In the 1981 case F. W. Woolworth Co. v. Taxation and Revenue Department of New Mexico, the U.S Supreme Court ruled in favor of the state's taxation department, upholding a tax law that was challenged by F.W Woolworth Company for violating the Commerce Clause and Equal Protection Clause of US Constitution. The company argued that it was being unfairly taxed because its out-of-state subsidiaries were included in its taxable income calculation under New Mexico’s corporate franchise tax formula while other corporations with only intrastate operations were not subjected to such calculations. The court held that there was no discrimination against interstate commerce as all corporations operating within New Mexico were subject to same formula regardless if they had interstate or intrastate business activities; thus, it did not violate Commerce clause. Furthermore, regarding violation of Equal Protection clause claim, court stated this classification scheme served legitimate state interest i.e., ensuring fair share contribution from businesses benefiting from services provided by State which justified any minor disparities between different types of corporations.

In the dissenting opinion for F. W. Woolworth Co. v. Taxation and Revenue Department of New Mexico, Justice Powell argued that the majority's decision violated principles of interstate commerce by allowing a state to tax income earned outside its borders based on in-state activities unrelated to that income generation process. He contended that this ruling could potentially lead to multiple taxation burdens on corporations operating across different states, which would be detrimental for national economic unity and efficiency - key considerations underpinning Commerce Clause jurisprudence. Furthermore, he expressed concern over the lack of clear guidelines provided by the majority regarding when such extraterritorial taxation would be permissible or impermissible, foreseeing potential arbitrariness and unpredictability in future applications of this precedent.