby § collected from “shall revenues fund campaign in the Vermont deposit for the state treasurer 17”). section 2856 Title established under lobbyists, Plaintiffs, nonprofit organizations employing a group superior action in the court declaratory judgment initially filed out and unconstitutionally singled burdened alleging protection equal and violated First Amendment activities protected § court 264a uncon- declare guarantees. requested Plaintiffs from enjoin enforcing the Commissioner Taxes stitutional (hereinafter State”) “the moved to dismiss Secretary tax. The of State had to exhaust adminis- ground plaintiffs on the failed suit for challenging imposition trative remedies statute established 9777(a) may hearing § before (taxpayer request tax. See 32 V.S.A. taxes); 32 V.S.A challenge unpaid commissioner to assessment 9781(a) commissioner). The tax refund from (taxpayer may request Later, pursuant parties’ the motion. superior court denied Association, Builders agreement, requested one Home plaintiffs, of taxes it had under 264a. The commissioner denied paid refund court, request, superior and that denial was to the where appealed declaratory judgment parties it was consolidated with the action. The opposing summary judgment. then filed motions *3 The in favor of superior granted summary judgment plaintiffs. court court tax the scrutiny, lobby strict the ruled the violates Applying Medlock, analysis First under the set forth in Leathers Amendment (1991). tax 499 U.S. 439 The court also concluded that the violates protection results equal provision Fourteenth Amendment and in an The expenditures. unconstitutional double taxation of lobbyist Constitution, separate analysis court made no under the Vermont to the counterparts determined the tax violated the Vermont ad- provisions. relevant federal constitutional The have not parties an appeal provides dressed on whether Constitution Vermont alternative basis to strike down 264a.2 (1) argues appeal superior State court erred Amendment, § 264a to under subjecting heightened scrutiny the First (2) holding statute unconstitutional under First challenged § and our Because have not 264a under the Vermont Constitution, plaintiffs First we need not resolution of their Amendment claim resolves parties’ dispute, Jewett, See State v. consider also violates state whether statute our constitution. (1985). Vt. A.2d 221, 222, 500 (3) Fourteenth Amendments to Constitution, the United States reaching Constitution, unbriefed claims under the Vermont asserting jurisdiction over plaintiffs’ claims without requiring them to first exhaust their administrative remedies. There are no facts in dispute. apply We de novo review to resolve the legal issue raised See parties. Vermont, O’Donnell v. Bank 166 Vt. (1997) (motion A.2d for summary judgment is reviewed court). under same standard as that by trial applied The parties’ characterizations of the lobby are in marked con- trast to one view, another. In the State’s 264a merely a generally applicable sales tax on the expenditures of a commercial service lobbying without regard to the content of the message provided by however, service. To plaintiffs, § 264a is a special tax that uncon- stitutionally singles out and political burdens core speech protected by the First right Amendment’s to petition the government. Under United law, States Supreme Court case if the State’s characterization §of 264a as a generally applicable, content-neutral extension of the correct, tax is the statute is reviewed under a deferential rational-basis hand, standard. On the other if plaintiffs are correct that § 264a a special tax burdening interests, First Amendment we apply heightened review, standard of under which the State has conceded it cannot prevail. For the below, reasons set forth we agree with plaintiffs that is a special tax singling First Amendment interests and thereby requiring heightened scrutiny.

A. Because the State questions the general notion of applying heightened to a scrutiny at lobbyists, directed opposed to the press, we first consider the status of lobbying protected as a Amendment interest. In part, relevant the First Amendment of the United Constitution, States which was made applicable to the states with the ratification of the Fourteenth Amendment, forbids laws “abridging the freedom of speech, or of the press; or the right of the people ... to petition the Government for a redress of grievances.” The United States Court has never defined the scope right to lobby in-depth analysis, but lobbying unquestionably concerns core political speech that “implicates First guarantees of petition, expression, and assembly.” Kimbell v. Hooper, *4 80, 83, 44, 164Vt. (1995); 665 A.2d 46 see Harriss, United States v. 347 612, 625(1954). U.S.

379 to redress government one’s petition to right The venerable Carta, Crown first where the the Magna to extends back grievances Thomas, citizens. A. to all to accessible duty its formally recognized a Constitutional Toward Groups: Pressure Pressure on Easing (1993). In 149, 181-82 Pol’y J.L. & Pub. 16 Harv. Lobby, to Right began action with America, influencing legislative history to make a meeting in the town appearance personal Englander’s New 1 Statutes Singer, action. N. some sort of request complaint 1994). (5th times, a At 13.02, ed. at 657 Statutory Construction meeting. unable to attend a fellow citizen might speak neighbor Id. lobbyist.” American was the first neighbor “That ways” “evil upon to fall was soon beginning That innocent local, from concessions sought to obtain new industries aggressive Recognizing at 657. state, Singer, supra, legislators. and federal by abuses system posed to our democratic danger potential reform statutes passed governments and state Congress lobbying, how representing were they to disclose who lobbyists required 13.04, See id. their clients’ behalf. they spending much were they upheld because generally laws were 663. These disclosure “the voice of the drowning out interest from groups prevented right to incidental burden on only an yet placed people” Kimbell, 625; 164 Harriss, U.S. at see government. one’s petition 85, supported laws are (“lobbying A.2d at 48 disclosure Vt. at protecting vital to interests” compelling [governmental] several Political Practices Comm’n process); of democratic Fair integrity 1979) (Cal. lobbyists to Court, (requiring 599 P.2d Superior interfere with substantially does not register and disclose voices). courts, at least Although to raise their ability lobbying in these and other decisions recognized implicitly, interests, there has been no detailed First Amendment implicates lobby, concerning scope right perhaps judicial analysis in our persisted that has lingering lobbying because of the distrust 149-51, 160-66, 179-80. Thomas, supra, at society. generally See directly Nevertheless, is beyond dispute heart of what the very that lies at political speech involves core Freeman, See Burson v. safeguard. was designed First Amendment of three (noting that one (plurality opinion) “regulation jurisprudence of First Amendment central concerns Pearson, 390 F.2d Inc. v. Liberty Lobby, political speech”); (D.C. 1968)(“While with has become encrusted ‘lobbyist’ the term Cir. trying ... connotations, engaged every person group invidious action persuade Congressional exercising First Amendment *5 (D. Killian, 228, F. right petition.”); v. 360 231 Conn. Supp. Moffett 1973) (it “beyond is that and dispute lobbyists employers their . . . have Amendment v. rights”); Fidanque Oregon First Gov’tStandards (Or. 1998) Comm’n, 376, & P.2d Practices 969 379 (“Lobbying is political being a is the act of speech, lobbyist being a to legislature subjects.”). communicator on political “Whatever may Amendment, exist interpretations differences about of the First agreement there is practically major purpose universal of that Amendment was to the free discussion protect governmental (1966). Alabama, 214, affairs.” Mills v. 384 U.S. 218 That is the case because is “speech concerning public affairs more than self-expression; Louisiana, is essence of self-government.” Garrison 379 U.S. 64, 74-75(1964).

