Cite as: 528 U. S. 458 (2000)
Opinion of the Court
pense into account. Apparently California now believes that, if the tin can manufacturer had $100,000 interest expense related to its tin can business, and another $50,000 interest expense related to the New Zealand sheep farm (say, money borrowed to buy shares in the farm), then California's statute would count a total interest expense of $150,000, all of which California would permit it to deduct from its unitary tin can business income if, for example, it had no nonunitary New Zealand sheep farm income in that particular year. This matter, arguably irrelevant to the tax years here in question (Hunt-Wesson reported no nonunitary interest expense), is also irrelevant to our legal result. Therefore, we need not consider this particular dispute further.
The question before us then is reasonably straightforward: Does the Constitution permit California to carve out an exception to its interest expense deduction, which it measures by the amount of nonunitary dividend and interest income that the nondomiciliary corporation has received? Petitioner, Hunt-Wesson, Inc., is successor in interest to a nondomiciliary corporation. That corporation incurred interest expense during the years at issue. California disallowed the deduction for that expense insofar as the corporation had received relevant nonunitary dividend and interest income. Hunt-Wesson challenged the constitutional validity of the disallowance. The California Court of Appeal found it constitutional, No. A079969 (Dec. 11, 1998), App. 54; see also Pacific Tel. & Tel. Co. v. Franchise Tax Bd., 7 Cal. 3d 544, 498 P. 2d 1030 (1972) (upholding statute), and the California Supreme Court denied review, App. 67. We granted certiorari to consider the question.
II
Relevant precedent makes clear that California's rule violates the Due Process and Commerce Clauses of the Federal Constitution. In Container Corp. of America v. Franchise Tax Bd., 463 U. S. 159 (1983), this Court wrote that the "Due
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