In the United States v. Kahriger case of 1952, the Supreme Court upheld a federal law that imposed a tax on individuals engaged in gambling activities. The defendant, Louis Kahriger, was convicted for not paying this tax and argued that it violated his Fifth Amendment rights against self-incrimination because he would have to admit to illegal activity (gambling) in order to pay it. He also claimed that Congress exceeded its taxing power by imposing such a levy with punitive intent rather than revenue-raising purpose. However, the court ruled against him stating that just because one might incriminate themselves while complying with a law does not make it unconstitutional and further noted there was no evidence showing Congress had any other motive beyond raising revenue when they enacted this tax.

In the dissenting opinion for United States v. Kahriger, Justice William O. Douglas argued that the federal gambling tax was not a legitimate exercise of Congress's taxing power but rather an attempt to regulate activities reserved to the states. He contended that this encroachment on state authority violated principles of federalism and exceeded Congress's constitutional powers under Article I, Section 8 of the Constitution. Furthermore, he believed that by imposing such a high tax rate (10%), it effectively served as punishment for gamblers instead of revenue generation which is outside congressional purview in his view. Lastly, he expressed concern about potential abuses from requiring gamblers to register with government authorities due to Fifth Amendment protections against self-incrimination.