This is no less true are because often paid petition government behalf others. See Fair Political Practices Comm’n, P.2d (lobbyist’s obviously 599 at 53 function to exercise right constitutional petition behalf of N. employer); Singer, 13.16, (need § at supra, and right legislative to communicate with through bodies medium of third party acting as spokesperson “appears hardly less fundamental” than other most basic tenants of Amendment). our constitutional safeguarded by liberties “The mere fact. . . that one earns living by exercising First Amendment rights not vitiate ability does to assert those rights.” Moffett, 360 F. at Nor Supp. 231. does one forfeit First rights merely by paying Indeed, another to them exercise for him. Id. notwithstanding the potential abuses posed that, lobbying, modern-day reality is effective, order to be groups organizations political across the spectrum compelled legislative to retain skilled to present counsel positions concerning often complex require significant issues that research and N. investigation. Singer, 13.16, supra, (legisla at tures have should benefit of best information legislat available when ing). Thus, the communications of paid lobbyists no deserve less protection constitutional than afforded to the direct entreaties of individual citizens. Id.

Of course, we do to suggest not mean lobbying immunized noted, from regulation. contrary, To the courts have routinely upheld Harriss, 625-26; disclosure statutes. See 347 U.S. at Kimbell, 85-88, 164 Vt. at 665 A.2d at 47-49. Courts have also suggested that the government may fee “to impose regulatory defray legitimate cost of administering regulation of First Amendment activity.” Moffett, 360 F. Supp. (relying 231-32 on Cox v. New (1941), Hampshire, 312 U.S. Pennsylvania, Murdock v. (1943), in striking down fee for lobbying $35 activities because from fee funds were far excess of sums needed to administer statute’s registration provisions). case, however,

In the instant the State does not claim that revenues from the tax are intended to compensate for administering Vermont’s disclosure statute. Cf. Rent- Thrifty (Colo. Denver, 1992) City A-Car v. 833 P.2d Ct. App. (transaction fee on car rental company for each airport $25,000 customer after company received in gross monthly revenues fee, was permissible user’s income illegal because it was used defray expense operating Indeed, and improving airport facility). 264a(d) explicitly provides that all revenues collected from the lobby tax “shall be submitted to the state treasurer deposit Vermont campaign fund established under section 2856 of Title 17.” *6 Thus, fee, the tax cannot be construed as a regulatory assuming that such a pass fee would constitutional muster. See Fidanque, 969P.2d at 379-80 (holding registration fee violated state constitution, that, and noting whatever might be permissibility of regulatory statute, fee imposed to administer “the statute on its face does not tie the fee to the costs associated with registering lobbyists”); Murdock, see also (Frankfurter, J., (“There 319 U.S. at 138 dissenting) is no constitutional difference between a so-called regulatory fee and an imposition revenue.”). for purposes

B. Apart fees, from regulatory the Supreme Court has also acknowledged that First Amendment activities are not immunized from “any of the ordinary forms taxation for support of the government.” Co., (1936). Grosjean v. Am. Press 297 U.S. Court in Grosjean however, emphasized, that a tax out singling protected interests by the First Amendment cannot stand. Id. at (it is settled law that freedoms of speech press “are rights of the same fundamental character” safeguarded against abridgment by legislation). state In making this the Court point, examined the history and circumstances that led to the adoption of the First Amendment’s abridgement clause. Id. at 244-48.The Court noted that the dominant purpose underlying British taxes on the press and other modes of communication was to curtail acquisition “the of knowledge by people in respect of their governmental affairs.” Id. at 247. abridgment clause

Accordingly, the Court concluded Amendment only directly not laws that censored First prohibited interests, special out those interests for singled but also laws that (evil to be was prevented taxation. Id. at 248-50 might action that any government but rather merely censorship, matters as seems public such free and discussion prevent general exercise of their people intelligent essential to absolutely prepare citizens). rights adhered to this consistently

The United States Court has single taxes that out and burden First principle disallowing special Star & Tribune example, Minneapolis Amendment interests.3 For Revenue, (1983), Comm’r Co. v. Minnesota down, use tax independent grounds, special Court struck on two and ink consumed in the paper products production The first the one most relevant to the instant publications. ground, case, singled was that the tax out a First Amendment interest for can acknowledging government treatment. While interests to economic “generally applicable” First Amendment the Court regulations creating problems, without constitutional the State’s claim that the and ink tax was a substitute rejected paper for the sales tax and thus of a scheme of taxation. Id. at part previous approving 581. The Court noted that its cases such economic regulation “emphasized general applicability challenged added). The regulation (emphasis to all businesses.” Id. at 583 Court destroy that there is concern that “a will government reasoned less if group taxpayers by impose selected burdensome taxation it must on the of its at 585. constituency.” same burden rest Id. When however, singles group, political select constraint absent, and “the threat of taxes becomes acute.” Id. burdensome Court, to the where First Amendment interests are

According stake, Hence, if heightened scrutiny required. singles See id. a tax *7 Amendment, protected by out and burdens freedoms the First the tax government has that the is not to subsidize held, however, Court Supreme required Regan through First Amendment interests status or tax deductions. See tax-exempt (1983) Representation, (upholding statute Taxation With 461 U.S. 540, 546, creating status that restricted tax-deductible contributions to charitable tax-exempt organizations lobbying; government does not involved Amendment require States, Cammarano v. United activity); to subsidize 358 U.S. 498, 512-13 protected (upholding regulations denying deductions for expenses; taxpayers simply being for their activities out of their own required pay constitutionally protected do). engaged as all in similar activities are required pocket, persons the State inter- counterbalancing unconstitutional “unless asserts a compelling that it cannot without differential importance est achieve emphasized raising taxation.” Id. The Court that the State’s interest in revenue, alone, standing could never this satisfy stringent standard taxing because State could raise revenue businesses generally, thereby imposing special avoid burden on First Amendment Id. at interests. 586.

The Court the absence of that the acknowledged evidence on paper use tax and ink was the result of products impermissible or censorial motive part legislature, but nonetheless struck tax down singled because First Amendment interests a compelling government support 580, 586. without interest to it. Id. at The Court also rejected as immaterial the State’s contention that the special was less burdensome than straightforward what a been, would have that holding special treatment threatens First interests “not only with the current differential treatment, but also the possibility subsequent differentially with 588; more burdensome Id. Moffett, treatment.” at see 360 F. at Supp. (under law, case Supreme Court “a tax exercise of First Amendment freedoms is when unconstitutional even there is no proof freedoms”). tax actually restrains exercise of those principles

