In the 1902 case of Jacobi v. Alabama, the U.S. Supreme Court ruled in favor of the state of Alabama against a claim made by Charles Jacobi, an agent for a New York-based company selling liquor in Montgomery, Alabama. The court upheld an Alabama law that required out-of-state businesses to pay license fees and taxes if they maintained sales offices within the state's borders even if their products were manufactured elsewhere. Jacobi argued this was unconstitutional as it violated interstate commerce laws but his argument was rejected by both lower courts and eventually by the Supreme Court too. The ruling affirmed states' rights to regulate business activities within their boundaries and set important precedents regarding taxation powers over interstate commerce.

In the dissenting opinion for Jacobi v. Alabama, the justice argued that the state of Alabama did not have a right to tax out-of-state corporations at a higher rate than in-state ones. The justice believed this was an infringement on interstate commerce and violated constitutional principles of equal protection under law. They contended that such discriminatory taxation could potentially lead to economic retaliation between states, creating unnecessary conflict and undermining national unity. Furthermore, they asserted that it is fundamentally unfair for one group (in this case, foreign corporations) to bear a disproportionate burden of taxation simply because they are less able to defend their interests politically within the taxing jurisdiction.