In the 1941 case of State Tax Commission of Utah v. Aldrich et al., Administrator, the U.S. Supreme Court ruled on a dispute involving state inheritance tax laws and federal jurisdiction over Native American tribal lands. The decedent, a member of an Indian tribe in Utah, had left property located both within and outside reservation boundaries to his heirs who were also tribal members. The State Tax Commission sought to impose an inheritance tax on all properties including those situated within the reservation's borders. The court held that while states have broad powers to levy taxes, these powers do not extend into federally-protected territories such as reservations without explicit Congressional authorization - which was absent in this case. Therefore, it concluded that any attempt by Utah to impose its inheritance tax law upon properties located inside the reservation constituted an infringement upon federal sovereignty over Indian affairs. This decision reaffirmed previous rulings establishing that state laws generally do not apply within reservations unless Congress has expressly provided otherwise; thus protecting tribes' rights against encroachment from state governments.

In the dissenting opinion for the case of State Tax Commission of Utah v. Aldrich et al., Administrator, Justice Frankfurter argued that the majority's decision was inconsistent with previous rulings on similar matters and violated principles of federalism. He contended that a state should have the right to tax its residents' entire income, including any interest from out-of-state bonds. According to him, this taxation does not interfere with interstate commerce or violate due process rights because it is based on residency rather than source of income. Furthermore, he expressed concern about potential negative impacts on states’ fiscal stability if they were unable to tax all sources of their residents' incomes fully.