In the case of Nielsen, Administrator v. Johnson, Treasurer (1928), the U.S Supreme Court was tasked with deciding on a dispute regarding inheritance tax laws in Utah. The appellant argued that certain provisions of the state's law were unconstitutional as they violated both due process and equal protection clauses by taxing non-resident decedents more heavily than resident decedents for property located within Utah. However, the court ruled against this argument stating that there is no constitutional prohibition preventing states from imposing higher taxes on non-residents compared to residents. It further clarified that such differentiation does not violate either due process or equal protection rights under Fourteenth Amendment because it is based on differences in circumstances and conditions between residents and nonresidents rather than arbitrary discrimination.

In the dissenting opinion for Nielsen v. Johnson, it was argued that the majority's decision to uphold a tax on federal securities held by state banks contradicted previous rulings and violated constitutional principles. The dissent emphasized that such taxation would interfere with federal operations and potentially undermine national authority over its own instruments of credit. It also highlighted concerns about unequal treatment between state and national banks, as only the former were subject to this tax under Minnesota law. Furthermore, it contended that exempting these securities from taxation did not equate to granting special privileges or benefits but rather aimed at preserving government functions from potential interference by states' taxing powers.