In the case of Bromley v. McCaughn, Collector of Internal Revenue in 1929, the Supreme Court was tasked with determining whether a federal tax on gifts could be considered constitutional. The plaintiff argued that this gift tax violated Article I, Section 9 of the Constitution which prohibits any direct taxes unless they are apportioned among states according to their populations. However, the court ruled in favor of McCaughn and upheld the constitutionality of such a tax by distinguishing between 'gifts' and 'income'. They reasoned that while income is generated from capital or labor (which can be directly taxed), gifts are voluntary transfers not created through these means and therefore do not fall under direct taxation rules. Hence it does not require apportionment among states based on population as per Article I, Section 9 clause.

In the dissenting opinion for Bromley v. McCaughn, it was argued that the majority's decision to uphold a tax on gifts as constitutional went against previous interpretations of the Constitution and its taxation clauses. The dissenting justices believed that this ruling expanded Congress' power to levy taxes beyond what was intended by the framers of the Constitution. They contended that if every transfer of property could be taxed, then there would be no limit to federal taxing powers, which they saw as a dangerous precedent. Furthermore, they disagreed with categorizing gift-giving as an activity or privilege subject to excise taxes because it is not typically considered a business transaction or use of government-provided privileges but rather an act done out of generosity and goodwill.