In the case of Keith v. Johnson, 1925, the Supreme Court was asked to determine whether a state could tax an inheritance that included federal bonds. The court ruled in favor of Johnson, holding that states cannot impose taxes on federal obligations such as government bonds. This decision reinforced the supremacy clause of the U.S Constitution which establishes federal law as "the supreme law of the land." The ruling also emphasized that any attempt by a state to levy taxes on these types of assets would interfere with governmental functions and thus violate constitutional principles. Therefore, it set a precedent for future cases involving similar issues about taxation and jurisdiction between state and federal governments.

In the dissenting opinion for Keith v. Johnson, it was argued that the majority's decision to uphold a tax on an estate based on its value at the time of death rather than when probate proceedings were completed contradicted previous court rulings and legal principles. The dissenting justices believed that this interpretation unfairly penalized estates which had decreased in value during probate due to no fault of their own, such as through market fluctuations or other uncontrollable circumstances. They also expressed concern about potential inconsistencies and complications arising from taxing estates at different stages depending on state law variations regarding when property officially transfers ownership after death. Furthermore, they disagreed with the majority's view that Congress intended for this type of taxation under existing laws.