In the case of Dodge v. Osborn, Commissioner of Internal Revenue in 1915, the Supreme Court was tasked with determining whether a federal income tax on dividends received from stock held in foreign corporations was constitutional. The plaintiff argued that such a tax violated their Fifth Amendment rights by depriving them of property without due process and also infringed upon Congress's power to regulate commerce with foreign nations. However, the court ruled against this argument stating that an income tax is not direct but rather excise or duty which can be imposed without apportionment among states as required for direct taxes under Article I Section 9 Clause 4 of U.S Constitution. Furthermore, it stated that taxation does not interfere with Congress's power to regulate commerce because it doesn't prevent transactions but merely takes part in its proceeds when converted into general wealth i.e., income.

In the dissenting opinion for Dodge v. Osborn, it was argued that the majority's interpretation of tax law was incorrect. The dissenting justices believed that a corporation should not be taxed on dividends received from another corporation in which it owns stock because these dividends are merely distributions of profits already taxed at the corporate level. They contended that taxing them again as income to the recipient corporation constitutes double taxation and is unjust. Furthermore, they disagreed with the majority's view that such dividends increase a company’s net worth or capital value; instead, they saw this as simply shifting assets from one pocket to another within an economic family without creating any new wealth or profit subject to taxation.