In the case of American Security and Trust Company v. Commissioners of the District of Columbia, 1911, the Supreme Court was asked to determine whether a tax imposed by Washington D.C.'s commissioners on dividends received from stocks owned in corporations outside of D.C. was constitutional. The plaintiff argued that this tax violated both their due process rights under the Fifth Amendment and also infringed upon Congress's exclusive power over interstate commerce as outlined in Article I Section 8 Clause 3 (the Commerce Clause) of the Constitution. The court ruled against American Security and Trust Company, upholding the constitutionality of such a tax. They reasoned that since these dividends were income for residents within D.C., they could be taxed without violating either due process or interfering with interstate commerce regulation. This decision confirmed local governments' authority to levy taxes on income derived from out-of-state sources.

In the dissenting opinion for American Security and Trust Company v. Commissioners of the District of Columbia, Justice Holmes argued that there was no constitutional violation in taxing a corporation's shares at their full market value, even if it resulted in double taxation. He contended that while this might seem unfair to some shareholders who also had to pay personal property taxes on those same shares, such perceived inequity did not make it unconstitutional. The justice further stated that any remedy should come from legislation rather than judicial intervention. In his view, the Constitution does not guarantee protection against all forms of economic disadvantage or hardship; instead, its purpose is to secure political rights and individual liberties.