TAXATION - COMPENSATING USE TAX - THEORY - BURDEN ON INTERSTATE COMMERCE

The California Use Tax Act of 1935 imposes an excise tax on the storage or use of personal property purchased in other states and brought into California. Plaintiff railroad bought materials and supplies in other states and stored them in California before installation on its interstate railroad system, and the tax was assessed on them. Held, the tax is unconstitutional as applied to such property as a direct burden on interstate commerce. Where the property was purchased for the sole purpose of being reserve equipment in an interstate commerce plant it is employed in interstate commerce from the time of its purchase.

Southern Pacific Co. v. Corbett, (D. C. Cal. 1937) 20 F. Supp. 940.