In the case of Moorman Manufacturing Co. v. Bair, Director of Revenue of Iowa (1977), the U.S Supreme Court ruled that a state could tax a corporation based on its sales within the state, even if it operates in multiple states and has no physical presence in the taxing state. The court held that this did not violate either Due Process or Commerce Clause principles as long as there was some minimal connection between interstate activities and the taxing State, and a rational relationship between income attributed to State and intrastate values of enterprise. In other words, so long as an out-of-state company derives benefits from economic activity within a given state - such as selling goods or services - it can be required to pay taxes on those earnings.

In the dissenting opinion for Moorman Manufacturing Co. v. Bair, Justice Powell expressed concern over the majority's decision to uphold Iowa's single-factor sales formula as a method of apportioning income tax among states where a corporation does business. He argued that this approach could lead to multiple taxation and potentially violate the Due Process Clause or Commerce Clause of the Constitution by unfairly burdening interstate commerce. Furthermore, he contended that it was inconsistent with previous Court decisions which had required an apportionment formula to reflect a more accurate measure of corporate activity within a state in order not to distort true values attributable to each jurisdiction involved in multi-state operations.