In the case of Lipke v. Lederer, the Supreme Court ruled on a dispute involving taxation and prohibition laws. The plaintiff, Lipke, was a liquor dealer who had paid taxes on his inventory before Prohibition went into effect but was later assessed additional taxes by Lederer, Collector of Internal Revenue for Pennsylvania's First District. The court held that imposing an additional tax after Prohibition took effect constituted double jeopardy under the Fifth Amendment and violated due process rights protected by the Fourteenth Amendment because it effectively punished Lipke twice for possessing alcohol: once through criminal penalties under Prohibition laws and again through taxation. This ruling clarified that while Congress has broad powers to levy taxes as it sees fit, this power is not unlimited and must respect constitutional protections against double jeopardy.

In the dissenting opinion for Lipke v. Lederer, Justice McReynolds disagreed with the majority's decision to uphold a prohibition-era tax on liquor dealers. He argued that this was not truly a tax but rather an attempt by Congress to regulate and prohibit activities under its taxing power, which he believed was unconstitutional. He maintained that if Congress could use its taxing authority in such a way, it would essentially have unlimited power over individual rights and state laws - something he felt went against the principles of federalism upon which the United States is founded. Furthermore, Justice McReynolds contended that there were no real guidelines or standards provided for determining who should be taxed as a dealer in illegal liquors; thus making it arbitrary and capricious enforcement of law possible.