In the case of McGoldrick v. Gulf Oil Corp., 1939, the U.S. Supreme Court ruled in favor of New York City's Comptroller, Joseph D. McGoldrick, upholding a city tax on sales made by oil companies within city limits even if delivery was outside those boundaries. The defendant, Gulf Oil Corporation argued that such taxation violated the Commerce Clause of the Constitution as it imposed an undue burden on interstate commerce and infringed upon federal jurisdiction over foreign commerce since some deliveries were to ships engaged in international trade or travel between states. The court disagreed with this argument stating that while taxes could not be levied directly on interstate or foreign commerce without congressional approval, they could be applied indirectly through a nondiscriminatory local tax like New York City’s sales tax which did not discriminate against out-of-state interests nor obstruct Congress' control over international and interstate trade. This decision reinforced state rights to levy taxes for revenue purposes provided they do not interfere with federal powers or violate constitutional provisions.

In the dissenting opinion for McGoldrick v. Gulf Oil Corp., Justice McReynolds disagreed with the majority's decision that New York City could impose a tax on oil imported from foreign countries and then sold within city limits. He argued that this was an unconstitutional interference with federal power over foreign commerce, as it imposed a direct burden upon such commerce. According to him, the fact that the oil had been stored in tanks before being sold did not change its character as imports nor remove them from protection under federal law against state taxation. The justice insisted that only Congress has authority to regulate or control importation of goods into United States territory and any attempt by states or municipalities to interfere is invalid.