The U.S. Supreme Court case F.S. Royster Guano Company v. Commonwealth of Virginia in 1919 revolved around a dispute over taxation laws and the Equal Protection Clause of the Fourteenth Amendment. The F.S Royster Guano Company, an out-of-state corporation operating in Virginia, challenged its tax assessment by arguing that it was being taxed at a higher rate than other similar businesses within the state, thereby violating their right to equal protection under law as provided by the Constitution. The court ruled in favor of Royster Guano Co., stating that there was indeed discrimination against interstate commerce since local corporations were given preferential treatment through lower tax rates compared to those imposed on foreign corporations for doing identical business operations within Virginia's jurisdiction.

In the dissenting opinion for F.S. Royster Guano Company v. Commonwealth of Virginia, Justice Holmes disagreed with the majority's decision that Virginia's income tax law was unconstitutional due to its discriminatory nature against foreign corporations. He argued that there is no constitutional principle mandating uniformity in taxation and states have wide discretion in determining their own tax policies based on local needs and conditions. Furthermore, he contended that it is not inherently unjust or unreasonable for a state to impose higher taxes on out-of-state businesses which may not contribute as much to the local economy or community compared to domestic ones. Therefore, he believed that such differential treatment does not necessarily violate equal protection clause of Fourteenth Amendment unless it can be proven beyond reasonable doubt that there is absolutely no rational basis for such discrimination.