AD VELOREM PROPERTY TAXES
Taxes based on a percentage of the assessed value of the property in question. Generally valid. However, a commerce clause issue arises when the property taxed moves in interstate commerce. Goods in transit are totally exempt from taxation. Once the goods come to a halt in a state (obtaining a taxable situs), they may be taxed. Then the issue usually revolves around whether the tax imposes an undue cumulative burden.
Goods are in transit, and thus exempt, when (1) delivered to an interstate carrier, or (2) the cargo actually starts its interstate journey. Goods merely being prepared for transit are not in the course of interstate commerce.
Breaks in the continuity of transit will not destroy the interstate character of the shipment, uness the break was intended to end or suspend the shipment.
The interstate shipment usually ends when it reaches its destination, and thereafter the goods are subject to local tax.
The validity of ad valorem property taxes on instrumentalities of commerce depends on (1) whether the instrumentality has acquired a taxable situs in the taxing state, and (2) since the physical situs of the instrumentalities may change from state to state during the year, whether the value of the instrumentality has been properly apportioned according to the amount of contacts with each taxing state. The taxable situs is required by the DP clause to establish the state's power to tax at all, and apportionment is required by the commerce clause to prevent an intolerable burden on interstate commerce.
An instrumentality has a taxable situs in a state if it receives benefits or protection from the state.