In the 1944 case Ford Motor Co. v. Department of Treasury of Indiana et al., the U.S Supreme Court ruled in favor of the State, upholding its right to tax a foreign corporation for doing business within its borders. The dispute arose when Ford Motor Company, incorporated in Delaware and Michigan but operating factories in Indiana, contested an additional franchise tax imposed by Indiana's Department of Treasury on grounds that it violated both due process and interstate commerce clauses under federal law. However, the court held that since Ford had established local manufacturing operations (a "domestic" presence), it was subject to state taxation laws just like any other resident company - thereby not violating due process rights or interfering with interstate commerce regulations as claimed by Ford.

In the dissenting opinion of Ford Motor Co. v. Department of Treasury of Indiana, Justice Murphy argued that the majority's decision to uphold Indiana's gross income tax as applied to Ford's manufacturing and selling activities within the state was incorrect. He contended that this application violated both due process and interstate commerce clauses by taxing value produced outside its jurisdictional boundaries. The justice believed that a significant portion of the taxed value resulted from out-of-state operations such as design, engineering, testing, purchasing materials etc., which were not subject to Indiana’s authority or benefitting from its services or protections in any way; thus it was unfair for them to be included in taxable gross receipts derived from sales made within Indiana borders. Furthermore, he warned about potential harmful effects on national economy if every state adopted similar taxation methods without considering where actual production took place.