In the 1939 case McCarroll, Commissioner of Revenues of Arkansas v. Dixie Greyhound Lines, Inc., the Supreme Court ruled in favor of Dixie Greyhound Lines. The issue at hand was whether or not Arkansas could impose a tax on the use and consumption of property that had been purchased outside its borders but brought into and used within its territory by an interstate carrier for hire. The court held that such taxation did not violate either due process or commerce clause protections as long as it was fairly apportioned to reflect intrastate values and activities. This decision upheld states' rights to levy taxes on out-of-state purchases if those goods were subsequently used within their jurisdiction.

In the dissenting opinion for McCarroll, Commissioner of Revenues of Arkansas v. Dixie Greyhound Lines, Inc., Justice Black argued that the majority's decision to strike down an Arkansas tax on interstate buses was inconsistent with previous rulings and undermined state sovereignty. He contended that states should have the right to levy taxes on businesses operating within their borders as long as those taxes do not discriminate against interstate commerce or create undue burdens. In this case, he believed that Arkansas' tax did neither; it was a flat fee applied equally to all bus companies using public highways in the state. Furthermore, he pointed out that similar fees had been upheld by courts in other cases involving railroads and airlines. Therefore, he saw no reason why buses should be treated differently.