In the 1938 case of Baldwin et al., Trustees, v. Scott County Milling Co., the U.S. Supreme Court was tasked with determining whether a state could impose a tax on flour and meal that had been produced within its borders but destined for out-of-state sale without violating the Commerce Clause of the Constitution. The court ruled in favor of Scott County Milling Co., stating that such taxation would indeed infringe upon interstate commerce rights as protected by federal law. The decision clarified that while states have some power to regulate local aspects of interstate commerce, they cannot use this authority to place direct burdens on it - including through taxation.

In the dissenting opinion for Baldwin et al., Trustees, v. Scott County Milling Co., Justice Black disagreed with the majority's ruling that a state could not tax intangible property held by trustees in another state. He argued that this interpretation of the Constitution was too broad and would lead to an unfair distribution of tax burdens. He believed that states should have more power to levy taxes on their residents' income, regardless of where it is generated or stored. Furthermore, he contended that if a resident benefits from services provided by his home state such as police protection or public education, then it is only fair for him to contribute towards these costs through taxation - even if some portion of his wealth lies outside the state borders.