These were reaffirmed in later cases in which the upheld Court generally applicable taxes that burdened First Leathers, (“the Amendment interests. See State’s extension of its generally applicable sales tax to . . cable services . Amendment”); does not violate the First Jimmy Swaggart Ministries (1990) (collection v. Bd. Equalization, 493 U.S. and pay- ment generally applicable sales and tax on use distribution of Amendment). materials religious Leathers, does not violate First the Court considered the of an constitutionality extension of television, gross cable, Arkansas’s tax to receipts and radio services cases, not the print Reviewing media. its previous the Court noted tax on First Amendment “constitutionally interests is suspect” and thus subject to heightened scrutiny singles when out those interests, targets group small speakers, discriminates on Leathers, basis of content of the taxpayer’s speech. 499 U.S. at 447. In upholding criterion, the statute under the first the one most here, relevant the Court question stated the tax in was one “of services,” general applicability” applied to “a range broad including services, utility telecommunications and personal well as services, services, services such as furnishing repair cleaning *8 (cid:127)384 (cid:127)

services, Thus, that tax did not Id. the Court concluded among others. being burdened. Id. Amendment interest “single out” the First tax, the tax deemed lobby that like The dissent contends services, Leathers, types is on other “imposed one constitutional A.2d 399, 172 Vt. 779 at telecommunications.” at including utility cites Broadcasting the dissent then Turner premise, this Applying 38. Commission, Inc. Communications v. Federal System, (1994), First does Amendment not proposition for the scrutiny among discriminate always regulations demand strict that 172Vt. at single within a medium. See speakers media or different is argument premise with this that is problem A.2d at 38. The merely not a tax that generally applicable tax is wrong. lobby Rather, as ex- speakers. First Amendment between discriminates below, tax is a tax that is aimed fully lobby more plained exclusively completely and is distinct from utility generally applicable expressly applied which 9771(5). services. 32V.S.A. and telecommunication suggestion, unavailing accepted We also find State’s dissent, that that a tax proposition burdening Leathers stands for the only suppresses interests is if it First Amendment unconstitutional Leathers, In viewpoints. principal ideas expression particular generally which the Court focused was whether Arkansas’s upon issue and television gross could be cable applicable receipts magazines. The Court exempting newspapers services while tax would under generally applicable upheld determined that long as it did not discriminate on the basis of these circumstances viewpoint, present danger suppressing particular which would however, did taxes suggest, ideas. Id. at The Court 453. long as do not discriminate based on presumptively they valid as Indeed, the has never a tax viewpoint. Supreme upheld Court interests, irrespective Amendment of whether it singled First particular viewpoints. suppressed law, sum, applicable under Court case generally may may

laws First Amendment interests not be burdening laws out” heightened scrutiny, “single those interests “are least always subject degree heightened to at some Turner, 640-41; City U.S. at Los scrutiny.” see Communications, Inc., Angeles U.S. Preferred (“Where challenge, a law to a First Amendment subjected colorable rationality legislation against the rule of which will sustain other

(cid:127)385 controlling same typically constitutional does not have the challenges force.”).

C. law, we conclude that the Applying plainly this case scrutiny, under cannot heightened pass warrants which Indeed, to conceive of constitutional muster. would be difficult distinct, discrete singling group more out a of First independent *9 lobby speakers. particulars Amendment An examination of the of the that it extension of tax merely tax belies State’s view is an the sales assessing enterprise. the financial transactions of a commercial noted, the tax generated lobby

As revenues from the are submitted deposit for into the fund established in 17 V.S.A public campaign lobbyists, arguably §2856. This suggests represent who of the campaigns, interests contributors to were principal political redirect, effort at in of specifically targeted part, an to least some the available of those neutral for public funds contributors to a fund governor candidates for the offices of and lieutenant We governor. tax, not need delve into the underlying motives behind however. Notwithstanding the assertion that there is no to dissent’s basis it of lobby invalidate tax because is not intended to inhibit freedom activities, and threat speech poses no real see 172 at lobbying Vt. 404, 42, intent is not the sine non 779 qua “legislative A.2d at Star, violation Minneapolis of a of the First Amendment.” at underlying 592. Whatever its purpose, singles a tax out a on the “places heavy interests burden State to its justify action.” Id. at 592-93. is the lobby

That case here. The ex- triggered by any type lobbyist made or of a penditure by an that ulti- employer mately furthers the employer’s efforts to influence or legislative (tax 2 § administrative action. V.S.A. is imposed See 264a on expendi- 261(5) (“Ex- employers § tures and V.S.A lobbyists); loan, advance, penditure” any distribution, means or “payment, deposit gift money contract, or else of anything value and includes promise enforceable, or whether not agreement, legally or make an expendi- ture”; includes expenditure expended also “sums connection research, lobbying, consulting with and other including lobbying §261(9) travel, meals and preparation lodging”); V.S.A. (“Lobby” activities, or means “lobbying” communications with officials, legislators or or administrative solicitation others “for action”). Thus, or not purpose influencing legislative administrative political with triggered expenditures connected the tax only"is being limited to specialized by is even further speech, action or administrative influencing legislative aimed at action, 261(1), for See id. example. and not municipal in particular, action” “Legislative action” and definition “Administrative (limiting legislators). officials and of statewide administrative activities directed short, lobbying profession out singles component action. influencing political statewide toward lobby to the remotely comparable is even other tax Vermont No professional first and lobbying only personal is the Notably, tax. 9741(35) (excludingpersonal V.S.A taxed in Vermont. See 32 service are tangible goods even if service transactions from sales transferred, inconsequential separately as long goods one that lobby singles That fact alone tax as priced). distinguishes lobbyists. and activities of Cf. Brown v. out the communications (Pa. 1993) n.3, Ct. Commonwealth, Commw. 624 A.2d lobbying sales services sold (concluding Pennsylvania’s tax is does not offend First Amendment because retail services, credit including collection secre variety wide services services, services, services, pest employment agency control tarial services, services, and storage lawn care computer programming thus single lobbying services does not treatment). tax far more than a tax on services

But *10 Rather, the tax involving lobbying transactions services. broad-based they of not types reaches all whether or can be lobbyists or of both and their employers, deemed sales services salaries, meals, newsletters, loans, including lodging, gifts, contracts or (or expenditure agreement expenditure) of to make an type other Thus, influencing aimed at or administrative action. legislation the to the notwithstanding contrary, State’s and the dissent’s claims function, distinct, in tax is both form and from a lobby completely the tax. The taxable which a tax is is the upon sales event sales or See Steel Strip Corp. sale of a a service. Thomas product perhaps (Ohio 1991). Limbach, the 114, Generally, 575 N.E.2d 116 seller of from of those goods goods or services collects a sales tax the purchaser or at the time for of the state. purchase services the benefit State (La. Berthelot, Farm Auto. Ins. 732 So. 2d Mut. Co. v. 1999). contrast, for the tax is not a lobby the taxable event sales

transaction, rather of a The tax reporting expenditure. but the taxable

387 is imposed “expenditures” on the of and their at employers the they they time that not at the time are made. reported, Further, at ex least where the makes unreimbursed paid consumer, penditures, the or ultimate of provider, purchaser not the pays City the service the tax.4 Co. v. Apollo See Stereo Music of 1206, 1209(Colo. 1994)(when Aurora, 871 imposed directly P.2d tax is business, it business rather than on customers is more like tax); Orleans, income tax than sales see also Cox Cable v. New City of (La. 1993) (tax 2d So. on cable television services has it by essential characteristics of sales tax because is paid purchaser at purchased, by time service is but be collected seller cannot seller, by assumed and is calculated by percentage purchase price service); Radiofone, Orleans, Inc. v. So. City New 2d (La. 1993)(same respect conclusionwith to tax on telecommunications services). In short, § aspects lobbying 264a taxes certain profession triggered, transaction, and is not by by a sales but of an reporting expenditure lobbying activity. associated with taxable Not surprisingly, tax on is not mentioned lobbying services anywhere dealing tax, though, statutes with the sales even as noted, the sales tax statute all explicitly exempts personal services. See 9741(35). Further, § 32 V.S.A. although necessarily tax lobby results in an additional tax on products that have been already subjected to a specifically sales is not from exempted Vermont’s generally applicable sales Cf. tax.5 32 V.S.A. 9741 (listing sales that tax). are exempt from generally Moreover, applicable only sales trigger payment of the tax unique, but the tax is to the paid Secretary State rather than the Commissioner of Taxes. Compare 264a(b) V.S.A. §§ with 32 V.S.A. 9776. The tax uses special filing forms different requiring types of information and computation from methods what is or required by sales use tax forms. forms, Unlike tax sales copies the special lobby tax forms must be filed with legislative counsel. imposition

