In the case of North Carolina v. Rice in 1971, the U.S Supreme Court ruled that a state cannot tax federal obligations. The issue arose when North Carolina imposed an inheritance tax on federally-backed bonds owned by a deceased resident's estate. The executor of the estate, Rice, argued that this taxation was unconstitutional as it violated the Supremacy Clause of the Constitution which establishes federal law as supreme over state law. The court agreed with Rice and held that states could not impose taxes on these types of federal securities because doing so would interfere with governmental functions and fiscal operations at a national level.

In the dissenting opinion for North Carolina v. Rice, 1971, it was argued that the majority's decision to uphold a state law requiring non-residents to pay higher court fees than residents violated the Privileges and Immunities Clause of Article IV of the Constitution. The dissenting justices believed that this clause should protect citizens' right to access courts on equal terms in all states, regardless of their residency status. They also expressed concern about potential discrimination against out-of-state litigants if such laws were allowed to stand. Furthermore, they disagreed with the majority's view that differential treatment could be justified by additional administrative costs associated with non-resident litigants or by a desire to discourage frivolous lawsuits from outsiders; instead, they felt these reasons did not provide sufficient justification for violating constitutional equality rights.