In the case of Michigan v. Michigan Trust Co., Receiver, 1931, the U.S Supreme Court was tasked with determining whether a state could impose an income tax on a foreign corporation for dividends received from domestic corporations doing business within that state. The court held that such taxation did not violate due process or equal protection clauses of the Fourteenth Amendment and therefore was constitutional. The decision emphasized that states have broad powers to levy taxes as long as they do not discriminate against interstate commerce or infringe upon federal jurisdiction. This ruling upheld Michigan's right to tax out-of-state entities receiving income from sources within its borders.

In the dissenting opinion for Michigan v. Michigan Trust Co., Receiver, Justice Stone argued that the majority's decision was inconsistent with previous rulings and principles of federalism. He contended that a state should not be allowed to impose its own tax laws on federally chartered corporations operating within its borders without explicit congressional approval. In his view, allowing states such power would undermine national uniformity in corporate taxation and potentially subject these entities to multiple, conflicting tax obligations across different jurisdictions. Furthermore, he disagreed with the majority's interpretation of relevant statutes as granting implicit permission for such state taxation; instead, he believed Congress had intended to reserve this authority exclusively for itself. Therefore, Justice Stone concluded that Michigan’s attempt to levy taxes against a federally chartered corporation exceeded its constitutional powers and infringed upon those reserved by Congress under federal law.