In the case of Roger L. Spencer, et ux. v. South Carolina Tax Commission et al., 1984, the United States Supreme Court was asked to consider whether a state tax on federal retirement benefits violated the doctrine of intergovernmental tax immunity or discriminated against federal retirees in violation of equal protection principles under the Fourteenth Amendment. The Spencers were retired federal employees who challenged South Carolina's policy of taxing their pensions while exempting those received by state and local government retirees from taxation. The court ruled that this differential treatment did not violate either principle as long as there was a significant difference between the two classes (federal versus state/local) that justified different treatments for purposes of taxation; it found such differences existed here due to differing conditions and terms associated with each type of employment. However, later cases would overturn this decision, establishing that states could not discriminate against federal pensioners in their tax policies.

In the dissenting opinion for Roger L. Spencer, et ux. v. South Carolina Tax Commission et al., 1984, it was argued that the majority's decision to uphold a tax on federal retirement benefits while exempting state and local government retirees from this same tax was fundamentally unfair and discriminatory against federal retirees. The dissenters believed that such an exemption violated principles of intergovernmental immunity by favoring state employees over their federal counterparts in terms of taxation policy, thus creating an imbalance between two levels of government workers who perform similar services but are treated differently under law due to their employer’s identity (state or federal). They also disagreed with the majority's interpretation of Davis v. Michigan Dept. Of Treasury case which they believe should have been applied here as well because both cases involved discrimination against Federal pensioners through differential taxation policies.