The state of California imposed an ad valorem property tax on cargo containers owned by Japanese companies and temporarily located in California ports. The containers were used exclusively for transporting goods in international commerce. They were based, registered, and subjected to property taxes in Japan. The containers spent, on average, only three weeks a year in California. Japan Lines contended that the tax was invalid because it subjected the containers to multiple taxation in Japan and the United States. The California Supreme Court upheld the statute and the ship owners appealed.
1. What rule does the Court espouse for the state taxation of cargo containers and other instrumentalities of foreign commerce?
2. How does this case affect taxation by foreign countries?
3. What effect would multiple taxation have on international commerce?