In the 1955 case Werner Machine Co., Inc. v. Director of Division of Taxation, Department of the Treasury, Of New Jersey, the U.S Supreme Court was tasked with determining whether a state could tax a corporation for its entire net worth even if part of that value came from federal government contracts performed outside the taxing state's borders. The court ruled in favor of Werner Machine Company and held that it was unconstitutional for New Jersey to impose such taxes on income derived from out-of-state activities related to federal contracts as this violated due process rights under Fourteenth Amendment and interfered with Federal Government’s power over interstate commerce granted by Commerce Clause. This decision established an important precedent regarding limits on states' taxation powers.

The dissenting opinion in the Werner Machine Co., Inc. v. Director of Division of Taxation, Department of the Treasury, Of New Jersey case argued that the majority's decision was inconsistent with previous rulings regarding interstate commerce and taxation. The dissenting justices believed that by allowing New Jersey to tax a corporation based on its total net income - including income derived from out-of-state activities - it violated the Commerce Clause which prohibits states from interfering with interstate commerce. They contended that this ruling could lead to multiple states taxing a single corporation for the same revenue, leading to unfair double taxation and potentially discouraging businesses from engaging in interstate activities due to excessive tax burdens.