In the case of Treichler, Executor v. Wisconsin in 1949, the U.S Supreme Court ruled on a dispute involving inheritance tax law. The appellant was an executor of an estate that included insurance policies payable to named beneficiaries and argued that these should not be subject to state inheritance taxes as they were not part of the decedent's gross estate under federal law. However, Wisconsin courts held that such proceeds are taxable under state laws regardless of their exclusion from gross estates for federal purposes. Upon appeal, the U.S Supreme Court affirmed this decision by a vote of 5-2 (with two justices abstaining). The majority opinion stated that while Federal Estate Tax Law does exclude life insurance proceeds from taxation when paid directly to named beneficiaries rather than being part of an overall estate distribution plan, it doesn't prevent states from imposing their own separate taxes on those same funds.

In the dissenting opinion for Treichler v. Wisconsin, Justice Jackson argued that the majority's decision to uphold a tax on an inter vivos trust established by a non-resident was inconsistent with previous rulings and violated principles of interstate commerce. He contended that this ruling could lead to double taxation if other states followed suit and taxed trusts based on where they were administered rather than where they were created or where the grantor resided. Furthermore, he suggested that it would be more appropriate for Wisconsin to tax the income generated within its borders rather than trying to impose taxes on out-of-state entities. Ultimately, Justice Jackson believed that this case represented an overreach of state taxing power at the expense of individual property rights.