In the 1890 case of Pullman's Palace Car Company v. Pennsylvania, the U.S. Supreme Court ruled on a dispute involving state taxation and interstate commerce. The Pullman's Palace Car Company, an Illinois-based company that manufactured luxury railway cars, was taxed by the state of Pennsylvania for doing business within its borders. The company argued this tax violated their constitutional rights under the Commerce Clause which prohibits states from taxing interstate commerce activities without Congressional approval. The court disagreed with Pullman’s argument and upheld Pennsylvania’s right to impose such taxes on businesses operating within its jurisdiction even if they were based in another state or engaged in interstate trade. It reasoned that while direct regulation of interstate commerce is indeed reserved for Congress under the Constitution, indirect effects like those resulting from a non-discriminatory tax imposed by a State are permissible as long as they do not create undue burdens on such trade. This ruling set an important precedent allowing states to levy taxes on out-of-state companies conducting business within their boundaries so long as it does not interfere directly with interstate commerce.

In the dissenting opinion for Pullman's Palace Car Company v. Pennsylvania, Justice Bradley argued that the tax imposed by Pennsylvania was not a regulation of interstate commerce but rather an excise tax on personal property located within the state. He contended that states have always had authority to impose such taxes and that this power should not be limited simply because some aspects of a company's operations involve interstate commerce. Furthermore, he asserted that if every instance where goods cross state lines were deemed as part of interstate commerce and thus exempt from taxation by individual states, it would severely limit their ability to raise revenue and could potentially lead to economic chaos. Therefore, in his view, only direct regulations or burdens on interstate trade should be considered violations of the Commerce Clause.