Because of the lobby tax on the depends purpose behind the expenditures itself, rather than the nature may transaction times, function like a at other times like an income 4The charged of the fee may ultimately paid by lobbyist’s employer part paying but the is also fee on the to the lobbyist, employer paid lobbyist. salary contends State that there is no need to services because Vermont exempt *11 law does not have a that taxes services. That acknowl statutory provision edgment highlights the State’s untenable on only tax services is position lobbyist generally an extension of the sales tax. merely applicable salaries) is, It (on or a and rooms tax. lobbyist fees or meals tax payroll fact, by core type triggered exclusively of tax completely unique a petition government. the one’s concerning right political speech lobby that tax argument if make a reasonable the Even the State could cannot, not tax, definitely it it most an of the sales which extension type may tax of the that burden applicable sales generally Reed v. constitutional muster. See pass Amendment interests and still (sales (La. 1992) use Orleans, 593 So. 2d City Newof selective, goods, applying taxes to all may general, applying be only commodity). one specific singles evidence that 264a seemingly

In the face of irrefutable tax, the and is from a sales generally applicable distinct (1) the tax similarities to lobby State has some responds (2) tax; of the allegedly unique sales most the features Vermont’s taxes lobby tax are also various other sales present tobacco; remaining the as alcohol and particular goods such such as and when it is col- unique lobby features the how in the of the lected do not result from difference function into the convenience of the tax practical incorporating rather from registration the in the already framework established expenditures. disclosure law reporting First, between arguments persuasive. These differences few relatively tax and the sales tax far outnumber lobby 264a(c)’s State, §as of the adoption similarities noted such by Second, of Title 32. provisions chapter enforcement contained lobby true some of the features of the may atypical while be items such alcohol by particular are shared sales taxes as tobacco, all, most, tax’s lobby no tax contains or even merely importantly, specially distinctive features. More because few atypical lobby taxed share one or two features of the tax does not items is a bur- suggest lobby sales tax generally applicable Star, Rather, Minneapolis U.S. at 583. dening “all businesses.” are not contrary. Generally applicable demonstrates the tax statutes need not fear that a subjected heightened scrutiny because “[w]e destroy a selected burdensome government group taxpayers will of its taxation if it must the same burden on rest impose rationale, lobby tax cannot constituency.” Id. at 585. Given this generally applicable a tax to all Vermonters. possibly be considered Third, incorporation tax into the framework of easily lobbyist registration just and disclosure statute could lobbying, that 264a is a tax on demonstrating unique construed as Indeed, quite apart any generally given from sales tax. applicable *12 objective expenditures ultimately §264a’s of all aimed at taxing a influencing legislation expenditure hiring lobbyist, whether the dinner, inviting renting Statehouse, a to a room near legislator —pens only possible to administer the purchasing ballpoint way is to it onto the tax piggyback disclosure law. The could not be a what is being administered as sales because of taxed. sum, definition,

In by statutory tax is a tax lobby directly on expenditures connected with communications and activities at legislation. aimed The tax is not of a influencing part generally that applies services, sales tax a broad of applicable range to singles lobbying, protected interest, rather out First Amendment fact, treatment. special very trigger for the tax is the reporting of right government associated with the to petition to such, As grievances. scrutiny redress is heightened warranted. Because State no proffers government apart interest from the revenue, raising the tax cannot scrutiny. withstand such

D. The State insists because the any is not directed at particular content-neutral, it is viewpoint, and thus entitled to presumption validity. Colorado, 703, (2000) See Hill v. 530 U.S. 719 (principal inquiry determining neutrality content is whether government regulated has because speech disagreement with (as message Turner, rule, conveyed); 512 U.S. 643 laws are content-based if they favored distinguish speech from disfavored contrast, on speech basis of ideas or views expressed; by are, laws instances, most if they impose content-neutral on speech burdens without reference to ideas or expressed). argument views This is unavailing. Supreme Court has emphasized on several occasions that the

First hostility Amendment’s to content-based is not regulations limited to particular restrictions on viewpoints, but rather extends to “ government restrictions its ‘expression message, because of its ideas, matter, subject added). its (emphasis or its content.’” Co. Comm’n, Consolidated Edison v. Public Serv. 447 U.S. 537 (1980) (quoting Dep’t Police Chicago Mosley, 408 U.S. 95 (1972));see Arkansas Writers’ Inc. v. 481 Project, Ragland, U.S. (1987) (same); Hill, see also (“Regulation 530 U.S. at 723 matter subject messages, not as though obnoxious viewpoint- regulation, based also an is form of objectionable content-based Schuster, New State Crime & Inc. v. York Simon regulation.”); (1991)(statute Bd., about restricting speech Victims U.S. content-based); League Comm’n v. is Fed. Communications crime Voters, 364, 381, 383-84 out (regulation singling Women right them address their denying commercial broadcasters public importance” “controversial issues chosen audience on content-based).6 inconsistency we need resolve perceived

But a may law when law be deemed content-neutral. concerning Court case earlier, singles tax that burdens emphasized As we interests, does, subject heightened §as Amendment 264a First Turner, scrutiny regardless of whether is content-neutral. See (laws 640-41, interests out First Amendment single U.S. at degree to at least always subject heightened “are some those unrelated to scrutiny” “regulations are scrutiny”). intermediate level of speech subjected content of to an conclusion, refusing political Taken to its a tax logical *13 heightened scrutiny to it disfavored speech particular unless view- to tax great would allow the State so that could points impose long to as as effectively destroy right petition government, the one’s all is not the law. viewpoints equally. the burdened That

II. our of the First dispute Because resolution the instant under §264a we not controlling, need address whether Equal the the Fourteenth Amendment. violates Protection Clause of 6 Leathers was cites the the The dissent two cases for that Court in proposition Supreme subject concerned with taxes that discriminate on the basis of rather than viewpoint matter. 172 Vt. at 779 A.2d at 39-40. Those eases involved differential 400-01, See among treatment various media with to a tax and thus are respect exemption, inapposite Publ’g, Inc., Dep’t v. Arizona Revenue Great Western 3 P.3d here. See of Commonwealth, (Ariz. 1999); Magazine Publishers Am. v. 521- Ct. 654 A.2d App. of (Pa. 1995). distinguished As the 22 the commentator cited dissent stated: by on either matter law is content based if its [A] application depends Phrased or another requirement viewpoint way, expressed.

government regulation be neutral of content its means speech subject-matter government ... If must be both neutral and neutral. viewpoint subject-matter to be a law is either a restriction it is deemed viewpoint content based. Speech: Neutrality as Problem Content a Central Freedom E. Chemerinsky, of (2000). Application, in the Problems Court’s 74 L. Rev. S. Cal. III.

