The U.S. Supreme Court case Western Air Lines, Inc., et al. v. Board of Equalization of the State of South Dakota et al., 1986 revolved around a dispute over taxation powers between states and airlines operating within them. The court ruled in favor of Western Air Lines, stating that South Dakota's tax on the gross receipts from intrastate flights violated federal law - specifically, the Federal Aviation Act (FAA) and the Airline Deregulation Act (ADA). These laws were designed to prevent states from enforcing their own economic regulations on air carriers; thus, any state-imposed tax directly related to airline services was deemed unlawful under these acts. This decision reinforced federal authority over interstate commerce and limited individual state power in this area.

In the dissenting opinion for Western Air Lines, Inc. v. Board of Equalization of South Dakota, Justice Brennan argued that the majority's decision was inconsistent with previous rulings on interstate commerce taxation and violated principles of fair apportionment. He contended that South Dakota's tax unfairly burdened interstate businesses by taxing them more heavily than local ones, as it did not account for how much business was actually conducted within the state versus elsewhere. Furthermore, he criticized the majority’s reliance on a “benefits received” principle to justify this unequal treatment because such benefits are difficult to quantify and should not be used as a basis for taxation without clear guidelines or standards in place.