In the case of Mobil Oil Corp. v. Commissioner of Taxes of Vermont, 1979, the U.S Supreme Court ruled that a state could include income from an out-of-state subsidiary in its tax base if it was unitary with the parent company's business within the state. The court held that there must be some connection between a corporation's activities within and outside a taxing jurisdiction to justify taxation by that jurisdiction on intercorporate dividends received from another jurisdiction. In this case, Mobil Oil Corporation had argued against Vermont’s inclusion of dividends it received from foreign subsidiaries in its taxable income under Vermont’s corporate income tax scheme as unconstitutional under both Due Process Clause and Commerce Clause grounds. However, the court upheld Vermont’s method for calculating corporate taxes owed by multistate businesses like Mobil.

In the dissenting opinion for Mobil Oil Corp. v. Commissioner of Taxes of Vermont, Justice William Rehnquist disagreed with the majority's decision that a state could tax a corporation based on its worldwide income rather than just its in-state earnings. He argued that this ruling violated the Due Process Clause and Commerce Clause of the U.S Constitution by allowing states to impose taxes beyond their jurisdictional boundaries. Furthermore, he contended that it would lead to multiple taxation burdens on corporations as they could be taxed by every state where they operate based on their total global income. This, according to him, was unfair and unconstitutional as it exposed businesses to excessive taxation risks without offering them any benefits or protections in return.