Finally, superior asserting the State court erred in argues claims, over jurisdiction plaintiffs’ except plaintiff for those of Home Association, plaintiffs Builders failed to their because those exhaust challenging administrative remedies tax refunds before seeking constitutionality superior court. See 2 V.S.A. 264a(c) § contained in of Title (adopting rights appeal chapter 233 9777(a) 32); § com- (taxpayer may hearing V.S.A. seek before 9781(a)-(b) (if tax); § missioner challenge to assessment of 32 V.S.A. application is made three years within after commissioner payment, shall refund any erroneously, illegally, unconstitutionally collected; person shall not entitled to refund determined be due to § under hearing 9777 “where he has had a or an for a opportunity hearing provided as in that section or has failed avail to himself Stone provided”). remedies therein The State relies principally upon Errecart, 1, 6, (1996), 165Vt. 675 A.2d in which this Court stated: §

We hold that 32 V.S.A. that a requires taxpayer petition for a pursuant refund from the Commissioner to § superior V.S.A. 5884 before going to court. failure the taxpayer to exhaust this remedy administrative deprives superior jurisdiction. court This is so even if the petition the Commissioner futile because the Commis- sioner is not empowered grant requested. the relief that, 5887(a) (“exclusive § We note unlike remedy” taxpayer with respect refund income taxes be the petition “shall for provided refund under section 5884 of this title” appeal and to therefrom provided 5885), § 9781 does not expressly provide hearing under 9777 is the exclusive remedy challenging imposition a tax. But we question need resolve this at this time. parties’ As a result of the agreement, plaintiff Home Builders *14 Association its exhausted administrative remedies and party is a to Thus, this appeal. today our decision is not advisory. There is no reason to address the issue jurisdictional concerning the plaintiffs other unless, until, than Home Builders Association and those plaintiffs actually denied, and are request, paid a refund of taxes any § pursuant to 264a.

Affirmed. Court, of this

Dooley, J., in a 3-to-2 decision Frequently concurring. ultimately and arguments is competing force in both a finds justice narrow relatively or the other on join to one side persuaded dissent, I not partic- is a Like the am This such case. considerations. placed fact that is form of this tax or the by the ularly persuaded to a goes or that the revenue Secretary of State Title and paid a sales tax on probably uphold I would fund. special campaign me persuades whatever its form. What lobbyists, services of personal be called either a challenge fairly involved in this cannot tax is tax, largely and point by majority ignored or made sales use form, invalid. substance, not the tax makes it the dissent. The is law both sale and use. A sale and use tax defines Vermont’s sales rental, both, barter, or or possession exchange “transfer title or consume, otherwise, any conditional or or license to use or lease consideration, or whatsoever for a by any manner means 9701(6). The definition does not § 32 V.S.A agreement therefor.” services, if is tangible personal property even some include sales of 9741(35). process. in the 32 V.S.A Use “the exercise transferred by the any right tangible personal property purchaser over power 9701(13). lobby merely If the substance of the tax thereof.” V.S.A only exception respect for services with removed services, just of the tax as an extension of the State’s characterization if the Similarly, the sales tax would be valid. substance consumption the definition of use to include merely expanded not reach for instances when the sales did compensate services them, would be defensible. again position the State’s

But, description the dissent is in error in its central my judgment, of the tax: nature foremost, the tax on indis- expenditures trans- by taxing functions like a sales sales

putably an Every expendi- commercial transaction involves action. sale, The tax on perspective. ture and a one’s depending sales; only from a tax on there is expenditures no different transaction, generally purchaser pays one it is who the tax. quoted at 37. the dissent states in the

172 Vt. A.2d As or uses. “expenditures,” tax before us is one on sales passage, lobbyists. of both employers It is a course, exchange if by even necessarily produce expenditures, Of *15 barter, or in set statutory described the definition out above. sales, Expenditures necessarily based on however.

The most obvious an of example employer lobbyist directly is when a makes a to a That is taxable gift legislator. clearly a but expenditure, quick is neither a sale a use. A the perusal nor the website of Secretary many State shows that of the taxable an expenditures of of a employer lobbyist are neither sales nor services. For if a example, association, trade lobbyist which a staff and mails a employs members, newsletter to its or legislators adds administrative officials list, mailing to its costs of the to the newsletter attributable discussion of policy issues the or legislative before executive branch a taxable lobbyist employer expenditure even if the is produced newsletter FAQs: solely Lobbying in-house. Lobbying?, What Constitutes Secretary Vermont of State’s Home Page, http://www.sec.state.vt. (last 2001). Indeed, us/pubs/lobby/bbfaql.ktm visited the Apr. of State has that Secretary opined inviting legislators to the view Vermont Yankee Nuclear Power Plant for background infor- mation in any expenses would make connection with trip if taxable Vermont Yankee also a employed lobbyist. Id. at http://umm.sec.state. (last 27,2001).

vt.us/pubs/lobby/bbfaq7.htm visited Apr. out, As the majority points a tax purpose based of an expenditure necessarily all crosses the lines in contained traditional tax categories. For example, services advertising generally remain untaxed, advertising but services to legislation intended influence administrative rulemaking are taxed if employer sold an aof lobbyist. reason, 264a(a)

For this much of the tax base defined in 2 V.S.A will be salaries paid company association staff who as part of their I jobs. that acknowledge employees such circumstances could be said to be selling is, their services for compensation. This however, large a expansion concept sales of services in current The law. result is a tax on payroll employers on that part of payroll attributable to a lobbying, including share presumably salary corporate officers and managers whose jobs necessarily include seeking governmental favorable I action. do not think payroll broad tax can fairly viewed as a sales or use tax. I note

Finally, repetitive taxation same event this tax is unparalleled in our If a lobbyist buys pen sales tax. use lobbying, lobbyist pays a sales tax on the purchase. The then pays lobbyist’s expenditure tax on the same pen purchase. lobbyist then bills the client for the lobbyist’s expenditures, including additional, an lobbyist’s employer pays pen, and the

the cost of double taxation recognize I pen. the cost of same third tax on services, triple taxes once a the sale unavoidable state may be anything well our goes beyond the same purchase taxation of broadly defined. even a tax merely and not short, is a tax on the tax before us capture It will lobbyists, as it is often described. the services of It has no services, a lot more than that. capture but will some sales this majority, As explained by tax scheme. analog in our state *16 the the transcends lines drawn lobbying clearly tax on unique v. & Tribune Co. Minneapolis Court in Star United States Supreme (1983), v. Revenue, and Leathers 460 U.S. 575 Comm’r Minnesota of (1991). Medlock, 499 U.S. 439 Morse, J., sales tax dissenting. today Court invalidates state The of speakers, out a class impermissibly singles the that it ground I Although agree of the First Amendment. lobbyists, violation Govern- “petitioning] lobbyists specializing as profession I do not share protection, are entitled to First Amendment ment” against impermissibly view that the tax discriminates the Court’s core, tax lobbyist-expenditure At its them. U.S. Const. Amend. I. Vermont’s sales as a content-neutral extension of functions tax, respect- First Amendment violation. I and therefore no presents fully dissent. of the decision is its conclusion

