In the case of Cammarano et ux. v. United States, the Supreme Court ruled that taxpayers could not deduct expenses incurred in opposing state legislation as business expenses under section 162(a) of the Internal Revenue Code. The petitioners were owners and operators of retail liquor businesses who had contributed to an organization formed to oppose a proposed initiative measure in Washington State which would have permitted government competition in their industry through establishment of public liquor stores. They sought to deduct these contributions as ordinary and necessary business expenses on their federal income tax returns but were denied by the Commissioner of Internal Revenue, leading them to take legal action against him for recovery of alleged overpayments resulting from this denial. In its decision, the court held that allowing such deductions would be tantamount to providing a subsidy for lobbying activities contrary to established public policy against diverting tax revenues towards influencing legislation.

In the dissenting opinion for Cammarano v. United States, Justice Douglas argued that the majority's decision was a violation of First Amendment rights. He contended that by disallowing businesses to deduct lobbying expenses from their taxes, the government was effectively limiting their ability to petition and influence legislation - an act protected under free speech laws. In his view, this ruling would disproportionately affect smaller businesses who may not have as much disposable income to spend on lobbying efforts compared to larger corporations or interest groups. Furthermore, he believed it could potentially discourage political participation and engagement in legislative processes among business entities due to financial constraints imposed by this tax policy.