In the 1914 case of Adams Express Company v. Commonwealth of Kentucky, the U.S. Supreme Court ruled in favor of Kentucky, upholding its right to tax interstate commerce companies operating within its borders. The Adams Express Company had challenged a state law that imposed an annual franchise tax on foreign corporations doing business in Kentucky based on their gross receipts from both intrastate and interstate operations. The company argued this was unconstitutional as it interfered with interstate commerce and violated the Fourteenth Amendment's due process clause by taxing property outside the state's jurisdiction. However, Justice Oliver Wendell Holmes Jr., writing for a unanimous court, rejected these arguments stating that while states cannot directly regulate or burden interstate commerce they can indirectly affect it through legitimate exercises of their taxing powers so long as those taxes are not discriminatory or protective.

In the dissenting opinion for Adams Express Company v. Commonwealth of Kentucky, Justice Holmes argued that the majority's decision was inconsistent with previous rulings on similar cases and could potentially lead to unjust outcomes. He contended that a corporation should not be taxed by a state in which it does not have its principal place of business or derive substantial income from operations within that state. According to him, this would amount to double taxation as corporations are already taxed in their home states where they generate most of their revenue. Furthermore, he pointed out inconsistencies between this ruling and other decisions made by the court regarding interstate commerce regulation and taxation principles. In his view, such inconsistency undermines legal certainty and predictability while also violating fundamental fairness principles inherent in tax law.