In the 1905 case of Gardner v. Michigan, the U.S. Supreme Court ruled in favor of the state of Michigan, upholding its right to tax corporations based on their capital stock value rather than solely on property value. The plaintiff, a shareholder in a corporation that had been taxed by Michigan under this method, argued that it was unconstitutional as it resulted in double taxation since much of the corporation's capital stock consisted of real estate and personal property already subject to taxation. However, Justice Brewer delivered an opinion for a unanimous court stating that while there may be instances where such taxes could become oppressive or unequal and thus violate constitutional principles against arbitrary seizure or deprivation of property without due process law; no such violation occurred here because these taxes were not unreasonable nor discriminatory towards any particular class.

In the dissenting opinion for Gardner v. Michigan, 1905, it was argued that the state of Michigan had overstepped its authority by imposing a tax on an out-of-state corporation's total capital stock without considering where their business activities were conducted. The dissenting justices believed this to be in violation of due process under the Fourteenth Amendment as it did not fairly apportion taxation based on where income was earned. They contended that while states have broad powers to levy taxes, they must do so within constitutional limits and respect interstate commerce protections. This view held that corporations should only be taxed proportionally based on their operations within a particular state rather than being subjected to taxation on all capital regardless of location or source.