The U.S. Supreme Court case Equitable Life Assurance Society of the United States v. Commonwealth of Pennsylvania in 1914 revolved around a dispute over taxation. The Equitable Life Assurance Society, an insurance company incorporated in New York, challenged the state of Pennsylvania's right to tax premiums on policies held by Pennsylvanians but paid for outside the state. The court ruled that while states have broad powers to levy taxes within their borders, they cannot impose taxes on transactions conducted entirely out-of-state even if those transactions involve residents of their own state. Therefore, it was decided that Pennsylvania had no constitutional authority to tax premiums paid directly to Equitable’s home office in New York by policyholders residing in Pennsylvania.

In the dissenting opinion for Equitable Life Assurance Society of the United States v. Commonwealth of Pennsylvania, Justice Holmes disagreed with the majority's ruling that a tax imposed by Pennsylvania on foreign corporations was unconstitutional. He argued that there is no constitutional principle preventing a state from taxing an out-of-state corporation more heavily than its own domestic corporations, as long as it does not discriminate against interstate commerce or violate any other specific provision in the Constitution. In his view, states have broad powers to regulate their internal affairs and should be allowed to favor local businesses if they choose to do so. Furthermore, he contended that this case did not involve discrimination against interstate commerce because insurance companies are not engaged in such commerce; instead, they merely enter into contracts within individual states.