Hey Washington State: Make It A 40% Tax Break For Journalism, Not For Newspapers

The newspaper bailout has arrived, or so the headlines are going in the wake of Washington State granting a 40% tax break to newspapers. That got me thinking — why just newspapers? If the intent was to promote journalism, shouldn’t any outlet that publishes journalism have gotten the break?

In particular, the Seattle Post-Intelligencer stopped printing in March. The Seattle PI still does newspaper journalism, only without an actual printed newspaper. It still has trained reporters that do all the journalism that some in the newspaper industry are worried will disappear, if newspapers die. It just doesn’t print on paper.

The reward for the Seattle PI for going into that bold new world? No 40% tax break for them.

Despite newspapers losing revenues, I believe offline still generates far more revenue for them than online sales. So what’s the logic in rewarding print papers but not helping online publications that are struggling more to build revenues?

Consider it another way. Imagine if when the telephone started becoming popular, telegraph operators were concerned that their method of delivery was going away. To save the telegraph, they got a 40% tax break.

That makes no sense. You’re not trying to save the communication medium — you’re trying to save the messages. You don’t care whether the messages gets out through dots-and-dashes on a telegraph or by voice through a telephone. You just care that messages still can get through in the most efficient, most desired manner.

Tax breaks for journalistic enterprises — online or offline — I’ll buy that to help support an important industry. Tax breaks because you print on dead trees? Not buying that one.

By the way, my assumption is that online publications do not get this break. I diligently went looking, but there hasn’t been any indepth coverage that I can see. I found:

  • WA Gov approves newspaper tax break at Politico which mentions “stories” at the Huffington Post and the Drudge Report, though actually these were simply links to stories elsewhere (HuffPo went with Business Insider; Drudge with the Seattle Times, both stories below).
  • Obnoxious Newspaper Bailout Begins at Business Insider is the story that the Huffington Post linked to, which links to a Seattle Times story about the bill, noting that it was a tiny seven-line item apparently buried in the local news section.
  • Washington State Bails Out Media: Newspapers Get Tax Cut is from Newsbusters and points at the same Seattle Times story.
  • Wash. gov OKs tax cut for newspapers is the aforementioned Seattle Times story, which is indeed tiny and boils down to this key sentence: “The new law gives newspaper printers and publishers a 40 percent cut in the state’s main business tax.”
  • Washington papers paid dearly for tax cut from Reflections Of A Newsosaur notes an estimate that the break will save papers $8 million through 2015, enough for 15 “fully loaded” reporting jobs — assuming the money is spent on that. It could be used for whatever the papers want.

Looking further, I found a copy (PDF) of the law via its legislative history page. As best I can tell, this is the main change to existing laws that reduce the tax rate to papers:

Upon every person engaging within this state in the business of printing a newspaper, publishing a newspaper, or both, the amount of  tax on such business is equal to the gross income of the business multiplied by the rate of 0.2904 percent.

But what is a newspaper? Is publishing a newspaper online covered? As far as I can tell, there’s no definition of this provided. It might be provided in other laws that are referenced, however. Oddly, other industries ARE definited within the bill, such as this:

As used in this section, “periodical or magazine” means a printed publication, other than a newspaper, issued regularly at stated intervals at least once every three months, including any supplement or special edition of the publication.

So who knows. Maybe the Seattle PI can argue that it does publish a newspaper and is entitled to the break. Perhaps some Washington State blog that publish news content could argue the same.