Xerox Corp.manufactured parts for copy machines in the U.S.that were shipped to Mexico for assembly.The copiers were designed to be sold to Latin America and did not operate on U.S.electric current.The copiers after assembly were kept in U.S.customs warehouses pending sale to Latin America.These goods were free of import duty by federal law.The city of Houston,Texas,assessed these copiers with a local property tax.Xerox sued to have this tax declared unconstitutional.The court decided:
I.That Xerox must pay all this tax because state/local governments have taxing powers just like the U.S.
II.That Xerox must pay only one-half since state/local governments are one-half partners with the federal government.
III.That this law is preempted by federal law.

Question

Quizplus · Accepted Answer

The court held that the local property tax imposed by the city of Houston was preempted by federal law, as the copy machines were shipped to Mexico for assembly and were intended for sale in Latin America. The goods were already exempt from import duty under federal law, and allowing the local property tax would result in a duplicative tax burden. Therefore, choice III only is the correct answer. Choices I and II are incorrect as they do not align with the court's decision.