In the 1933 case of A. Magnano Co. v. Hamilton, Attorney General of Washington, et al., the Supreme Court upheld a Washington state law that imposed a tax on wholesale butter and oleomargarine dealers but exempted those who sold only butter from paying this tax. The plaintiff, A. Magnano Company - an oleomargarine dealer - argued that this law violated their Fourteenth Amendment rights to equal protection under the law because it discriminated against them in favor of butter sellers. The court disagreed with the plaintiff's argument and ruled in favor of Washington State by upholding its right to impose such taxes as part of its police power (the inherent power of a government to exercise reasonable control over persons and property within its jurisdiction). The justices reasoned that states have broad discretion when creating classifications for taxation purposes so long as they are not arbitrary or capricious. Furthermore, they found no evidence suggesting any discriminatory intent behind this legislation; instead, it was enacted due to health concerns related to margarine consumption at that time period which justified differential treatment between these two types of products.

In the dissenting opinion for A. Magnano Co. v. Hamilton, it was argued that Washington state's tax on wholesale butter sales violated the Commerce Clause of the U.S Constitution by placing an undue burden on interstate commerce. The dissenting justices believed that this tax unfairly targeted out-of-state businesses and had a discriminatory effect against them in favor of local businesses, which is contrary to the principles embodied in the Commerce Clause designed to prevent states from enacting protectionist measures against other states' economic interests. They contended that while states have broad powers to levy taxes, they should not be allowed to use these powers as a means of economic discrimination or protectionism against other states.