The First National Bank of San Jose v. State of California case in 1922 revolved around the issue of whether a state could tax national banks on their shares, and if so, how this taxation should be calculated. The Supreme Court ruled that states have the right to impose taxes on national bank shares as long as they are not taxed at a higher rate than other moneyed capital within the state. However, it was also determined that when calculating these taxes, only net assets (i.e., total assets minus liabilities) can be considered; any surplus or undivided profits cannot be included in this calculation. This ruling clarified how states could levy taxes against national banks and set important precedents for future cases involving similar issues.

In the dissenting opinion for the case of First National Bank of San Jose v. State of California, Justice McReynolds argued that the majority's decision to uphold a tax on national banks in California was inconsistent with previous rulings and federal law. He contended that such taxes were prohibited by Section 5219 of the Revised Statutes, which aimed to protect national banks from discriminatory state taxation. According to him, this statute should be interpreted as prohibiting any form of direct tax on these institutions by states where they are located. Furthermore, he pointed out that prior Supreme Court decisions had upheld this interpretation and prevented states from imposing similar taxes on national banks within their borders. Therefore, he believed it was incorrect for the court to suddenly change its stance without sufficient justification or explanation.