The U.S. Supreme Court case Bowers v. New York & Albany Lighterage Company in 1926 revolved around the issue of taxation and its relation to interstate commerce. The New York & Albany Lighterage Company, a corporation engaged in lighterage business within the port of New York, was assessed for federal income tax by Mr. Bowers, who acted both individually and as collector of internal revenue for the second district of New York State. The company contested this assessment on grounds that it violated their constitutional rights under Article I Section 8 Clause 3 (the Commerce Clause) which prohibits states from taxing interstate commerce activities without congressional approval. The Supreme Court ruled against the company stating that although they were involved in interstate commerce, not all their earnings were derived from such activities; some came from intrastate operations too which could be taxed by state authorities without violating any constitutional provisions or requiring Congressional consent. This decision clarified that while businesses involved in both intra- and inter-state trade are protected under Commerce Clause when it comes to taxation on their inter-state transactions, they aren't exempted entirely from paying taxes on profits earned through intrastate operations.

In the dissenting opinion for Bowers v. New York & Albany Lighterage Company, Justice Oliver Wendell Holmes Jr. argued that the tax imposed by New York on vessels using its ports was not unconstitutional as it did not interfere with interstate commerce or violate any other constitutional provision. He contended that states have a right to impose taxes for services provided and benefits received, such as maintaining harbors and providing security, which are essential for commercial activities of these vessels. The fact that some ships may be engaged in interstate commerce does not exempt them from paying their fair share of costs incurred by the state in facilitating their operations. Thus, he disagreed with the majority's view that this tax constituted an undue burden on interstate commerce.