David Takes On Goliath p.9

By: M.L. Stein 6,000-circulation newspaper fighting an attempt by
State of California to tax its comics and political cartoons sp.

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 "unreported comic strips purchased without tax subject to use tax."
The publisher, who is appealing the levy, said he has made several calls to newspapers 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 newspapers, 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 now?"
He also pointed out that since the law exempts manuscripts from taxation, the exemption should include 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 which, 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 and publishers and all major syndicates, warning that the BOE auditors have told him that "they intend 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."
There could come a day, he observed, when writers would be required to apply for a state license and to charge a sales tax each time their work was sold.
Creators distributes political cartoonists such as Herblock, Mike Luckovich and Doug Marlette and comics such as "Miss Peach," "Speed Bump" and "The Wizard of Id."
The Yreka paper also got support from state Sen. K. Maurice Johannessen, who ridiculed BOE efforts to tax the funny papers.
"All I can figure is that the Board of Equalization thinks Californians laugh too much," he quipped. Or, he continued, the state "must be in far worse shape than we'd even imagined, if this is what the tax collector has to do to fill the coffers."
In a more serious vein, he commented: "How can the board retroactively apply a regulation that has never existed in the history of publishing? . . . To blindside taxpayers like this constitutes tyranny."
The state tax will get its first test when Mavrides' appeal will be presented at an open hearing in Sacramento on Dec. 12.
"If Mavrides wins, newspapers win," Newcombe predicted.
Newton, who said CNPA will act as an amicus curiae in the appeal, agreed.
But even if Mavrides loses, Newcombe said, the issue will eventually become moot, as all comics and cartoons will be transmitted to newspapers electronically, thus providing no tangible "art work."
?(The State of California wants the Siskiyou Daily News to pay tax on these comics. A state newspaper sales tax was enacted in 1991, but the use tax imposed on the Daily News' comic strip and cartoons stems from an obscure 1939 state tax art objects used for commerial purposes.) [Photo & Caption]
?("I'm not even opposing this on First Amenment grounds, but from a common sense point of view. I don't have to pay a tax on Ann Lander or any other column, but I do for 'Peanuts' or 'For Better or For Worse.' Does that make sense?") [Caption]
?(Dale Anderson, publisher, Siskiyou Daily New) [Photo & Caption]