The basis Court’s principal lobbyist-employers out and tax lobbyist expenditure singles The upon principles tax treatment. Court relies disparate for Supreme Court decisions in a series United States developed on various challenges to taxes with First Amendment dealing fact, may interpreted of the media. these cases segments constitutionally is lobbyist expenditures that the tax on demonstrate inoffensive. Medlock, 499 U.S. point

The recent decision on is Leathers v. most (1991).There, argued that an Arkansas operators cable television services, while general sales tax to cable extending statute newspapers magazines, for maintaining existing exemptions reviewing After a number of earlier the First Amendment. violated decisions, general principle reaffirmed the Court constitutionally is speakers “differential taxation of First expression particular suppress when threatens to suspect three court then identified high Id. 447. viewpoints.” ideas or may justified this be inferred and law circumstances where threat (1) only by interest: when the tax so compelling governmental (2) treatment; single structured as to out the for press differential when tax targets group a small of First Amendment speakers; upon when based viewpoint speakers. ideas See Applying statute, id. that test to the the Supreme Arkansas Court concluded that was an extension of the generally applicable state’s tax, did impermissibly target not a small group speakers, and was content neutral. Accordingly, the tax not was heightened judicial review.

Leathers, unfortunately, provided practical guidance little or prin cipled through framework which to judge validity taxing of other schemes, here, such regulatory as that presented subsequent law, case while suggestive, has not substantially analysis. advanced the See, e.g., Department Am., Revenue v. Magazine Publishers (Fla. 1992)(on 459, 461-62 So. 2d remand for light reconsideration Leathers, court held that tax on magazines retail sales of secular did not single treatment, for press special unconstitutionally but content); discriminated on basis of Magazine Publishers Am. Commonwealth, (Pa. 1995) (statute 654 A.2d deleting sales and use tax for exemption magazines retaining exemption newspapers prohibited tax); did constitute Cox Cable Roads, (Va. 1991) Hampton Inc. v. City Norfolk, 410 S.E.2d (municipal utility tax cable television service generally was applicable notwithstanding fact that it applied only one *17 company).

More instructive is by far the case on principal which Leathers relied in developing rule, the out” “singling Minneapolis Star & Tribune Co. Revenue, (1983). Minnesota Comm’r 460 U.S. 575 aFor number of of years, Minnesota’s sales and use tax exempted had retail of periodicals. schemes, Like most such use augmented the tax the sales tax eliminating by any tax incentive for Minnesota residents to acquire goods in other states in order to avoid the sales tax. See at 577. In id. 1971,the use component tax was amended to a tax on the impose cost of and paper products Thus, ink consumed in a publication. producing noted, Supreme the Court and in paper “[i]nk used publications the subject became items the tax only to use that were of components goods to be sold at retail.” Id. at 578. In legislature the amended $100,000 the again exempt statute to the first worth of ink and paper publication consumed in by any year. a The calendar result was that state, only publishers eleven the including plaintiff, the a incurred tax liability in 1974. the and ink underlying paper Court invalidated both Supreme

The $100,000in The the first costs. exempt tax the tax as amended and and ink First, paper it noted that the was two-fold. Court’s rationale to certain only publications that applie[d] tax a tax “special was a Although Id. at 581. use by First Amendment.” protected the the eliminating a sales tax complement serves to ordinarily state, of the use tax on paper major purchases to make incentive uses, to all whether “applie[d] no such function. It and ink served in-state, it paper applie[d] ink and and the taxpayer purchased the tax,” items exempt although from the sales exempt items a tax. Id. at 582. tax were not to use from the Minnesota sales tax, which, to observed, “[b]y creating special this use Thus, the Court scheme, Minnesota in the State’s knowledge, parallel our is without Id. differential for treatment.” Such singled press has out the the treatment, concluded, “suggests goal of the Court a expression, such regulation suppression not unrelated Id. 585. unconstitutional.” goal presumptively ink tax violated addition, paper the Court concluded that it only press, out the singles the First Amendment “not because Id. at 591. The targets group newspapers.” it a small also because $100,000 publishers a handful of exemption only was effect held a tax “that singles and the Court so tailored paid potential for abuse press out a few such presents members can the scheme.” Id. at suggested by justify that no interest Minnesota 592. noted, Star Minneapolis the rule in As commentators have Leathers, — cited on expressly which and relied by extension is that the Court will infer censorial Minneapolis Supreme Star where purpose even in absence evidence such purpose, substantially so in form or function from challenged tax differs single state taxes that can be said to out media discrim other Bezanson, See Editorial inatory Agnosticism, treatment. R. Political Freedom, Neutrality Toward the Press: Observa and Government on Star & Tribune Co. v. Minnesota Commis Minneapolis tions 1359, 1369(1987)(“the Revenue, [Minnesota] L. sioner Iowa Rev. different”); Note, its Leathers v. differential because was was form Press, on Changes Taxing Court Course Medlock: (1992)(the “the & Lee Rev. Leathers test looks to Wash. L. censorship). tax” to if it prohibition structure see violates observed, form,” weight one author has placed “The conclusive *18 core of the by ensuring government serves a value First Amendment Bezanson, neutrality press. supra, toward the at 1369-70. Assessed in of these light principles contrary and to this Court’s conclusion tax is lobbying expenditure not so different in form or function from Vermont’s general requires sales foremost, heightened judicial review. First and the tax on lobbying expenditures indisputably tax, functions like a sales by taxing a sales Every transaction. commercial transaction expenditure involves an sale, and depending on one’s The tax on perspective. expenditures is sales; no different transaction, from a tax on there is one only and it is generally purchaser pays § who the tax. See 32V.S.A. 9778.

The Court also asserts that the lobbyist-expenditure tax differs from general sales because it was incorporated into the framework of the registration and disclosure statute. The fact that the Legislature borrowed the terminology provisions and of an existing regulatory requiring scheme disclosure and reporting lobbying “expenditures,” 264, § 2 V.S.A. does not alter the essential form Indeed, Star, tax. unlike the tax in Minneapolis which the Supreme Court noted parallel” scheme, was “without taxing Minnesota’s U.S. at the tax on lobbying expenditures essentially nothing more than an extension of the existing Vermont sales tax to an additional service provider. In this regard, is also noteworthy (five Legislature imposed the identical tax rate percent) on lobbying expenditures as that under the general sales and expressly incorporated into the lobbying tax the general sales tax provisions collection, enforcement, relating penalties, and appeal. (c). 264a(a), § See 2 V.S.A.

The Court identifies other formal distinctions between the sales tax and the tax on lobbying expenditures. examination, Upon however, none appears to significant. For example, the tax on lobbying expenditures is codified in a different statutory provision Yet, from the general sales tax. taxes, same is true of other sales those including applicable vehicles, § motor 32 V.S.A. rooms meals, id. malt beverages spiritous liquors, 7 V.S.A. 421,422, fuel, §§ 3003,3106. §§ V.S.A.

