In the case of State of New York, ex rel. Interborough Rapid Transit Company v. Sohmer, Comptroller of the State of New York (1914), the U.S Supreme Court ruled in favor of Sohmer, upholding a tax imposed by New York on foreign corporations for capital stock employed within its borders. The Interborough Rapid Transit Company argued that this taxation was unconstitutional as it violated both due process and equal protection clauses under the Fourteenth Amendment since domestic corporations were not similarly taxed. However, the court held that states have broad powers to levy taxes and found no constitutional violation in taxing foreign corporations differently from domestic ones if justified by differences between them related to public interest or policy considerations.

In the dissenting opinion for the case of State of New York, ex rel. Interborough Rapid Transit Company v. Sohmer, Justice Holmes argued that a tax imposed on a corporation should be based on its property value and not its franchise rights or privileges granted by the state. He believed that it was unjust to levy taxes against corporations based on their potential earnings from such franchises because these were speculative and could fluctuate greatly year-to-year. Furthermore, he contended that this method of taxation violated the Fourteenth Amendment's Equal Protection Clause as it unfairly targeted certain businesses over others without any rational basis for doing so.