In the 1946 case Atlantic Coast Line Railroad Co. v. Phillips, State Revenue Commissioner, the United States Supreme Court ruled in favor of Atlantic Coast Line Railroad Company (ACL). The issue at hand was whether Georgia's tax on ACL’s income from interstate commerce violated the Commerce Clause of the U.S. Constitution by subjecting it to multiple taxation and thus burdening interstate commerce. The court held that since Georgia only taxed a proportionate share of net income derived from within its borders, there was no risk of multiple taxation or undue burden on interstate commerce as claimed by ACL. Therefore, this state-imposed tax did not violate the Commerce Clause because it did not discriminate against or unduly burden interstate businesses.

In the dissenting opinion for Atlantic Coast Line Railroad Co. v. Phillips, it was argued that the majority's decision to uphold Georgia's tax on railroad companies' gross receipts from interstate commerce violated the Commerce Clause of the U.S. Constitution by imposing a direct and discriminatory burden on interstate commerce. The dissenting justices contended that this tax differed significantly from property taxes or income taxes as it directly targeted revenue generated through interstate activity, thereby interfering with free trade among states and infringing upon federal authority over such matters. They also disagreed with the majority’s view that similar taxes imposed by other states justified Georgia’s actions, arguing instead that these instances represented further violations of constitutional principles rather than legitimate precedents.