In the 1917 case of Locomobile Company of America v. Commonwealth of Massachusetts, the U.S Supreme Court upheld a Massachusetts law that required out-of-state corporations to pay an annual fee for selling their products within state borders. The Locomobile Company, based in Connecticut, argued that this law violated the Commerce Clause and Fourteenth Amendment by unfairly burdening interstate commerce and denying equal protection under the laws. However, the court ruled against them stating that states have a right to impose reasonable regulations on foreign corporations doing business within their jurisdiction as long as they do not discriminate or unduly burden interstate commerce. This decision affirmed states' rights to regulate commercial activity within their borders while also recognizing federal authority over interstate commerce.

In the dissenting opinion for Locomobile Company of America v. Commonwealth of Massachusetts, Justice Oliver Wendell Holmes Jr. argued that the state's power to tax should not be limited by a company's interstate commerce activities. He contended that if a corporation is created and operates within a state, it owes its existence and protection to that state, thus making it liable for taxation regardless of whether its business crosses state lines or not. The justice believed this principle applied even when the taxed property was used in interstate commerce as long as there was no discrimination against such commerce or direct burden imposed on it by the tax itself. In his view, limiting states' taxing powers based on corporations' involvement in interstate trade would create an unjust privilege for these entities at the expense of local businesses and taxpayers.