Fisher's Blend Station, Inc. v. State Tax Commission
Headline: State tax on radio broadcasters struck down as an unconstitutional burden on broadcasts reaching listeners across state lines, preventing Washington from taxing nationwide radio income.
Holding: The Court held that broadcasting from Washington stations that reaches listeners in other states is commerce across state lines, and a state occupation tax measured on gross receipts from that business is barred as unconstitutional.
- Prevents Washington from taxing gross receipts of nationwide radio broadcasts.
- Protects broadcasters from state taxes on income from out‑of‑state listeners.
Summary
Background
A company that runs two radio stations in Washington sued the State Tax Commission to stop a state occupation tax measured by the stations’ gross receipts. One station was licensed to cover a large multi‑state region and the other as a clear‑channel station able to reach across the nation, nearby sea areas, and parts of Canada. The company sells advertising time, operates the transmitters, and generates the electromagnetic waves that carry the programs to listeners in other states.
Reasoning
The central question was whether the taxed business was interstate activity and therefore off limits to this type of state tax. The Court agreed that broadcasting, when it transmits programs to listeners in other states, is commerce across state lines. It emphasized that the broadcaster—not the advertiser—generates and controls the radio emanations that reach distant listeners, making the service like telegraph or telephone transmission. Because the tax was levied on gross receipts from the company’s entire broadcasting business and the income could not be shown to be allocable to only local activity, the tax placed an unconstitutional burden on interstate commerce.
Real world impact
The Court reversed the state high court and barred Washington from collecting this gross‑receipts tax as applied to the interstate broadcasting business. The decision protects radio companies from state taxes measured on nationwide broadcasting receipts unless the taxed income can be clearly allocated to purely local activity. The case was sent back for further proceedings consistent with this ruling.
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