In Graves v. United States (1893), the U.S Supreme Court ruled on a case involving the interpretation of tax laws. The plaintiff, Graves, was an employee of New York state who had been taxed by federal authorities on his salary. He argued that this taxation violated principles of intergovernmental tax immunity and sought to recover these funds from the federal government. However, in its decision, the court upheld his taxation as constitutional under Article I Section 8 Clause 1 of the Constitution which grants Congress power to lay and collect taxes without limitation or restriction. The court reasoned that salaries paid by a state are not different from other forms of income for purposes of federal income taxation; thus they can be subjected to such taxes without violating any principle prohibiting direct interference with functions performed by states within their respective spheres. This ruling clarified that employees working for state governments were not exempted from paying federal income tax based on their employment status alone.

In the dissenting opinion for Graves v. United States, Justice Brewer argued that the majority's decision to uphold a tax on federal judges' salaries was unconstitutional. He contended that this taxation violated Article III of the Constitution, which protects judicial independence by guaranteeing life tenure and non-diminishing compensation for federal judges. According to him, allowing Congress to impose taxes on these salaries would undermine judicial independence as it could use its taxing power punitively against judges whose decisions it disagreed with or wanted to influence. Furthermore, he believed that such taxation constituted an improper diminution of judicial compensation because it reduced the net value of their salary package after they had been appointed and confirmed in office under certain terms and conditions including financial ones.