In the case of Bank of California, National Association v. Roberts, Treasurer of the State of California (1918), the U.S Supreme Court was tasked with determining whether a state could tax a national bank's shares held by non-residents while exempting those owned by residents. The Bank argued that this practice violated both federal law and the Equal Protection Clause in Fourteenth Amendment to Constitution. However, after reviewing previous cases and legislation on taxation policies for banks at both state and national levels, including Hepburn v. School Directors (1870) which upheld similar discriminatory taxation practices against out-of-state shareholders in Pennsylvania-based corporations, as well as subsequent amendments to banking laws allowing states more freedom to tax national banks' shares under certain conditions - provided they did not discriminate against such institutions compared with their own - it ruled in favor of California’s treasurer Roberts. The court concluded that there was no violation since all shareholders were taxed equally within their respective classes i.e., resident or non-resident.

In the dissenting opinion for Bank of California, National Association v. Roberts, it was argued that the majority's decision to uphold a tax on federal banks imposed by the state of California violated principles of federalism and threatened national banking institutions' ability to operate effectively. The dissent contended that this ruling allowed states to potentially undermine federally chartered institutions through taxation policies, which could disrupt their operations and compromise their stability. They also pointed out inconsistencies in how different types of banks were being taxed under California law, with national banks facing higher rates than other financial entities. This discrepancy was seen as an unfair burden placed specifically on nationally-chartered banks operating within the state’s borders.