The Court also notes that each of the aforementioned taxes is expressly exempt generally from the state’s applicable sales tax. See 32 V.S.A. however, 9741. This is hardly surprising, since an exemption is necessary prevent items such as fuel or alcoholic from beverages falling within the general sales tax on property sold at retail. The absence of a broad-based sales tax on tax on exemption an such renders

services unnecessary. *19 paid are generally that sales taxes the Court observes Additionally, is Taxes, lobbying expenditures the tax on while Department to the fund. campaign a special for into Secretary deposit of State to the paid taxes numerous other sales as hardly compelling, point the Again, 3106(d) §§3015(7), See, 23 V.S.A. e.g., funds. special into paid Fund and wildlife Cleanup into Petroleum fuel tax paid (portion (sales into paid motor vehicles and use tax on fund); § 8912 32 V.S.A Publishers, 654 A.2d at 524- Magazine Fund); see also Transportation (court singled press sales Pennsylvania claim that rejected tax on from sales because revenues tax treatment special for Assistance Transportation Public were into magazines paid Fund). for payment the forms and schedule notes further that

The Court tax. There is from the sales general tax differ lobbyist-expenditure the state; some, taxes to the the of sales payment no uniform schedule for See, schedules. specific have lobbying expenditures, the tax on like (fuel month); § 9243 on 25th of 32 V.S.A. § 3108 tax due 23 V.S.A e.g., (rooms requirement The monthly quarterly). meals tax due or not uncommon. or service taxed is also product to the specific forms 421(c) (forms sales beverage alcoholic See, reporting for e.g., 7 V.S.A. volume). result may the lobbying-expenditure also notes that

The Court materials, for of office acquisition taxation. in some double purchase, the sales tax subject general upon example, may be subject to taxation. lobbying expenditures component later form a however, lobbyist-expenditure not render the this does Again, Indeed, correctly tax. as the State structurally distinct from sales general sales out, taxation is inevitable when some double points Thus, “telecommunications service” is to a “service.” tax is extended 9771(5), tax, although sales 32 V.S.A. to the Vermont subject such components, a sales tax on the may pay purchase also provider in the service. providing used supplies, as office that, apart on the fact from heavily the Court relies Finally, any tax does not extend to general lobbyist-expenditure 172 Vt. at 779 A.2d at 29. service. “personal professional” other reliance, Legislature That the again, misplaced. once The Court’s personal tax to but not other to extend the sales chose functionally it is does not demonstrate services professional Court Leathers Supreme sales tax. As different from “[¡Inherent observed, power power to tax is the to discriminate Thus, in taxation.” upheld 499 U.S. at 451. Leathers a sales tax on cable services, television the fact that no other notwithstanding segment media, and satellite broadcast including newspapers, magazines, television, There, here, was to the tax at that time. the tax services, was on other imposed types including utility and telecommunications, see id. but the mere fact that it was not any similar media services did not differentiate it in constitutionally significant way.

This point brought was home Court in its subse- decision in quent Turner Inc. v. Broadcasting System, Federal (1994). Commission, There, Communications 512 U.S. 622 rejecting claim that certain regulations applicable only to cable review, television triggered scrutiny strict the Court observed: It conclude, however, would be error to that the First Amendment mandates strict scrutiny any speech thereof) (or regulation that applies to one medium a subset *20 Medlock, but not others. In (1991), Leathers v. 499 U.S. 439 for example, we upheld against First Amendment challenge of a application general state tax to cable television services, though even the print media and scrambled satellite broadcast television services were from exempted taxation. illustrates, As Leathers the fact that a singles law out a medium, certain whole, or even the press as a “is insufficient by itself to raise First Amendment concerns.” Id. at 452.

Id. at 660.

The Court’s holding ultimately that the suggests easy constitutional “fix” is simply conform certain procedural externalities of the lobbyist-expenditure tax to the general sales tax. legal spun The web by the Legislature suitable; was functionally it simply lacked a certain purity design. done, When all is said and what apparently matters is not the Legislature’s straightforward intent to capture additional revenue through a generally tax; applicable lobbyist-expenditure nor the virtual absence of any evidence of a legislative intent to inhibit plaintiffs’ freedom to speak and petition government; nor even the existence of similar sales taxes on other services involving expression, such as form, telecommunications and printing. What matters is appearance, and that vividly this case illustrates plainly is in the eye of the beholder. lobbying the tax implies concurring opinion

The tax on sales general exception a rare constitutes expenditures fact, In Vermont’s rather than services. property tangible personal services, fabricating printing utility applies general V.S.A. See 32 amusements, services. services, and telecommunication lobbyist 9771(2)-(5). suggests also opinion concurring The than sales. may include more expenditures fails because raise, as most hardly dispositive, did not plaintiffs which argument, may transaction sales, any other taxable expenditures char- concurring opinion Although the equivalent. treated as that it “substance,” I am not persuaded in a difference acterizes this as difference form. than a minor more anything represent does not Thus, the tax on review. Because constitutional heightened requiring tax” “special address the two otherwise, trial court failed to concluded whether scrutiny identified Leathers: criteria for strict remaining and whether group speakers, a small targets the tax explained As speaker’s viewpoint. of the discriminates on basis either of these tax does not offend below, the lobbyist-expenditure criteria. additional tax, challenged to the of speakers number focusing Star, than which involvedfewer Minneapolis cited

the Leathers Court Project, and Arkansas Writers’ subject to the newspapers a dozen (1987), invalidated where the Court 481 U.S. Ragland, Inc. v. magazines or three that taxed two a sales tax scheme trade, journals. sports professional all exempted circulation and affected contrast, approximately the tax in Leathers way of By of the concluded that the extension and the Court companies, cable ” 499 U.S. for a few.’ “hardly ‘penalty sales tax resembles Arkansas 592).Here, Star, similarly, (quoting Minneapolis at 448 payments resulted in tax which lobbying expenditures, tax on sixty lobbyists, percent by approximately employers target be said to cannot registered employers, total number of *21 of speakers. small number impermissibly an scrutiny strict lobbying expenditures require the tax on Nor does noted, that a Leathers held discrimination. As “viewpoint” the basis of Amendment “if it review under the First trigger heightened tax will taxpayer speech.” of the content of discriminates on the basis it meant define what specifically 447. Leathers did Although discrimination, and commentators have several courts “content” taxes that discriminate was concerned with concluded that Court

