The U.S. Supreme Court case Arkansas v. Schlierholz in 1900 revolved around the issue of taxation and interstate commerce. The state of Arkansas imposed a tax on freight carried by railroads within its borders, including goods transported from other states but not yet delivered to their final destination. A railroad company agent named Schlierholz refused to pay this tax, arguing that it violated the Interstate Commerce Clause of the Constitution which prohibits states from interfering with trade between states. The Supreme Court ruled in favor of Schlierholz, stating that while states have power to tax businesses operating within their boundaries for revenue purposes, they cannot impose taxes that directly burden interstate commerce or discriminate against it in favor of local business activities. Therefore, the court held that Arkansas' imposition was unconstitutional as it placed a direct burden on interstate commerce.

In the dissenting opinion for Arkansas v. Schlierholz, it was argued that the state of Arkansas did not have jurisdiction over a crime committed on federal land within its borders. The argument centered around whether or not states had authority to enforce their laws and prosecute crimes on lands purchased by the United States government for public purposes, such as post offices or courthouses. The dissenting justices believed that when a state cedes land to the federal government, it also surrenders its legal jurisdiction over those lands unless explicitly retained in some form of agreement between both parties. They maintained that since no such agreement existed in this case, only federal law should apply and therefore any prosecution should be carried out by federal authorities rather than state ones.