In the 1984 case Metropolitan Life Insurance Co. et al. v. Ward et al., the U.S Supreme Court ruled that Alabama's tax statute, which imposed a higher premium tax rate on out-of-state insurance companies than in-state ones, violated the Equal Protection Clause of the Fourteenth Amendment. The court held that promoting domestic business by burdening out-of-state competitors was not a legitimate state purpose and thus did not justify discrimination against non-resident taxpayers under equal protection principles. This decision affirmed that states cannot use their taxing power to favor local businesses over interstate commerce, as it contravenes constitutional protections for equality and fair competition.

In the dissenting opinion for Metropolitan Life Insurance Co. v. Ward, Justice Thurgood Marshall argued that Alabama's tax statute was not discriminatory and did not violate the Equal Protection Clause of the Fourteenth Amendment as it treated all insurance companies equally within their respective classes (domestic vs foreign). He contended that a state has a legitimate interest in promoting domestic business and thus can constitutionally favor local over out-of-state businesses if there is no protectionist intent behind such legislation. Furthermore, he asserted that this case should have been evaluated under rational basis review rather than strict scrutiny because economic legislation does not involve fundamental rights or suspect classifications. Under this standard, he believed Alabama’s law would be upheld as constitutional since it could reasonably be seen to promote fiscal health of local industry and increase competition by offsetting advantages enjoyed by large out-of-state insurers.