In the 1945 case of Prudential Insurance Co. v. Benjamin, Insurance Commissioner, the U.S. Supreme Court upheld a South Carolina law that required out-of-state insurance companies to pay a license fee and taxes not imposed on in-state insurers. The court ruled that this did not violate the Commerce Clause of the Constitution which gives Congress power over interstate commerce because insurance was not considered "commerce" under federal law at that time. Furthermore, it held that states have broad powers to regulate businesses within their borders including those from other states as long as they do not discriminate against them or impose undue burdens on interstate commerce.

In the dissenting opinion for Prudential Insurance Co. v. Benjamin, Justice Robert H. Jackson argued that the majority's decision to uphold a South Carolina law imposing taxes on out-of-state insurance companies was unconstitutional and violated the Commerce Clause of the U.S Constitution. He contended that this ruling would allow states to discriminate against interstate commerce by taxing it more heavily than local businesses, which could lead to economic protectionism and hinder free trade among states. Furthermore, he expressed concern about potential retaliation from other states in response to such discriminatory practices, potentially leading to an "economic war" between them. Lastly, Justice Jackson disagreed with the majority's interpretation of Section 2(b) of Federal McCarran Act as granting permission for state taxation schemes like South Carolina’s; instead he believed Congress intended only limited regulation not including taxation powers over foreign corporations.