In the case of Stewart Dry Goods Co. v. Lewis et al., 1932, the U.S Supreme Court was asked to determine whether a Kentucky tax statute that imposed different rates on chain stores and independent retailers violated the Equal Protection Clause of the Fourteenth Amendment. The plaintiff, Stewart Dry Goods Company, argued that this law unfairly discriminated against them as a chain store operator by imposing higher taxes than those levied on independent retailers conducting similar business operations in Kentucky. The court upheld the validity of Kentucky's graduated tax system for chain stores and found no violation of equal protection rights under its constitution or federal laws. It reasoned that there were significant differences between individual retail businesses and large-scale chains which justified differential taxation; these included economies of scale enjoyed by chains due to their size, centralized management structure allowing greater efficiency in operation compared to single-store enterprises among others. Therefore, it concluded that such distinctions provided reasonable grounds for taxing entities differently based on their organizational structure without violating principles of equality before law enshrined in constitutional provisions.

The dissenting opinion in the case of Stewart Dry Goods Co. v. Lewis et al., argued that Kentucky's tax law, which imposed a graduated tax on merchants based on their gross sales, was not unconstitutional as it did not violate the Equal Protection Clause of the Fourteenth Amendment. The dissenters believed that there was a reasonable basis for this classification and differentiation in taxation among businesses since larger businesses could afford to pay more taxes than smaller ones due to economies of scale and other advantages they possess over small-scale operations. They also pointed out that such progressive taxation is common practice at both state and federal levels across various types of taxes, including income tax. Therefore, they disagreed with the majority's ruling striking down this provision as discriminatory against large businesses.