In the case of Pennsylvania v. New Jersey in 1975, the U.S Supreme Court was asked to resolve a dispute between several states over income tax laws. The controversy arose when Pennsylvania and other states imposed an income tax on nonresidents' incomes earned within their borders while allowing residents who worked out-of-state to claim a credit for taxes paid elsewhere. This led to double taxation for some taxpayers living in neighboring states like New Jersey and Connecticut, which also taxed all residents' incomes regardless of where it was earned. These aggrieved states sued under the original jurisdiction of the Supreme Court, arguing that this system violated both federal statutory law and constitutional principles such as equal protection or due process rights. The court ruled against them by a vote of 6-3, holding that there were no violations because each state's laws applied equally to its own citizens - everyone had to pay tax on their worldwide income - so there was no discrimination based on residency status per se; rather any differential treatment resulted from how different jurisdictions chose independently (and legitimately) to exercise their respective taxing powers.

In the dissenting opinion for Pennsylvania v. New Jersey, 1975, Justice William O. Douglas argued that the case should not have been dismissed on original jurisdiction grounds. He contended that this was a dispute between states over income tax laws and thus fell under the Supreme Court's purview as outlined in Article III of the Constitution. The majority ruled to dismiss because they believed it was an issue better suited for Congress to resolve; however, Douglas disagreed with this interpretation and felt it abdicated their constitutional responsibility to adjudicate disputes between states directly affecting citizens' rights and obligations under differing state laws.