In the case County of Mahnomen v. United States (1942), the U.S. Supreme Court ruled in favor of the federal government, upholding its right to purchase land for Native American tribes without being subject to state and local taxation. The dispute began when Minnesota's Mahnomen County attempted to impose taxes on a plot of land that had been purchased by the U.S. Secretary of Interior as part of a program aimed at increasing tribal lands for impoverished Chippewa Indians living off reservations. The county argued that since title was held by individual tribe members rather than collectively by a recognized tribe, it should be taxable property under state law. The court disagreed with this argument, stating that Congress intended these purchases to benefit tribes generally and not just specific individuals within them; thus they were exempt from taxation under federal law which supersedes state laws according to Supremacy Clause in Constitution.

In the dissenting opinion for County of Mahnomen v. United States, Justice Frank Murphy argued that the majority's decision was a departure from established principles of Indian law and policy. He contended that Congress had not intended to subject Indian lands to state taxation when it passed legislation allowing Indians to lease their lands. Instead, he believed this legislation aimed at promoting self-sufficiency among tribes by enabling them to generate income from their resources without losing control over those resources or having them diminished by state taxes. Furthermore, he pointed out inconsistencies in the Court's interpretation of similar statutes relating to other tribes and suggested that such discrepancies undermined legal certainty and fairness for all parties involved in disputes over tribal land rights and taxation issues.