Recent Cases: Taxation — Constitutional Law — Ad Valorem Personal Property Tax On Flight Equipment Used in Interstate Commerce

Plaintiff airline, incorporated in Delaware, with its executive offices in Texas, and its home port in Minnesota, brought action for a declaratory judgment to test the validity of a Nebraska statute authorizing the imposition of an ad valorem personal property tax on flight equipment used in interstate commerce. The tax in question was not based on the full value of the equipment but on the percentage of flight equipment used in Nebraska. Plaintiff contended that taxation of its equipment by Nebraska in any amount was prohibited by the Commerce Clause of the Federal Constitution. Held: Nebraska has the power to impose this tax upon flight equipment engaged in interstate commerce temporarily in Nebraska, so long as such equipment has remained wholly and continuously outside the state of incorporation. This case is the first appellate court decision upon the precise issue of the power of a state to impose a proportionate ad valoram personal property tax upon aircraft moving in interstate commerce. However, the particular form of taxation has been practiced in the United States for some time, the rationale being derived by analogy to decisions of the United States Supreme Court in regard to inland waterways and railroads