401 on the of not on the basis of matter. viewpoint, basis ideas See, Inc., v. Great Western e.g., Dep’t Publishing, Arizona Revenue of (Ariz. 1999) App. (rejecting argument 3 P.3d Ct. that Leathers broadly prohibited any discriminating among publications on basis content, concluding “[gjenuine of instead that ‘content-based’ discrim ination” “particular viewpoints”);Magazine must be based on ideas or Publishers, (rejecting magazine group’s 654 A.2d at 523 trade claim that newspaper exemption general from sales tax discriminated on basis of “content” merely required because reference to definition newspaper publication “containing as matters of interest events”); (“Justice Note, reports supra, of current at 1062 n.58 O’Connor in expresses censorship Leathers concern about which distinctions.”). Revenue, implies viewpoint But cf. 604 Department of 2d at (invalidating subjected So. 461-62 sales tax scheme that maga zines to sales tax but exempted newspapers ground that statute required tax to evaluate contents of department publication to determine whether it was entitled to exemption). important, distinction is for the Court has defined content- variety

based classifications in a and not ways, always consistently. See E. Content Chemerinsky, Neutrality as a Central Problem of Freedom Problems in Speech: Court’s Application, (2000) S. Cal. L. Rev. (noting distinction between “viewpoint- standard, neutral” prohibits regulations which that discriminate on basis of “the of the ideology message,” “subject-matter-neutral” requirement, which prohibits laws “based on the topic speech”); Stone, G. Speech Restrictions Because its Content: The Peculiar (1978) Subject-Matter Restrictions, Case 81, 83-84 46 U. Chi. L. Rev. (providing general background on content-based classifications and review). discussion of standards content Subject-matter restrictions See, have been upheld Freeman, some contexts. e.g., Burson v. (1992) U.S. restriction (upholding on campaigning activity near polling places); Lehman v. Shaker City Heights, 418 U.S. (upholding ordinance prohibiting political advertise buses, advertisements). ments on while permitting commercial View point invalidated, restrictions are invariably they “the pose inherent risk that the Government seeks not legitimate regulatory to advance a goal, but to suppress unpopular Turner, ideas or information.” U.S. at 641. O’Connor,

Justice Leathers, for the writing majority repeatedly the Court’s concern expressed with taxes that discriminate on the of the targeted basis speaker’s ideas views. That concern was *22 as follows: throughout opinion, variety ways in a expressed is constitu- speakers taxation of First “[D]ifferential expression suppress' when it threatens tionally suspect 447; tax on a small 499 U.S. at “a viewpoints,” ideas or particular only range a limited affecting runs the risk speakers number of 448; penalty that resembles views,”id. at is not a structure “[t]his 449. thus agree ideas.” Id. at We particular or particular speakers has concluded as one author those authorities who have with on viewpoint-based Leathers Court. . . focused written that “[t]he form, distinctions of discrimination instead of and idea-based Note, at 1080. subject-matter.” supra, or even frequency, in emphasis Court’s gone It has not unnoticed marked a subtle but nonetheless viewpoint Leathers on discrimination decisions,notably Ragland, in earlier departure language distinct from it certain exempted had invalidated a sales tax because which 481 U.S. at Ragland, on their matter. See periodicals based in Leathers, however, the Court “underwent a shift ... 229. In viewpoint Amendment as more concerned with viewing Note, supra, and less with mere content distinction.” censorship viewpoint particularly 1060 n.49. This discrimination is emphasis There, in in subsequent noticeable in the Court’s decision Turner. operators television to FCC rejecting challenge by cable stations, the Court they carry local broadcast requirements observed: “principal inquiry determining

We have said that the ... whether the has. neutrality government content adopted regulation speech [agreement or] because . . disagreement message conveys.”. with rule, distinguish As a laws that their terms of the' speech speech favored from disfavored basis contrast, are content ... expressed By ideas or views based. speech laws that confer or burdens on impose benefits expressed without reference to the ideas or views are most instances content neutral.

Turner, 512 Racism, Against U.S. at 642-43 Ward v. Rock (quoting (1989)). understood, is content- lobbying expenditures

Thus the tax on the tax meaning Although applies neutral within the of Leathers. i.e., for the particular subject, lobbying related to a action, or administrative see V.S.A. purpose influencing legislative 261(9)(A), on the of the viewpoint draws no distinctions basis As the court in Brown ideas to which such activities are directed. observed, Pennsylvania’s extension of the sales tax to upholding services, to all who sell their lobbyists’ applies “[t]he services at retail without to the ideas or the content of the regard by any lobbyist.” advanced Brown v. Common- speech particular (Pa. 1993); wealth, 624 A.2d 797-98 Commw. Ct. see also Kimbell 80, 82, (observing 164 Vt. 665 A.2d Hooper, censor nothing “attempts particular disclosure act view”). messages points sum, meet lobbying expenditures the tax on does not

criteria identified Court as of the requiring application most of constitutional Absent such consti- demanding scrutiny. level concerns, lobbyist tutional turns on whether the question solely expenditure rationally legitimate governmental tax is related to a 540, purpose. See v. Taxation With 461 U.S. Regan Representation, (1983). 549-51 assuredly

Most the state’s in the tax on purpose enacting lobbying was to raise revenue to fund partially the Vermont §264a(d); §2856. fund. See 2 campaign Raising V.S.A. 17 V.S.A. revenue is a if not indeed the legitimate, principal, purpose of tax Street, 260, 267, legislation. See In re One Church 152Vt. Property of 1349, 1352(1989); States, 565 A.2d Quarty see also v. United 170 F.3d 961, (9th 1999)(“There Cir. can be no dispute purpose raising government revenue is a legitimate legislative purpose.”); Blue (Utah 1989) (in State, Cross & Blue Shield v. 779 P.2d upholding claim, tax on insurer against equal protection court ob served that first and predominant purpose premium “[t]he of the income tax is to raise revenue . . . legitimate purpose.”). This is a accomplishing purpose, Legislature generally this free to tax some and not groups long others so as the classification rests upon 278, 311 reasonable basis. See General Corp. Tracy, Motors 519 U.S. (1997) (in taxation, field, more than other legislatures possess classification); freedom greatest Regan, 461 U.S. at 547 (“Legislatures especially creating have broad latitude classifications statutes.”); Street, and distinctions One Church 152 Vt. at (in upholding higher 565 A.2d for taxes on provision nonresidential than residential Court noted that property property, Vermont Constitution does not “forbid classifications of reasonable property purposes”). presumptively Such statutes are constitutional, party and the burden rests the tax upon challenging is invalid. See id. at A.2d demonstrate that the classification

at 1354. lobbying expenditures

The trial court here concluded that discriminating organizations between equal protection by violated without money lobbying and those who persons spend enjoys nevertheless broad incurring expenditures. Legislature and distinctions in tax statutes. creating discretion in classifications Thus, it was within the Legislature’s See 461 U.S. at 547. Regan, transaction for tax a commercial prerogative distinguish purposes — related to activities from non- expenditure lobbying of funds activity. commercial impermissibly

The trial court also concluded that the statute taxed expend who funds to employers the class of others, action, while legislative omitting influence or administrative funds for similar magazines, expend such as who newspapers however, the was not unreasonable. The Again, classification purposes. choosing state has latitude in to tax different trades and broad Bowers, (1959), see Allied Stores v. professions, scheme, here, not uncon- presented and a tax such as does discriminate it discriminates on the basis of stitutionally “unless Leathers, earlier, ideas.” 499 U.S. at 450. As noted the tax is content neutral, regardless to all applying lobbying expenditures viewpoint expressed represented. —Here as in Leathers has chosen to include a Legislature class within the tax. As was particular speakers also Leathers, ever “[n]othing suggested true about that choice has an *24 censoring interest in activities” of those to the expressive Indeed, tax. Id. at 453. in the record demonstrates that the five nothing real threat percent poses any express implied activities or freedom of such plaintiffs’ lobbying expression. Absent concerns, there is no to invalidate the tax. I would constitutional basis reverse.

I Judge joins am authorized to Cheever this dissent. say