In the 1898 case of First National Bank of Louisville v. Louisville, the U.S Supreme Court ruled in favor of First National Bank. The city of Louisville had imposed a tax on all shares held by shareholders in national banks located within its jurisdiction, which was challenged by the bank as unconstitutional. The court found that while states have no power to directly tax federal agencies or instrumentalities such as national banks, they can impose taxes indirectly through shareholders' interests in these entities without violating constitutional principles. Therefore, it upheld Kentucky's law allowing cities to levy taxes on shares held by individuals in national banking associations based within their limits.

In the dissenting opinion for the First National Bank of Louisville v. Louisville case, it was argued that a national bank should not be exempt from local taxation simply because it is a federal institution. The dissenters believed that this exemption would give an unfair advantage to national banks over state and local banks, which are subject to these taxes. They also contended that such an exemption could potentially undermine the financial stability of local governments by depriving them of much-needed tax revenue. Furthermore, they disagreed with the majority's interpretation of federal law regarding this issue, arguing instead that Congress intended for national banks to be treated similarly to other corporations in terms of taxation at the state level.